The New Cost-Conscious Doctor

Doctors practicing in the U.S. are becoming increasingly conscious of the increasing costs of health care. Most consider themselves cost-conscious, and are considering the impact of their practice patterns — in terms of prescribing medicines, tests, and procedures — on the nation’s health bill. In fact, most physicians feel they have a responsibility to bring down health costs.

This perspective on physicians comes from the survey report, The new cost-conscious doctor: Changing America’s healthcare landscape, from Bain & Company, published in March 2011. Bain spoke with over 300 U.S. physicians to assess their perspectives on managing costs, drug and device usage, and standardized care protocols.

The top-line finding is that, regardless of physician demographic — whether male or female, salaried or productivity-based, specialist or generalized, urban or rural, young or mature, doctors uniformly see that they must change clinical practice patterns to accommodate the realities of health economics.

The impacts of this on the practice will be many, including:

  • Consolidating practices, increasingly being absorbed into hospital systems
  • Decreasing utilization as a direct response to incentives
  • Promoting preventive care
  • Adapting to standardized treatment protocols.

Jane’s Hot Points: Bain rightly points out that these changed physician attitudes and behaviors will ripple through the health supply chain on to life science, medical device, pharmaceutical and technology companies. Organizations in these health supply segments must demonstrate value to physicians and patients in the larger health ecosystem in order to be adopted into clinical practice.

That physicians see cost management as part of their jobs now means that their decisions will be increasingly impacted by their collective cost consciousness lens. Accountable care models, medical homes and more tightly integrated delivery networks will bolster this approach and tightly focus that cost conscious lens. Physicians will be less inclined to try out new-new products without firm proof-of-concept and references from peer physicians who are influencers in their field. Over one-half of physicians told Bain that they’d be using comparative effectiveness analyses within 2 years.

Furthermore, physicians are growing more comfortable with practice protocols and standardized care, Bain found. They’re using clinical guidelines more often in 2011 than 5 years ago; this is especially true of younger physicians, who more often refer to practice guidelines for patients. The mass adoption and full implementation of electronic health records will enable such protocols to be pushed to clinicians at the point-of-care. In fact, physicians expect a five-fold increase in the prevalence of electronic access to clinical treatment guidelines, and an 8-fold increase in pay-for-performance programs.

For manufacturers in the health supply chain, the major challenge is to develop and market products that help lower the costs of health care. That’s the new definition of “innovation” in health care.

Jane Sarasohn-Kahn is a health economist and management consultant who serves clients at the intersection of health and technology. Jane’s lens on health is best-defined by the World Health Organization: health is a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity. She blogs at HEALTHPopuli.

28 replies »

  1. Hiya, I am really glad I have found this information. Today bloggers publish just about gossips and net and this is actually annoying. A good site with interesting content, that is what I need. Thank you for keeping this website, I’ll be visiting it. Do you do newsletters? Can not find it.

  2. Good to know providers are very concerned. Welcoming patients to ask questions and be a partner in the care of their health may help to reduce costs. People may find this video helpful when forming Qs: http://tinyurl.com/4odprtz

  3. Many years ago I was an administrator and now I sell medical equipment and supplies. I started my company to be a low margin supplier and that was doing my part to reduce costs, other members of this community must find their way in this matter. I feel for the doctor who entered the field 30 years ago who now doesn’t recognize his field because of all the changes. 30 Years ago he was his own master but today through regulation and fear of economic loss he has little choice in what he does. He was right back then and the new way is right now because it has all become unsustainable. I suspect all the newer trained healthcare professionals will be more cost conscious because it is such a topic of discussion. It is hard to dismiss the education and experience gap between some of the proposed decision makers but I think time and experimentation will sort it out. Additionally, once you empower others what keeps them from the same own the device kind of process or trap. If the next generation physician and other healthcare professional can bring about cost savings without sacrificing results I say go for it.

  4. My 20 company seeks to do its small, tiny part in keeping costs down for ultrasound equipment as best as we are able…click on my name to learn more.

  5. I agree that I see more and more physicians using evidence based clinical guidelines and I see nothing wrong with that. These guidelines were created for a reason and a lot of time and effort were put forth by researchers to create them. I also think they are cost effective as well.
    I am a new family nurse practitioner and we were always taught in school to check the evidence based research and the guidelines when we are unsure of ourselves. I think a problem with rising healthcare costs occurs in the hospital setting not primary care. I don’t know how many times I have seen in the hospital setting someone who complains of abdominal pain and a million dollar work-up is done including XRs, CT scans, US, blood work, urine tests…….and the physician rarely comes to see the patient. I think if these healthcare providers take the time to come see the patient evaluate them and use their judgement healthcare costs will greatly decrease.
    Primary care’s main focus at this time is in preventative care. This will eventually be a cost saving technique and could really pay off in the future. A recommended mammogram might find a lump and it is removed rather than letting it go on for years to later put the women through chemotherapy and radiation, costing thousands of dollars.
    I also agree with the fact that so many people are out to sue their healthcare providers we would not need to do every test under the sun “just to make sure”.

  6. Actually, no. We don’t have good access to downstream costs. Private sources, such as commercial insurers, are proprietary and public sources, such as Medicare, are protected by law.

