Prospective Payment and Medical Ethics

This article considers the ethical implications of prospective payment from the perspective of physicians and other health care practitioners. It focuses on the argument that prospective payment creates ethical conflict by giving physicians an economic incentive to do less for their patients. This argument is criticized in two respects. First, available evidence is reviewed which suggests that the incentives actually created by different prospective payment schemes and their effect on "optimal" patterns of practice is uncertain. Further, it is pointed out that ethical conflict originates in the dual role of physicians as agents and suppliers of service. Recognizing that such conflict exists under any payment mechanism, a better focus for the ethical evaluation of prospective payment is suggested that considers whether the incentive to do less is likely to have adverse effects on physician decisions, relative to decisions made under other payment mechanisms.