One Great Idea For Reducing Health Care Costs: Offer A 90-day Warranty
by Kai Falkenberg
November 21, 2011
As part of Forbes.com’s Human Ingenuity series, we ask staff writers, contributors and experts to weigh in with solutions to some of the nation’s biggest problems. This month’s focus is on reforming health care. We asked each to weigh in with one great idea for reducing costs while still providing high quality care. This response is from National Center for Policy Analysis President John C. Goodman.
Q: What is one great idea for reducing health care costs that should be replicated across the country?
Geisinger Health System in central Pennsylvania provides a useful example of a cost-saving health service with national implications. Geisinger offers a 90-day warranty on heart surgery, similar to the type of warranties found in consumer product markets. If the patient returns with complications during that period, Geisinger promises to provide treatment without sending the patient or the insurer another bill.
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Unfortunately, Geisinger incurs financial losses under this practice, even as it saves money for Medicare and other payers overall. What is needed is a willingness to pay for such guarantees. Medicare should be willing to pay more for the initial surgery if taxpayers save money overall.
Doctors and hospitals should be free to innovate like Geisinger has done. Physicians should be free to repackage and reprice their services — thus profiting from innovations that lower costs and raise the quality of care.