The cost of health care administration: Lessons from the FAA as a public model

Federal Aviation Administration (FAA) grew out of a need to standardize rules for flying airplanes across the country. Today, competing airlines operate stay in business while operating under the same set of rules. It’s yet another example of how lessons from another sector could hold the key to alleviating administrative burdens in health care, said Kevin Schulman, MD, MBA, is an internal medicine physician and professor of medicine at Stanford University.

Medical Economics: What could the U.S. health care system learn from the FAA? Standardizing rules that allow competing businesses to operate efficiently

Kevin Schulman, MD, MBA: Another public model was the origin of the FAA. Originally, airline operations, just like health plan payment rules, were totally the responsibility of the airline. And then, unfortunately, in 1956 two planes crashed into each other over the Grand Canyon in broad daylight. And the government said, this is ridiculous, we can only have one set of rules for flight operations, and we created the FAA to standardize route planning for airlines. We can easily imagine something analogous, where we say we don't like the current system, this makes no sense to have all this complexity, needless complexity. There's no studies that this complexity adds value, other than, I guess, to shareholders of some of the companies involved. We could move forward to a different platform and different set of transactions that would still be computable, customizable to the degree that they're computable, so you could have different offerings from different health plans, but we'd have one set of payment rules and one set of rail transaction platforms.