The Structure and Financing of Health Care Systems Affected How Providers Coped With COVID-19

Perspective COVID-19

Policy Points:

  • We compared the structure of health care systems and the financial effects of the COVID-19 pandemic on health care providers in the United States, England, Germany, and Israel: systems incorporating both public and private insurers and providers.
  • The negative financial effects on health care providers have been more severe in the United States than elsewhere, owing to the prevalence of activity-based payment systems, limited direct governmental control over available provider capacity, and the structure of governmental financial relief.
  • In a pandemic, activity-based payment reverses the conventional financial positions of payers and providers and may prevent providers from prioritizing public health because of the desire to avoid revenue loss caused by declines in patient visits.

Financial distress in the health care sector is a nonintuitive consequence of a pandemic. Yet, in the United States, the budgets of health care providers are under considerable strain as the COVID-
19 pandemic continues.

Analysts anticipate that these continuing financial challenges will generate a wave of consolidation among hospitals and physician practices through 2021.1 Critical access hospitals, hospitals serving vulnerable populations, and independent primary care practices are particularly threatened.2,3 These dire financial outcomes arose through the interaction of the public health measures taken in response to the COVID-19 epidemic, particularly the shutdown of elective procedures, along with the underlying structure of US health care financing and the US government’s emergency response.

Open Access

Waitzberg, R, Quentin W, Webb E, Glied S. The Structure and Financing of Health Care Systems Affected How Providers Coped with COVID-19. Milbank Q. 2021;99(2):542-546.