Health care policy analyst Greg Scandlen writes:

Almost everyone involved in health care will tell you that the greatest problem in our system is that we pay on a fee-for-service basis. Almost everyone is wrong.

For example, Sandy Graham, managing editor of a Colorado Health Foundation publication, writes:

With the fee-for-service model, there is little incentive to limit the quantity of care or seek lower-cost alternatives. A reformed system would give providers financial incentives to avoid unnecessary care and provide quality care.

Scandlen continues his critique of those, like Graham, who blame fee-for-service medicine for medical care problems:

The graph below shows the CPI broken into components. Food, housing transportation, apparel – all are paid fee-for-service and all have a lower rate of inflation than health care. …

Yes, the providers of these services would like to sell us more units of service. But we have good reason to resist – we don’t want to waste our money on services we don’t need.

What is unique about health care is not fee-for-service, but third-party payment. Only in health care is there someone else picking up the tab for our spending.

via Is Fee-For-Service the Problem? | John Goodman’s Health Policy Blog | NCPA.org.