Fee-For-Service vs. Value-Based Care: Implications for Health Equity

Healthcare systems around the world are striving to improve patient outcomes while managing skyrocketing costs. In the U.S., two primary models—Fee-for-Service (FFS) and Value-Based Care (VBC)—shape healthcare delivery and compensation. These models differ in how they incentivize healthcare providers, and they have significant implications for health equity, which is the fair and just access to healthcare for all individuals, regardless of socio-economic status.

Fee-for-service (FFS) is the traditional model where providers are paid for each service they render, such as tests, procedures, and consultations. The more services provided, the higher the reimbursement.

Value-based care (VBC) focuses on rewarding healthcare providers based on the quality of care they deliver, rather than the quantity of services. Providers are incentivized to improve patient outcomes, reduce hospital readmissions, and manage chronic diseases effectively.

Both Fee-for-Service and Value-Based Care models have strengths and weaknesses related to health equity. FFS can perpetuate health disparities by emphasizing volume over quality and not addressing social determinants of health, while VBC has the potential to reduce disparities by focusing on patient outcomes and preventive care. For greater health equity, it’s essential to prioritize models that consider both medical needs and social factors. A hybrid approach, combining elements of both models, could ensure that healthcare remains affordable, accessible, and equitable for all populations, especially those in underserved areas.