New Marketplace

Time to Sink the Two-Canoe Argument

Article · March 27, 2018

Health care payment models remain in flux, with the pace of movement from fee-for-service toward value-based payments continuing to be unclear in the context of changing federal and state policy decisions and significant local market variation. In the face of this uncertainty, health care providers can feel trapped, fearful of “having a foot in two canoes,” straddling the two divergent payment models.

Unfortunately, in response, many physicians have passively or actively resisted payment model changes while benefiting financially from the existing fee-for-service model. Hiding behind the mantra of “I can’t change my delivery model until the payment system changes,” providers have, intentionally or unintentionally, continued to provide non-value-added or even inappropriate care, driving up health care costs without benefit and potentially harming patients. Furthermore, in the often chaotic ongoing health care debate, many physician organizations have concentrated their energies on maintenance of the fee-for-service status quo, rather than providing a unified professional focus on improving health care and creating value. These rationalizations should no longer be offered by the medical profession, and there are compelling ethical, professional, and business reasons why this approach is misguided and counterproductive.

Ethical Reasons

First, ethically, the medical profession is anchored on the precept that the physician will serve as an agent for the patient, making decisions that maximize health and well-being. As codified in the Hippocratic Oath, “I will apply, for the benefit of the sick, all measures [that] are required, avoiding those twin traps of overtreatment and therapeutic nihilism.”

Overtesting, overdiagnosis, overtreatment, and overcharging, although remunerative under fee-for-service, often cause harm and are major drivers of cost and impediments to quality. Overtreatment goes beyond the active provision of care that is known to be inappropriate; it also encompasses the cynical acceptance of the status quo of more testing, driving false positives and continued unnecessary evaluation of incidental findings. Lucrative for physicians under fee-for-service payment models, these practices are defended under the guise of physician autonomy, or “I know what is best for my patients.” In truth, physician autonomy entails the ability to work with patients toward treatments that best reflect medical evidence, provider experience, and patient values and, as such, is not linked to any specific payment model.

Professional Reasons

Second, rationalization of fee-for-service threatens the professional stature of physicians, both among the physicians themselves and in the overall community. The epidemic of physician burnout is clear evidence of the threat to the medical profession posed by the focus on generating RVUs (relative value units) rather than on meeting the needs of patients. By aligning with the status quo, rather than supporting better delivery models, physicians effectively trap themselves in a vicious cycle. They are forced to do more to maintain income, while devoting their energy and political capital to fighting for reimbursement rates and losing the ability to provide better care. Increasing physician burnout reflects at least in part the frustration and moral bankruptcy of this spiral.

Overall, the medical profession remains socially esteemed and financially lucrative, a status that is reflective of the intensive skill, training, and dedication that are required, not to mention the daunting responsibility of making decisions that literally have life and death consequences. However, inappropriate care driven by the pursuit of excess profit serves to undermine the standing of physicians and may contribute to further loss of our ability to regulate ourselves as a profession. We live in a world of increasing distrust of government and public institutions. Although physicians and health care organizations have, to date, largely escaped such suspicions, we worry that an increasing collective focus on generating revenue can fuel the active resentment of the public that we serve and that ultimately pays our salaries.

In addition, some medical professional societies have also focused their efforts on maintenance of the status quo, spending millions of dollars and devoting thousands of physician hours toward lobbying over details of fee-for-service reimbursements, while essentially resisting the more meaningful shift to value-based payment. Social psychology research suggests that individuals arrive at behavioral norms from the peer group with which they identify. Within the context of these physician organizations, financially-driven decision-making can be normalized, with regrettable consequences. While the self-interest is obvious in these activities, the primacy of the patient’s interest may be lost, further threatening the standing of the medical profession.

Business Reasons

Third, there is a business case to be made for active support of innovative payment models that reward high-value care. Pay-for-value models are in the early phase of development, and the large majority of payments to our institution still come through some sort of fee-for-service model. However, it is clear that quality-based payment will only grow in importance. It is in the infancy of such a paradigm that physicians can — and should — take a leading role in shaping this transition. Quality-based payment models remain imperfect, making it all the more imperative for physicians to actively engage to ensure that quality is defined in a way that supports physician professionalism and aligns financial incentives with better care for the patient community. By resisting change, many physicians and physician organizations risk being pushed to the sidelines, thereby tacitly supporting the sometimes arbitrary and certainly less-predictable payment reforms handed down by public and private payers.

Active engagement in designing new payment models and demonstrating what might be possible benefits both providers and patients. Forward-thinking organizations can find partners on the payment side, including insurers, employers, and public-sector government entities. Such engagement enhances the success of the organization even as fee-for-service payments continue to decline. As examples, we have partnered with large national employers, including Walmart and Lowe’s, to provide spine and joint-replacement referral services to their employees from multiple states throughout the western half of the United States. These contracts are predicated on our ability to provide bundled high-value care rather than traditional fee-for-service care. This approach not only greatly expands our geographic referral base, but it also provides access to high-value care for a broader range of patients.

