Final answer:
A value-based care model is a system that improves healthcare quality by incentivizing providers based on patient outcomes rather than service quantity. It contrasts with a fee-for-service model and aims to reduce healthcare costs while enhancing care quality. HMOs are one alternative structure aimed at efficient resource allocation among patients.
Step-by-step explanation:
A system for improving health care quality by increasing payment based on quality not quantity is referred to as a value-based care model. This approach incentivizes healthcare providers to offer better care, rather than simply more services. The traditional fee-for-service model compensates providers based on the volume of care delivered, regardless of the outcomes. Value-based systems aim to reward providers for efficiency and effectiveness, fostering an environment where patient outcomes and satisfaction are prioritized over the sheer number of procedures performed.
Organizations worldwide are exploring value-based care as a means to reduce healthcare costs and improve quality of care. In contrast, Health Maintenance Organizations (HMOs) offer a structure where providers are paid based on a per-patient model. They are encouraged to allocate resources efficiently among all patients. HMOs can also help manage the issue of adverse selection, which is prevalent in insurance markets when there is information asymmetry between insurance buyers and providers.