What is a potential drawback of the per diem payment system?

The per diem payment system compensates healthcare providers a fixed amount for each day a patient stays in a facility. One significant drawback of this system is that it may inadvertently encourage longer patient stays. Since providers receive payment for each day a patient is hospitalized, there might be a financial incentive to keep patients in care for a longer period than necessary, rather than focusing solely on the efficiency and quality of care.

Longer patient stays can lead to increased healthcare costs for both providers and payers, and may also result in negative outcomes for patients, such as hospital-acquired infections or other complications that arise from prolonged hospitalizations. This is a critical concern in healthcare management as it can conflict with the goals of efficient resource allocation and optimal patient outcomes.

In contrast, other payment models, such as bundled payments or value-based care, aim to align financial incentives with the quality of care provided, thus discouraging unnecessary extensions of hospital stays.