The cost of healthcare is at an all-time high and many people feel the fee-for-service model is the main culprit for the skyrocketing costs. From a logical standpoint it makes sense, healthcare providers get paid more by providing more services. As humans we tend to consume
too much and spend too much, therefore, ditching the fee-for-service model would result in fewer services and less spending, right?
Not so fast, as logical as that sounds I am not completely sold on that theory. When we look at our lives almost everything we do is based on a fee-for-service model. When we go out to eat, go to the movies, get new tires on our car, get a haircut, hire a baby sitter or hire someone to do our taxes, we do it on a fee-for-service basis. Those providing the previously mentioned services would like to sell us more, but we generally resist because we don’t want to waste OUR money on unnecessary services. Generally speaking when we pay with OUR money we try to get maximum value and good providers try to be as efficient as possible.
Fee-for-service is not unique to healthcare, however, in the healthcare sector we shop with other people’s money. We have very little out-of-pocket cost for additional services and someone else “picks up the tab” for OUR spending. The third-party payer is one of the big reasons for rising costs and inefficiencies in the healthcare industry. It is human nature not to concern ourselves with the total cost of care, but rather, how much WE have to pay. How many times have you received an explanation of benefits and glanced over it only to notice the part that tells you what you are responsible for?
If we implemented a third-party payment model in other service industries we would be faced with the same inflating costs that we are dealing with in healthcare. If you were only responsible for a $30 copay every time you visit your hair stylist you would be inclined to get unnecessary services in addition to a haircut. Why, because YOU aren’t paying for them, someone else is picking up the tab.
Better yet, you are traveling for work and need something to eat. If it were personal travel you would grab a chicken sandwich and call it a night. But work is paying for it, so you have a steak dinner. As far as you are concerned a steak dinner costs the same as a chicken sandwich because YOU aren’t paying for it, you aren’t accountable for payment.
Healthcare costs and inefficiencies are going to continue to increase until we address the third-party payment model. Healthcare consumers need to be accountable and more aware of the total cost of their healthcare. A more aware and accountable healthcare consumer may be the motivation needed to live a healthier life. Or at the very least eat more chicken sandwiches.
