How could health care leaders reduce administrative costs? Look at lessons from other industries

The costs are adding up for the administration of health care across the United States.

That problem may seem like an incurable ailment in the health care system. But it doesn’t have to be if industry leaders would look to other sectors for examples of successful business solutions.

Other areas of business operate with common rules that assist and sustain innovation in competitive markets, and those principles could be applied to the payment and administrative processes of health care.

Kevin Schulman, MD, MBA, is an internal medicine physician and professor of medicine at Stanford University. He’s also the co-author of papers suggesting health care borrow lessons from other industries to lower costs, while improving treatment of patients and making work easier for doctors.

What are some examples?

The Federal Aviation Administration oversees common rules that airline operators use to avoid crashing in the sky.

The tech inventors behind mobile phones develop innovations that they all use so the devices work with each other.

Any American who buys a house uses documents standardized by Fannie Mae and Freddie Mac, the financial companies that invest in mortgages and ensure money is available for lenders and homebuyers.

In this video series, Schulman discusses “precedents thinking,” or the processes of identifying a business need or problem, refining and rethinking it, then looking to other industries for examples of how businesses resolved it. That process could apply to how physicians, patients and insurers approach health care paperwork and payment.

Schulman is co-author of the study, “Applying Precedents Thinking to the Intractable Problem of Transaction Costs in Healthcare,” in Health Management, Policy & Innovation, and an editorial, “Addressing Health Care’s Administrative Costs,” in JAMA.

His colleagues Stefanos Zenios and Ken Favaro published “Precedents Thinking” in Harvard Business Review.