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SGIM Calls for End to Fee-For-Service

John Commins, for HealthLeaders Media, March 4, 2013

Schroeder says many of the recommendations in the report will face significant opposition from vested interests in the healthcare sector. Still, he hopes the report will "advance the dialog" about how transitioning compensation models.

The difference now, he says, is the widespread understanding that the growth in healthcare expenditures—now averaging about $8,000 annually per person in the United States—is unsustainable. 

"I have been following this stuff since the 1970s. I have never seen it this intense and I have never seen the non-healthcare sector so vested in solving this issue," he says.

"The status quo is always comfortable. It's always hard to get people to accept change if they think they are giving something up. On the other hand there is this huge realization that compared to the last 30 years the cost question is here to stay. It's not a question of 'if' but 'how.'"

"There is going to be a lot of back-and-forthing. When you take money out of something the people who are affected are going to push back. There is $3 trillion in the healthcare system now. We are at 18% of GDP. Many prestigious bodies have said there is a tremendous amount of wasteful care, so I can't believe we can't find ways to work things through."

"I would urge the players to try to carve the best kind of solution they can to maximize value to patients, make doctors and hospitals feel like they are providing good value, and bend the cost curve. Will it do so? I certainly hope so."


John Commins is a senior editor with HealthLeaders Media.

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2 comments on "SGIM Calls for End to Fee-For-Service"


Bart Lee (3/4/2013 at 3:44 PM)
Dr. Knight is right. When people use whatever but don't pay for that whatever, they use a whole lot more of it, limited by only their own better uses of their time. Make employee benefits fully taxable and effective incentives will appear to control costs. Until then, we're on our way to infinite demand for life -prolonging medical care, always paid for by other people [INVALID] so what's not to like about that? ##

James G Knight MD (3/4/2013 at 9:49 AM)
The problem isn't Fee-For-Service; it's the third party payment method that has evolved as a consequence of tax law. The problems are the consequence of someone other than the consumer of services paying the cost of those services. A consumer who is insulated from the cost of the goods and services they use, consume more services and unscrupulous physicians are prone to offer more (unnecessary) services. Consumer directed health care has been shown to control costs without loss of health outcomes. Reconnecting consumers to the lion's share of their day-to-day health care expenditures, while still protecting them from financial ruin due to major illnesses or injury (high deductible insurance coverage), right-sizes health care thru market forces. Making doctors salaried employees is the DMV/ post office approach to the problem and will produce the same culture endemic to these institutions...