The Business of Healthcare Podcast, Episode 140: How Incentives Shape U.S. Health Care

The episode examines how incentives shape behavior across the U.S. healthcare system. Host Dan Karnuta introduces the idea that businesses and individuals respond to the rewards built into a system, whether or not those rewards produce the best overall results. Guest Steve Horowitz, president and CEO of SRH Advisory LLC, board member of careviso and a member of its audit committee. Horowitz is a health care executive with experience in provider organizations, pharmacy benefit managers and health services. He says the system's complexity makes it easy for one group to optimize its own results while worsening outcomes elsewhere.

They discuss fee-for-service payments, which can reward more services, and value-based arrangements, which can reward lower costs and better outcomes but may also encourage cutting necessary care. Horowitz says newer models such as bundled payments and accountable care organizations can help, but require careful design, monitoring and experience. The conversation ends with why reform is so difficult: health care decisions involve personal values and tradeoffs about cost, access and quality, so even sensible policies can provoke disagreement.

Karnuta is an associate professor in the Naveen Jindal School of Management's Organizations, Strategy and International Management Area as well as director of its Professional Program in Healthcare Management.