One of the barriers to affordable health insurance in America is the underlying business model of medicine. Most doctors are paid a fee for each service. That type of compensation schedule encourages physicians to perform as many procedures as possible. Unfortunately, the cost of those procedures is passed onto patients and their insurance companies. It also results in increased competition among departments. Some hospital systems have chosen to use a different system: all of their doctors are on a salary. Proponents of this method claim that it increases the quality of health care while decreasing costs. Incorporating these ideas into healthcare reform could help save the nation money, according to supporters. Not to mention that the Cleveland Clinic is among the hospitals that manages to do just that, while treating some patients with advanced pre-existing conditions that many hospitals would avoid.

An alternative to the predominant fee-for-service model has been offered by Dr. Delos M. Cosgrove, CEO and President of the Cleveland Clinic--one of the nation's leaders in revolutionizing health care delivery. Departments are based on related organ systems and diseases, as opposed to medical specialties. This way, physicians are better able to work together and deal with the patient as a whole. This is unlike the system used by most other hospitals, which serves to divide health problems into single parts. In addition to making care more effective, this method of organization streamlines administrative costs. Since it facilitates better coordination among doctors, they are less likely to engage in duplicate or competing treatments that waste money. For example, the Cleveland Clinic is able to save money by buying in bulk and stocking only three types of medical supplies like heart valves, instead of 30. Exceptions must be justified as a medical necessity, not solely a doctor's personal preogative.

That reduced freedom is a drawback to many doctors within the medical establishment. Doctors working at the Cleveland Clinic cannot run up the tab for a patient's medical coverage with additional tests and procedures of dubious purpose. Their potential income is also reduced. Like employees in any business, the salaried physicians also receive regular evaluations of their work. The care they provide has to meet high standards at a good value. However, doctors are very well compensated at most of these hospitals. World-class systems, such as the Mayo Clinic or Cleveland Clinics, pay salaries of up to $1.2 million--a healthy sum that exceeds the average income of a traditional practice with fewer business hassles and expenses--which convinces doctors to make the trade-off. While their private-practice or fee-for-service hospital counterparts are on call every day of the week and spending thousands on startup costs for an office, doctors who receive a salary are able to further hone their skills and concentrate primarily on their medical practice. This serves to improve the quality of medical care.

Moving away from the most common form of doctor compensation would involve a change in health insurance reimbursements. The majority of health insurance companies reimburse health care providers on a fee-for-service basis as well. Organizations attempting to bill a flat fee for a specific diagnosis are stymied by complex and vague billing procedures. These procedures vary among health insurance companies and states with Medicaid. It creates the inefficiency of having thousands of billing agents work with all of the insurance companies; a uniform billing system would reduce the need for such a large administrative department. That savings could be passed onto consumers in the form of more affordable health insurance, since insurers will likely pay less in registration. However, the health care industry is often slow and resistant to change.

The experiment in salaried doctors appears to be working so far. Since Cleveland Clinic overhauled its organizational structure in 2006, it has been hailed as offering the most cost-effective care in the nation, while simultaneously retaining its status as one of America's best hospitals. That goes part of the way towards reducing the $210 billion spent on unnecessary medical tests that are ordered each year. Granted, it has a far higher proportion of wealthy patients than most hospitals--many of whom are from foreign countries and therefore don't present health insurance burdens at all. Still, the hospital system has some insight into what it may take to provide affordable health insurance to our population. Dr. Cosgrove recently spoke to Congress during its healthcare reform debates about his organization's innovations in cost control and quality medical care, both of which are essential.