risk of their end-of-life medical costs. Consumers already use their own savings for deductibles, co-payments, and elective procedures such as laser eye surger Align reimbursement mechanisms with providers. Health systems around the globe will benefit by better aligning reimbursement mechanisms with the providers that best manage risk. In the past, providers were generally paid on a fee-for-service basis. The flaw in this approach is that costs rise whenever providers increase their fees, provide more services, or substitute more expensive services for less expensive ones -and providers have the incentive to do all three Three alternative-reimbursement mechanisms are in play. Diagnosis-related groups categorize illnesses according to their diagnoses and treatments and pay providers a predetermined amount, based on that category, for treatment. Capitation fees are specified amounts paid to the provider for each person in a given group, regardless of the actual number or nature of the services delivered over a set period. Per diem rates are flat, all-inclusive daily fees for a specific service or outcome, regardless of cost. Diagnosis-related groups have been clearly effective only in the United States, where they have produced the shortest average hospital stays in the oECD countries and catalyzed the development of subacute care providers To implement these reforms successfully, leaders of health care systems must work within a robust organizational framework at every level Health care systems should explore novel structures, such as payment for performance, more intensively In the United States, for example, CMS is pursuing a plan to im prove the quality of care that Medicare beneficiaries receive by differentiating payments across the top and bottom decile of providers (calculated by a providers composite performance across four to six quality indicators per disease). Private payers in the United States are adopting similar programs, which use a combination of variable co-payments to nudge patients toward higher-quality and lower-cost facilities and reward high-performing providers with incremental increases in patient volumes and higher reim bursements 7. Ensure successful implementation To implement these reforms successfully, leaders of health care systems must work within a robust organizational framework at every level. Health care organizations need to have effective leaders who can push through change; to build institutional skills (notably in It, which tends to be poor across most health systems); to develop greater accountability, which is often diluted by the public nonprofit aspect of health care; to coordinate the stakeholders'interests in order to avoid a backlash against change and any unintended, negative consequences and to deploy the three main approaches to implementation(Exhibit 2)risk of their end-of-life medical costs. Consumers already use their own savings for deductibles, co-payments,3 and elective procedures such as laser eye surgery. Align reimbursement mechanisms with providers. Health systems around the globe will benefit by better aligning reimbursement mechanisms with the providers that best manage risk. In the past, providers were generally paid on a fee-for-service basis. The flaw in this approach is that costs rise whenever providers increase their fees, provide more services, or substitute more expensive services for less expensive ones—and providers have the incentive to do all three. Three alternative-reimbursement mechanisms are in play. Diagnosis-related groups categorize illnesses according to their diagnoses and treatments and pay providers a predetermined amount, based on that category, for treatment. Capitation fees are specified amounts paid to the provider for each person in a given group, regardless of the actual number or nature of the services delivered over a set period. Per diem rates are flat, all-inclusive daily fees for a specific service or outcome, regardless of cost. Diagnosis-related groups have been clearly effective only in the United States, where they have produced the shortest average hospital stays in the OECD4 countries and catalyzed the development of subacute care providers. To implement these reforms successfully, leaders of health care systems must work within a robust organizational framework at every level Health care systems should explore novel structures, such as payment for performance, more intensively. In the United States, for example, CMS is pursuing a plan to improve the quality of care that Medicare beneficiaries receive by differentiating payments across the top and bottom decile of providers (calculated by a provider’s composite performance across four to six quality indicators per disease). Private payers in the United States are adopting similar programs, which use a combination of variable co-payments to nudge patients toward higher-quality and lower-cost facilities and reward high-performing providers with incremental increases in patient volumes and higher reimbursements. 7. Ensure successful implementation To implement these reforms successfully, leaders of health care systems must work within a robust organizational framework at every level. Health care organizations need to have effective leaders who can push through change; to build institutional skills (notably in IT, which tends to be poor across most health systems); to develop greater accountability, which is often diluted by the public, nonprofit aspect of health care; to coordinate the stakeholders’ interests in order to avoid a backlash against change and any unintended, negative consequences; and to deploy the three main approaches to implementation (Exhibit 2)