Not long ago, The New York Times Magazine ran an article about reforms in the health care community. In particular, Intermountain Healthcare, based in Salt Lake City, was an example of internal changes that have improved the health of their members and at the same time lowered costs. Dr. Brent James has applied management techniques to providing health care, called evidence based care.

Intermountain did this by publishing protocols for various procedures, from heart disease to inserting an IV line. An unintended consequence to these protocols was that the system lost money, because unnecessary tests were performed and not billed. Still, they believe that the ethical practice of medicine is more important than the bottom line. How refreshing!

There was a lingering question in the article and that was the role of how our pay for service model contributes to higher and higher medical costs to insurance companies, individuals, government, and  other companies. This is why some are predicting the bankruptcy of our government from payments for Medicare, Medicaid, and government employees. Already, more than 60% of all individual bankruptcies are due to health care debts. Can our nation continually absorb double digit increases in health care costs? Probably not.

This why I bring up the issue of our pay for service system. When I see a doctor, I pay a copay. If the service is unusual, I also pay 20% of the cost of the service. In turn, my insurance company pays the cost of the service that the copay doesn’t cover. This is pay for service. But what if, doctors were paid salaries instead of relying on fee payments for income. What if hospitals stopped charging for every little tittle and service and instead charged a flat fee (with charges varying depending on service, for example ICU would be a much higher rate). The overhead for care would certainly be lower.

Maybe greater minds than mine can figure out an alternative to the fee for service model or at least a modification of the model. Also, health insurance companies and medical centers should be non-profits. Do we really need these groups to make money (i.e. profit and profit motive) in doing what is truly best for our health?

Unfortunately, the protocol system as used at Intermountain (and copied at other hospital systems) and the issue of the pay for service system are not being addressed in the health care reform legislation. Both of these ideas can lower the cost of health care, which is why we are having these reform fights. But Congress is a political animal and expediency to get something done, compromising with many factions, creates less than optimal legislation. Of course, doing nothing is much, much worse.