Changing how doctors, hospitals, nursing homes, and other providers are paid is central to saving money and improving quality in health care. (Photo: Shutterstock)

Health-policy experts have long debated whether better outcomes and lower costs are achieved by putting more consumer “skin in the game” or by changing how providers such as hospitals and doctors are paid. It doesn't have to be one or the other, but it's becoming increasingly clear that if forced to choose, we should focus mostly on the incentives for providers.

A provider-centric approach to improving quality and reducing costs is both hard-headed and soft-hearted. The hard-headed part reflects the accumulating evidence, including in a recent study of MRIs and a brand new study of nursing homes, that hospital and doctor incentives matter more than consumer cost-sharing in affecting overall health-care spending. Basically, in health care, we mostly get what the doctor ordered.

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Focusing on provider incentives is also soft-hearted. The more we lean on putting consumer skin in the game, the higher the risks to family budgets from health-related surprises.