How is your doctor like your auto mechanic?

Oct. 18, 2021 / By Steve Delaronde

Bringing your car to a mechanic is a lot like going to the doctor. Auto mechanics and doctors both work within a predominantly fee-for-service system where information asymmetry prevails. Information asymmetry exists when one party has better information than the other. This creates an imbalance of power which can easily be exploited in a fee-for-service system.

Primary care providers (PCPs) and automobile mechanics are both diagnosticians. When our body or our car experiences symptoms such as musculoskeletal pain, breathing difficulty, squeaky brakes (or joints), or engine noise, we rely on an expert to diagnose the problem and recommend a solution. Furthermore, we trust the expert to deliver a solution that is 1) appropriate 2) effective and 3) affordable. 

One difference between PCPs and auto mechanics, however, is that we are usually not required to reimburse a mechanic for their diagnostic service, but only for parts and labor. Also, a mechanic rarely recommends that you bring your car to another mechanic, which is what PCPs do when they refer you out to a specialist. Nor do auto mechanics “prescribe” a solution for which they receive no payment. The primary income source for PCPs is their diagnostic service, since prescriptions and referrals benefit others.

The definition of “appropriate” or “necessary” can be a judgement call. Unfortunately for the consumer, fee-for-service creates an incentive to deliver more services. This applies to all trades, including auto mechanics and health care providers. Procedures that are low-value, such as oil changes every 3,000 miles or diagnostic tests, are more likely to occur in fee-for-service versus bundled payment arrangements. Fee-for-service can also encourage poor quality if complications result in additional services and charges.

An obvious distinction between health care and auto repair is price transparency. The price of parts and labor for auto repairs is not a secret. The customer knows the price before the service is rendered. Obtaining prices for health care procedures and services is much more difficult, if not impossible.

The comparison shifts when we move beyond the PCP and consider the specialist or surgeon. In a fee-for-service environment, billing becomes a bigger challenge in health care compared to auto repair. Auto repair bills are paid directly out of pocket, while most health care bills involve a third-party payer. 

Car repair bills are issued directly to the customer after the service is completed. The medical billing cycle can take months to complete and can be quite complicated. These often involve insurance verification, clinical documentation, coding compliance, claims transmission, denial management and finally, a bill is generated and mailed to the patient. It can also result in bills from multiple providers depending on the procedure, including laboratory, radiology, pathology, anesthesiology, facility charges, as well as the services of the physician or surgeon.

Another difference is with insurance. Health insurance and auto insurance have different purposes. While both protect against unforeseen events such as a collision or a cancer diagnosis, only health insurance covers regular maintenance and prevention. Engine oil, air filters, tire replacement and routine repairs are not covered by auto insurance.   

Ultimately, most of us accept a fee-for-service arrangement for servicing our automobiles since we have price transparency, a wide selection of mechanics, and the option to buy a new car if maintaining an older model gets too expensive. Unfortunately, we cannot trade our bodies in for a newer model. This means we need better health care options that include price transparency, bundled payments and an easier billing and payment process.

Steve Delaronde is senior manager of product, population and payment solutions at 3M Health Information Systems.

Manage cost, understand risk and measure quality.