Normally, I like to write about the common sense approach to manufacturing, particularly as it relates to the auto industry. This month I would like to stray a bit and talk about a common-sense approach to health-care costs. Health-care costs have escalated over the years, and they now have become a major problem to U.S. car companies - a problem they feel they must contain.

Health benefits, on the other hand, have become so ingrained in the worker's lifestyle that any proposed reduction in benefits would be fiercely opposed.

It's unusual today for any major company not to offer a full range of health benefits; they've become a major cost that didn't exist some fifty years ago. On the other hand, there have been some offsetting cost reductions during this same period due to advancements in medical technology. There are many operations that are now handled on an outpatient basis, whereas years ago you would have to spend a significant amount of time in the hospital. This has resulted in a big reduction in worker time off the job due to medical problems.

I had my appendix out some 40 years ago and spent seven days in the hospital. This same opration is now done as an outpatient. You would think this would reduce medical costs, but, instead, they keep escalating. I agree that health care costs are too high. But I'm also against reducing benefits. I'm certain that these costs can be reduced by attacking inefficiencies in the system and improving productivity. It will require ingenuity, imagination and leadership.

Corporate bureaucrats are attacking this problem in their typical fashion by imposing subtle restrictions. Many plans now offered to non-bargaining employees restrict their choice of doctors, limit the frequency of certain tests, increase co-payments, and add other restrictions.

These same restrictions will be fiercely opposed when it comes to bargaining with employees. Besides, I don't think they're necessary. I think health-care costs can be significantly reduced with little or no impact on benefits. I can give you an example based on personal experience.

A few months ago, I had a knee operation. Years ago, this operation would have required a long stay in the hospital. Today, you're in and out in less than one day. The actual operation took about a half-hour and I was back to work the next day. I was under anesthesia during the brief operation, so I don't really know who or what was going on during this period. Outside of that, everything ran pretty smoothly.

I saw a couple of doctors, a nurse, and that was that. However, based on all the bills I got from a lot of different people, the whole hospital must have been involved in my operation. The bills totalled $7,000. Of course, my insurance took care of most of this, but I don't know if the amount is high, low, or what. Still, $7,000 seems a bit steep for a half-hour's work - or even a day's work.

It seems to me that all of these different people and their separate billings is very confusing, if not inefficient, when you're talking cost control. Why not take a leaf from the purchasing department and create Tier One contractors, which reduced the number of contracts they had to deal with (in some cases from 5,000 to 350) for better cost control? In medical procedures, this could be the hospital or a doctor but, in my case, let's say it was the surgeon. He would submit one fee for the operation and he would be responsible for controlling all the costs for any support activities.

It also appears to me that there's a lot of costly duplication of medical procedures and testing because the patient's medical history is not centralized. In my case, when I had trouble with my elbow, my family practice doctor sent me to a specialist. When I had trouble with my knee, he sent me to another specialist. The knee doctor made some standard tests in order to get general information on my health - the same tests that the elbow doctor had made just two weeks prior.

If doctors could access a patient's medical history, I'm sure a lot of costly duplicate testing could be eliminated and there would be no forms to fill out. Centralizing a person's medical history and making it readily accessible shouldn't be any more difficult than what's being done now with a person's credit history. Banks can check your credit history in a flash when you apply for a loan, and for $5 TRW will send you your complete credit history.

I think the system is basically good; it's just a matter of making it better.