an example that illustrates the difference between a fee-for-service payment and a case-based service payment. Explain the benefits and limitations of each approach. Assess the viability of utilizing, within your own organization (or one with which you are familiar), the two alternative reimbursement strategies described in “Which Health care Payment System is Best?” Analyze how the nurse-to-patient ratio is affected by the payment approach selected and how these impact quality of service.


The way healthcare providers are reimbursed for their services has a significant impact on their ability to deliver high-quality care. Two common approaches to reimbursement in healthcare are fee-for-service (FFS) and case-based service (CBS) payments. This paper aims to provide an example that illustrates the difference between these payment models and explain the benefits and limitations of each approach. Additionally, it will assess the viability of utilizing these alternative reimbursement strategies within an organization and analyze how the nurse-to-patient ratio is affected by the payment approach selected and how it impacts the quality of service.

Example illustrating the difference between FFS and CBS payments

To better understand the difference between FFS and CBS payments, consider the following example: In a fee-for-service payment system, a physician is reimbursed for each individual service provided. For instance, if a patient visits the physician for a check-up, the physician is reimbursed for the consultation, any laboratory tests ordered, and any additional services provided during the visit. Each service is billed and paid for separately.

On the other hand, in a case-based service payment system, a lump sum payment is provided for a specific episode of care or treatment. Continuing with the example, if a patient undergoes surgery, all the services related to the surgery, including pre-operative consultations, the surgery itself, and post-operative care, would be bundled together and reimbursed as a single payment.

Benefits and limitations of FFS and CBS approaches

The fee-for-service payment approach has several benefits. First, it provides incentives for healthcare providers to deliver more services, as each service provided generates revenue. This can lead to increased access to care for patients. Second, FFS payments allow for flexibility in the choice of services provided, as each service is billed separately. However, this flexibility can become a limitation as it may encourage over-utilization of services, resulting in increased healthcare costs.

Case-based service payments also have their own set of benefits. By bundling services together, CBS payments encourage coordination and integration of care, as providers are incentivized to work together to deliver high-quality care efficiently. This approach can also help control healthcare costs, as providers are reimbursed a fixed amount for a defined episode of care. However, CBS payments may create a financial disincentive for providers to deliver additional services that may be necessary for optimal patient outcomes.

Viability of utilizing alternative reimbursement strategies

In assessing the viability of utilizing FFS and CBS payment strategies within an organization, several factors need to be considered. Firstly, the organization’s financial stability and ability to manage risk should be evaluated. FFS payments may provide higher revenue potential, but they also carry the risk of unpredictable and fluctuating revenue streams. CBS payments, on the other hand, offer more predictability in revenue but may not compensate adequately for the level of services provided.

Furthermore, the organization’s capacity to effectively coordinate care and manage episodes of care should be examined. CBS payments require strong care coordination and integration to ensure that all necessary services are provided within the bundled payment. This may require significant investment in care management infrastructure and processes.

Nurse-to-patient ratio and impact on service quality

The choice of reimbursement strategy can have a direct impact on the nurse-to-patient ratio and subsequently affect the quality of service provided. In an FFS payment system, where each service is billed separately, there may be a tendency to increase the number of patient visits or services provided to maximize revenue. This can put additional strain on nursing resources, potentially leading to higher nurse-to-patient ratios. This increased workload may compromise the quality of service delivered, as nurses may have limited time to adequately address each patient’s needs.

On the other hand, CBS payments incentivize coordination and integration of care, which can lead to more efficient resource utilization. By bundling services together, providers can better allocate nursing resources based on the specific needs of the episode of care. This may result in more optimal nurse-to-patient ratios and potentially enhance the quality of care delivered.


The choice between fee-for-service and case-based service reimbursement strategies in healthcare has important implications for access to care, cost control, and the quality of service provided. Both approaches have their benefits and limitations. The viability of utilizing these strategies within an organization depends on its financial stability, care coordination capabilities, and ability to manage episodes of care effectively. The nurse-to-patient ratio is directly impacted by the payment approach selected, with potential implications for the quality of service delivered.

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