Healing the Health Care Cost Conundrum

The military health care system is different in many ways from the civilian system, but a primary difference is the income incentive. Simply put, health care providers and other medical professionals are not paid based on the number of patients that they see or the number of procedures that they do. Instead they receive a fixed salary with few if any bonuses for productivity or quality. The budgets for military health care institutions, and many others in the Federal government, are based on Congressional appropriations, not on productivity. This has been changing in the past decade but remains largely true today.

Civilian medicine is not so. They are paid for what they did, patients seen and procedures done, and everyone on staff is usually highly motivated to do more. Some have described such fee-for-service reimbursement arrangements as “you eat what you kill.” In some practices, that can equate to more visits and more procedures, even if some are not medically required.

Each system has advantages and disadvantages. If medical personnel have no financial incentive to see more patients, they will generally see fewer. Since the fixed costs of health care are high the cost per patient will increase. Further, access to care may decrease if doctors see few patients per day. If medical personnel are paid by the patient seen and procedure done, they will generally see more, potentially improving access to care and decreasing the cost per patient. Unfortunately, they will also do more, including procedures with marginal benefit to the patient.

Some say that health care in the United States is poor, and they are wrong. While some population health metrics show that we have a long way to go, others show how far we have come. Most metrics of medical care demonstrate that we have the most advanced system in the world. Health care in the United States is good, but is very expensive. As these facts illustrate, finding the right balance in payment for health care in America is difficult. Nonetheless, there are some simple ways to reduce prices and control costs in US health care.

Require transparent pricing – Bitter Pill: Why Medical Bills are Killing Us was the cover story on the 20 February 2013 issue of Time magazine. It described frightening patient experiences with huge bills, inconsistency in pricing, and even duplicity. Though biased, the article raises some valid concerns. Just as pricing in other fields should be transparent to the consumer, so should pricing in health care.

Require transparent quality measures – It is difficult, but not impossible, to measure the quality of a health care institution or system. HEDIS and Oryx measures are commonly used and effective, as are readmission rates. Health care facilities could advertise and compete on their accreditation scores, such as Joint Commission. Consumers need quality measures in addition to transparent pricing to know where and when to spend their health care dollar.

Reform the Relative Value Scale Update Committee – Medicare and insurance payments are determined by a 31-member group that is dominated by specialists, with only one seat reserved for a primary-care doctor. Hence specialist payments are high and primary care payments are low. Primary care accounts for 51.3% of all visits to office based physicians in the US, while it has only 3% representation on this committee (http://www.ahrq.gov/research/pcwork1.htm).

Prescribe generic medications – Health care providers should use generic drugs whenever possible. They are regulated just as much as name brand drugs and are far cheaper. Generics tend to older drugs because of patent law and therefore have much more safety and efficacy data than newer drugs.

Make more medications and devices available over the counter (OTC) – self health care, often involving OTC medications and devices, can save a lot of money for American health care payers, including consumers. Widespread availability will drive costs down and quality up due to the forces of competition. Information on the proper use of these things is more available than ever before due to the Internet and computer applications. Pharmacists are usually available at point of purchase to answer questions and the health care providers are becoming more readily available via secure messaging over mobile devices for consultation. Devices themselves, such as Automatic External Defibrillators, have become smarter. Quality concerns are still valid but must be balanced against access to care concerns.

Engineer health, don’t just advocate it – Occupational health experts have long known that it is better to engineer out workplace hazards than it is to use administrative controls to prevent injury and illness. Sidewalks, bike lanes, traffic circles, parks, and other community improvements encourage active lifestyles and improve health. Seat belts, bike helmets, fluoridated water and immunizations are other examples. They are far more effective than administrative and advertising programs designed to encourage or force healthy behavior.

Reward good behavior – Payers such as employers and the government, should provide meaningful rewards for people who improve their health by stopping smoking, losing weight, and making other positive behavior changes. Reduced insurance premiums and health savings account benefits are two possible motivators. These rewards should not be given to those who do not improve their health in a measurable way. Ultimately the responsibility for the health of each person lies with that person, and those who are successful should be rewarded.

Encourage insurance competition – Nationwide competition between insurers, when paired with the other reforms mentioned here, would go far to control costs and still maintain reasonable levels of quality.

Enact tort reform – Like it or not, defensive medicine wastes money and can create a hostile environment between physicians and patients. Further, it limits providers’ ability and willingness to provide pro-bono or low cost care. Some patients are thereby denied care entirely, a bad outcome for everyone involved (except perhaps tort attorneys). While patients should be compensated for mistakes, limiting punitive damages introduces safeguards into the system which benefit everyone.

Take hospice seriously – Many patients with terminal diseases could benefit from home hospice care earlier after diagnosis. During the 1990s, 25% of health care costs were incurred in the last year of life (http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1464043/). Most people would prefer to die at home, but 56% die in hospitals and 19% in nursing homes (http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1282180/).

A health savings account (HSA) for everyone – Anytime that patients take a bigger role in their health care, everyone wins. Tax exempt and employer contribution HSAs help consumers get better health care, and better health, for their dollar.

Institute patient and family centered medical homes (PFCMH) – The concept behind PFCMH is that the patients and their families are the most important parts of the health care system. The medical team is responsible for the total health of patients enrolled to them and is rewarded for healthy patients rather than the number of visits or procedures. The data suggest that patients who receive care in the PFCMH context are healthier and happier, and costs are lower, than patients receiving care in other systems.

Practice evidenced based medicine – Medical research provides medical answers in terms of averages, such as how long a typical woman with breast cancer might survive. It cannot answer how long a particular individual with breast cancer will survive. Clinical practice guidelines (CPG) provide the best way to manage the “average” patient. Since most patients are, by definition, around average, CPGs are useful. It takes the individual acumen of the physician to determine how best to use the CPG for each individual patient. The Veteran’s Administration and the Department of Defense have made some excellent CPGs which can be found at http://www.healthquality.va.gov/.

Promote physical fitness

Physical exercise helps everyone at every stage of life. Whether a child on the ward or an elderly person in the intensive care unit, activity helps physical and mental health. Passively putting unconscious patients through the full range of motion in all of their joints improves strength, range of motion, and overall functionality. Having the patient actively do the same thing, unless contraindicated, is even better. Rehabilitation after surgery or injury and prehabiltation before make outcomes much better. There are few people on earth who wouldn’t benefit from more physical activity.

Avoid emergency departments except for genuine emergencies – Non-urgent or emergent care done in emergency rooms is more expensive and lower quality than that same care provided in a doctor’s office.

Encourage support of family and friends – many patients who have difficulty with activities of daily living need care in expensive skilled nursing facilities. Doing the same care at home with visiting home health nursing personnel is better for the patients and saves money.

Compete for patient dollars – Informed and engaged patients and families are the best defense against bad health outcomes and unclear or even exorbitant costs.


While some improvements in health care are complicated, others are simple. Making the improvements mentioned here would go far toward lowering costs and improving quality in American health care. Insofar as is germane to the military system, we are doing all of these. We cannot afford not to do them.


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