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Disadvantages of using third-party services in healthcare organizations

Third-party services in healthcare organizations - disadvantages

- accept unnecessary treatments and procedures

Because someone else pay for the bills, but not patients (first party) they erroneously think that since it’s free why I don’t take it. Insured health care individuals consume everything they can or entitle to from medical care and services. This is mainly because patients feel if they don’t use it now then they lose these benefits. Individuals consume health related care, products, and services in many cases without reasonably valuing the importance or need of them.

- lack of the incentives to economize

In addition, because of insured patients won’t take the price into consideration the medically necessary care lacks the incentive to economize. Doctors might do perhaps unnecessary procedures to make more money for the hospital or their own practice. If there won’t be close monitoring what really essentially necessary procedures are and what just nice things to do or have the resources might be used unreasonably and even with some abuse. Waste is also a potential risk in such situations.

- increase cost of health care

Insured patients didn’t realize the full financial impact of treatment decisions. In other words, they aren’t going to take the price of that good or service into account when deciding whether or not to purchase it, which means that the normal supply-demand price mechanism isn’t going to be applied. In the long run, this means prices will go consistently up. Increase in price for medical services in its turn make unaffordable medical care to self-paid parties.

- increase uncollectibility from self-paid parties

There is no healthy market situation with medical services and care because third-party payers cover bills whichever hospitals charge them for. On the other hand, self-paid parties in constant increase of health care services won’t pay at all even for those procedures that they used to could afford. This will create the need for hospitals to do cost shifting and increase even more prices for medical care and services.

- influence medical decisions

Health care providers will be also under constant pressure from the third party payers because they depend on them. Those payers indirectly will influence their medical decisions, potentially even to their own benefits. Third-party payers’ contracts might inappropriately influence a wide variety of medical decisions. Physicians may feel like they are employees of those health care insurance companies since they were the ones who paid them and dictate the rules, according to their non-negotiable fee schedules.

- force providers to schedule extra appointments with patients

Health care providers by following the third-parties rules and limitations might decrease their appointment times with patients making them to come several times to medical offices for the same procedure instead of one time in order to pick up their revenues if not one way than the other one, anyway. This will create inconvenience and extra expenses for patients. In addition, the waiting period to schedule any appointment will increase as well.

- collection of money

Health care providers cannot receive money right after the health services were rendered. They have to wait couple of months when insurances payments cycles will begin.

- fraud

Scams are a significant cost and problem in healthcare system. For instance, some dollars paid by Medicare is spent on a fraudulent claim for which the patient never received care and service or the service was unnecessary.