Viewpoint: The way hospitals are paid maintains structural racism

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Payment models that tie compensation to quality and cost goals aren't often focused on disadvantaged communities, and may inadvertently create incentives for hospitals to avoid these groups and sustain structural racism, according to an op-ed published in The New York Times.

The op-ed, written by Philadelphia-based University of Pennsylvania health policy professors Amol Navathe, MD, PhD, and Harald Schmidt, PhD, examines why payment models may incentivize hospitals to "shun" minority patients. 

Many insurers tie payment to quality goals in an attempt to control hospital costs. While there are some instances of these quality-based programs benefiting disadvantaged populations — the authors cite the Pennsylvania Rural Health Model, which provides a fixed annual payment to rural hospitals so they worry less about the profitability of services — many aren't focused on minority populations. 

As a result, the authors argue, hospitals might be incentivized to avoid minority patients. They cite the Hospital Readmissions Reduction Program, which aims to help hospitals avoid readmissions. The authors write, "But since people with worse living and working conditions are readmitted more frequently, hospitals that serve more worse-off racial and ethnic minorities were more frequently penalized," citing findings published in Health Services Research.

Drs. Navathe and Schmidt outlined three steps payers and hospitals can take to address this issue:

1. Make reducing racial disparities in health outcomes an explicit goal of all payment reforms.
2. Document how federal and commercial payers are affecting healthcare access for disadvantaged populations. 
3. Inventory current payment reforms and make recommended improvements. 

Access the op-ed here.

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