Modeling the impact of an outcome-oriented reimbursement policy on clinic,patients, and pharmaceutical firms

Tackling the steep increase in drug costs is an especially important issue among many health care providers and insurers. To entice the clinics to bec ome more cost efficient, the U.S. federal government, as well as many HMOs, have developed various cost containment initiatives recently. However, the impact of these initiatives on the patients' well-being, the clinic's prof itability, and the pharmaceutical firm's profitability has nor been formall y analyzed. Tn this paper we develop a mathematical model that is intended to examine the impact of a reimbursement policy for drug usage. Despite the simplistic structure of our model, the analysis enhances our understanding of the joint impact of the reimbursement policy on the patients, the clini c, and the pharmaceutical firm. Thus, our analysis can provide valuable inf ormation for evaluating the effectiveness of implementing such a reimbursem ent policy. In addition, we utilize the data gathered from a clinic to help support the assumptions and results of the underlying model.