Provider
payment promotes financial incentives, and the range of payment methods supports a
controlling of costs and a variety of service provision incentives. Fee-for-service2
payments provide good service provision incentives and responsiveness to clients;
however, there is less incentive in controlling costs since all incurred costs are covered
by payers. Close-end payment methods, i.e. capitation3 or global budget4, provide the
opposite effect, greater incentive to controlling costs but less incentive in providing
services. All payment methods have strengths and weaknesses, and hence, incorporating
more than one approach would be beneficial. Doing so is likely to simultaneously maintain
strengths and prevent negative consequences, i.e. point system and/or Diagnosis
Related Group (DRG)5 weight global budget.