One of the classic moments in any movie western is the runaway stagecoach. In order to save the city-slicker passengers, the hero races behind the galloping team and somehow leaps onto the driver’s seat and coaxes the horses to a stop, usually at the very edge of a cliff.

Costs in the health care system are a lot like that stagecoach, careening wildly away, with all of us scrambling to catch up. Organizations across the country are working to slow the stampede and one of the first steps to getting things under control is identifying the causes behind the costs.

However, no single horse could pull a stagecoach, just like no single thing is influencing health care costs. While there are many, many reasons for the current state of health care costs in the United States, in this blog we’re going to explain four of these “horses.”

Horse #1 – Low Value and/or Unnecessary Care

As a patient, it can be difficult to determine whether or not you should undergo a test or procedure, or even where to go to get the best care. As a provider, you want to make sure you cover all the bases when treating patients, to try every possible option because your job is to keep them healthy. Everyone is motivated by the best intentions, but not all tests, facilities, and procedures are guaranteed to be the most cost effective or have the highest value. These expensive and low value decisions are major causes for skyrocketing health care costs. A report from the Washington Health Alliance provides excellent examples of low value care and the Choosing Wisely initiative can help patients and providers make health care decisions.

Horse #2 – A Fee for Service System

Charles Dickens famously wrote long and descriptive stories because his newspaper publisher paid him by the word. It makes sense, more words = more money. The current health care system is no different. Right now, most everyone is paid per patient visit, resulting in lots of short, generally ineffective patient visits. The idea behind the shift away from this Fee-For-Service model is to pay for the quality of care rather than the quantity, just as publishers now pay authors by how many books are sold, not the number of pages. Under the Pay-for-Performance model there are many different ways for health care to be delivered and paid for, including Patient-Centered Medical Homes with providers getting financial incentives to coordinate your care or bundled payments where providers are paid one set price for a procedure, regardless of complications.

Horse #3 – Unwieldy System

To anyone in the industry, or anyone interacting with the health care system, we know that over time we’ve created a wildly complex system.  The system itself is a multi-headed and multi-armed beast that is hard for all involved – patients, providers, employers, health systems and others – to navigate. Many, many people are involved in the delivery, billing, and payment for one person’s care and the administrative burden of the complex payment system is higher than most developed countries.. The paperwork for one of the smallest elements in the system, the claim, is unforgiving and the intricacies involved in contract negotiation are mind-boggling.

Horse #4 – Lack of Transparency

Transparency is a hot buzzword right now in health care but no one has the same idea of what it means. It means something different based on your role in the system. Patients want price transparency so they know how much they are going to have to pay for treatment, payers and providers want cost transparency so they know how much to charge for treatment. It is unlikely that any change to health care cost and expenditures will happen unless all involved work from the same baseline information and strive to eliminate the black boxes between silos.

Since it is impossible to distill all of the major cost influencers in the health care system into four basic categories, look for more blogs in the future, explaining how prescriptions, utilization, and narrow networks push expenses higher each year.