As a nation, the cost of health care accounts for 17.6 percent of our Gross Domestic Product (GDP). What does this mean? For every U.S. dollar, 17 cents is spent on health care. A recent study by the Centers for Medicare and Medicaid Services found that the average U.S. citizen spends $8,915 annually on health care, which adds up to $2.8 trillion. PBS “Newshour” reported that this figure is two-and-a-half times more than most developed nations in the world, including relatively wealthy European nations such as France, Sweden, and the United Kingdom; all of which have better health outcomes than we do in the U.S.
So, what’s the culprit of this out of control health care cost? It’s the current fee-for-service (FFS) model that a majority of health insurance organizations use to reimburse health care institutions and providers for their services. In a FFS model, health care institutions and providers are reimbursed for every service that’s rendered, regardless of the outcome of their patient’s health. Essentially, the more these institutions and providers do for their patients, the more they’re going to get paid, regardless of whether it improves or worsens the patient’s health.
The FFS model allows institutions and providers to order a lot of unnecessary tests and/or treatment, which, in many cases, doesn’t even improve the patient’s condition; this is known as medical waste. A recent report by the Institute of Medicine found there’s so much medical waste in our nation’s health care institutions that it costs our country billions of dollars annually for unnecessary exams and/or treatments.
In my tenure as a paramedic, I’ve seen this occur on many different occasions. For example, I’ve transported patients from the scene of an emergency to a local hospital and was latter called back to transfer them to a hospital that could provide a higher level of care. In many of these cases, upon receiving a report from the hospital staff, I was given copies of x-rays, CT-Scans, or an MRI to turn over to the receiving hospital. After transferring these patients and releasing them and all of their exam results to the hospital, one of the first things I’ve heard physicians order is a repeat of the previously completed exams. Come to find out, repeating these exams had no effect on improving the patients health. Instead, it only cost the patients a rather large amount of unnecessary money and increased the profit margin of the receiving hospital (medical waste at its best).
Multiple reports have found this to be true all across our nation. We have to get away from the FFS model because it’s essentially causing thousands of families to file for bankruptcy due to outrageously high medical bills. Additionally, The Atlantic recently reported the cost of health care is expected to consume 19.8 percent of our nations GDP by 2020. If this problem isn’t resolved, the rising cost of health care will be an additive factor of causing our country to go bankrupt.
A solid solution to this problem is to move away from the FFS model and adopt a pay-for-performance (PFP) model. A PFP model reimburses health care institutions and providers for quality patient outcomes, rather than for the amount of services they provide. For example, in a PFP model, when a physician is treating a patient with congestive heart failure, both parties are rewarded for the improvement and maintenance of the patient’s health status. Not only does this keep the patient healthy, but it prevents future office visits and hospitalizations.
This model has the potential to increase both the efficacy of our health care delivery system and the overall health of our population. In turn, the $2.8 trillion that’s spent on health care annually could be significantly reduced with a PFP system.
In conclusion, studies have provided evidence that the PFP model improves the quality of care delivered and reduces medical waste. This model will keep more Americans healthy and reduce the overall costs of health care that our nation incurs every year. Consequently, PFP has the potential to significantly reduce the amount of money we spend on health care as it pertains to our GDP, which will control the rising cost of health care and help prevent medical spending from causing our nation to go bankrupt.
Randy Williams, of Colquitt, is a distance education student at George Washington University, where he is pursuing a master of science in emergency health services leadership. He is a nationally registered paramedic with 13 years of experience.