In Washington State, we have also supported innovative regional collaboratives of providers, health systems, employers, and insurers to define and reward evidence-based care for diverse clinical scenarios ranging from headache to joint replacement to hospital readmissions. Additionally, we have developed systems to reduce unnecessary care (e.g., lumbar imaging) with commensurate quality-based reimbursement and to further decrease costs through the elimination of non-value-added administrative overhead in the form of preauthorization. These approaches are foundational to our current and future financial success, despite the potential for reduced fee-for-service reimbursement in the short term. We endeavor to provide high-value care to a broader population while partnering with payers and other stakeholders to permanently align payment with value.

In reality, health care payment models have already changed, and the ingrained sense of security in the status quo is falsely placed. Payment for quality, even in its current nascent form, is already here, and no amount of resistance or lobbying by physicians and their professional organizations is going to reverse this trend. Payment models will continue to evolve but, for the foreseeable future, we will exist in a hybrid model with varying payment schemes for differing populations. Neither fee-for-service nor value-based care is going to be the exclusive payment model anytime soon. However, rationalizations for fee-for-service-driven inappropriate care should no longer be offered by physicians and physician organizations and should no longer be accepted by patients, payers, and society. Fundamentally, we, as physicians, cannot put our pecuniary interests ahead of the well-being of patients by irrationally defending fee-for-service medicine. Rather than straddling the two-payment model “canoes,” it is time for physicians to help sink fee-for-service and fully commit to aligning payment around value.

New Call for Submissions ­to NEJM Catalyst


A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

More From New Marketplace
Robert Gavin head shot

Amazon and CVS: Short-Lived Unicorns in Health Care, or Healers of the “Tapeworm”?

Will Amazon–Berkshire Hathaway–JP Morgan and CVS-Aetna change the health care game? To one health care employer purchaser, these announcements feel a lot like Groundhog Day.

Fiona Scott Morton head shot

We Can’t Spend All Our Money on Health Care

We have to think about how much we want to spend on health according to how much it’s worth to us at the margin.

Simplified Chain of Production for Primary Care Services Generating Retail Prescriptions. Solid arrows indicate contractual relationships or ownership, and the dashed arrow indicates referral for prescription.

Does CVS–Aetna Spell the End of Business as Usual?

What might one of the largest mergers in history mean for the health care delivery system?

Lack of Incentive Is Top Barrier to Implementing Value-Based Payment

Survey Snapshot: Payer-Provider Alignment Is Difficult Even for Integrated Organizations

NEJM Catalyst Insights Council members say stronger incentives and better use of analytics could improve alignment.

Mostashari01_pullquote - Medicare Advantage Holds the Key to Reforming the ACO Program

Medicare Advantage Holds the Key to Reforming the ACO Program

Value-based care continues to be the emphasis of federal policymakers, as well as many providers. Aligning Medicare Advantage with ACOs would boost both programs.

Physician Group Practices BPCI Classic Success and Looking Ahead to BPCI Advanced Bundled Payments

Physician Group Practices: Succeeding in Bundled Payments

Physician groups are demonstrating their ability to deliver care in new and innovative ways as part of the nationwide effort to transform health care delivery through value-based payment models. The physician experience and perspective is invaluable and should remain an important component of any shift to value-based care.

How Aligned Are Payers and Providers in Working Together to Achieve Value-Based Care

New Marketplace Survey: Payers and Providers Remain Far Apart

Health care stakeholders are not aligned in important goals and in large part are not working together to achieve value-based care, according to the NEJM Catalyst Insights Council. They are waiting on government regulators to change the payment model — including, possibly, single-payer health care.

Comparison of Select Characteristics of the Sample and Shared Savings Program - MMSP ACO - Physician-Led ACOs

Do Independent Physician-Led ACOs Have a Future?

While some of these smaller organizations are succeeding, they do face numerous challenges, and there is a need for both regulatory change as well as greater sharing of peer-based resources and best practices.

Disruption of Innovative Mergers in Health Care Industry - BDO graphic

Innovative Mergers Will Disrupt Health Care

The NEJM Catalyst Insights Council expects outside players to have a major impact on the industry over the next three years.

Mark Miller and Melinda Buntin

MedPAC’s Role in Curtailing Drug Prices

The former Executive Director of the Medicare Payment Advisory Commission lays out three recommendations for curtailing drug prices, as well as upcoming Medicare trends.


A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »


We Can’t Spend All Our Money…

We have to think about how much we want to spend on health according to…

Change the Model → Change the…

If we’re going to change the health care payment model, do we need to change…

Change the Model → Change the…

If we’re going to change the health care payment model, do we need to change…

Insights Council

Have a voice. Join other health care leaders effecting change, shaping tomorrow.

Apply Now