    To improve transparency, the Wall Street Journal took the lead Jan. 25th, 2011 to sue Medicare to release doctor referring and billing information, which has been locked up tight since 1979.


    Please note that, as a private practice physical therapist, I bill Medicare Part B under the physicians’ fee schedule and my claims data would also be made public if the WSJ lawsuit is successful.

    I fully support the efforts of the WSJ and the Center for Public Integrity as a means of improving transparency in medicine and policing our respective professions.


  7. The system needs all the primary care providers it can provide and we do not need to argue about extent of privileges but only supply the data. How mluch per encounter per patient does each one cost including down stream costs such as ordered tests or therapy. What are they ordering such as how many MRIs, x-rays, antibiotics, referrals, pain medications. Certainly for all public money ie our taxes being spent, these figures should be available on line by provider number and zip code to make the vast data digestible. I for one as a primary care provider would dearly love to get a statement from Medicare and Medicaid as to the cost of the home health and durable supplies I order each month. Better still to have this be public information so I can compare myself to my peers then perhaps we won’t have some of us being exposed after years as having ordered millions of questionable services. To even discuss these issues sensibly we need transparency. The data is out there just not available and the press is ready to help the consumer make better decisions.

  8. I hope hecan account on real positive changes.
    “For manufacturers in the health supply chain, the major challenge is to develop and market products that help lower the costs of health care” – lower the costs for WHOM? The memories of my doctor strongly advising costly meds while cheaper (and no less effective) alternavies were available are still fresh in my mind so it’s really hard for me to believe in cost-conscious doctors. Once you get burned you become really careful.

  9. Ms. Saunders,

    You are highly uninformed regarding the NP education. The education is not solely online AND we do manage patients on our own depending on where we are in our training. Do we have 20,000 hours of clinical time? No… then we would be Doctors.

    I find it funny that you and Mr. Smith seem to be so angry about the NP profession. Again, we are not trying to be doctors. If we were, we would go to medical school …. (I dare you both to avoid below the belt comments here).

    I would also like to remind you that during those 20,000 hours of internship and residency, RNs are a vital lifeline for MDs and the patients who they practice on. I have had Interns and Residents ask me what med to order for a condition, the dose, the route…etc. They are more than open to suggestions from an RN as part of the team, and frankly, many of them would not survive their intern year without the help. Oh, how out of touch you have become…
    I find it interesting that Advanced Practice Nursing strikes such a nerve with you both….

  10. Implicit in both Sanders and Smiths’ arguments is the association between credentials and quality. That relationship does exist but it is not as large as many, including the lay public, believe it to be.

    One of the biggest investments in healthcare is the desire to manage complexity through specialization. That is why doctors spend so much time in school.

    Physical therapy and nursing education is organized the same way except that these programs do not graduate professionals with the only unlimited license in healthcare – licensed to provide care but perhaps unqualified to do so.

    Our belief that the mind of the trained physician is capable of managing the universe of medical knowledge and bring that knowledge to bear in a way that is pertinent to a specific patient makes the physician resort to heuristic shortcuts – for example, routine x-rays for all lumbar spine pain patients.

    On a daily basis, many physicians do not work to the “top of their license”.

    Instead, they spend many hours every day making routine care decisions and treating the lifestyle diseases that I mentioned above. They manage these patient in 15-minute increments. They are incentivized to do this through fee-for-service payments.

    Many of the routine care decisions, especially for chronic conditions, could be better handled by nurses or physical therapists.


  11. NPs already have authority in Florida to script meds, yet costs keep going up.

    There goes your myth that nurses will save money on healthcare. In fact they usually raise costs becasue they refer anything thats more complicated than strep throat to a specialist like an ENT surgeon which greatly increases costs.

  12. Oh come on, thats a joke. NP programs are 100% online and their clinical “trianing” consists of nothing more than shadowing.

    MDs get over 20,000 hours of clinical training during med school and residency. During residency they actually have to take care of patients without any attendings in house. NP students NEVER come even close to that level of responsibility during their so-called “training”

  13. Or this illustrates how unnecessary a lot of healthcare consumption is: None of it affecting the outcome, and none of it paid for out of pocket by the patient.

  14. Mr. Smith,

    Thank you for expressing your OPINIONS so eloquently…. your level of sophistication and modesty are inspiring.


    The blogging nurse

    P.S. There IS evidence that Advanced Practices Nurses have outcomes similar to those of MDs despite the difference in education. Perhaps this is due to the vast amount of RN experience that most APRNs have prior to obtaining their Master’s degree. APRNs are not trying to replace MDs and are aware of their scope of practice.

  15. You’re right – nurses here in Florida have had legislation in Tallahassee for 16 years that would lower costs by giving them additional prescriptive authority and allow them to work unsupervised in retail clinics treating sore throats, bad backs and ankle sprains.

    The legislation never even makes it to committee because of powerful lobbying and entrenched self-interests (one legislator is an orthopedic surgeon).

    The FMA and various specialty groups are trying to protect their volume rather than find better ways to deliver care.

    As for imaging and drugs – no thanks. Physical therapy, exercise and behavior modification is the first, best choice for over 90% of activity-limiting spinal and extremity pain syndromes.

    Simple screening techniques and prediction rules can identify pathology in those 10% that actually NEED physician care.

    Drugs and imaging have their place – that place is probably AFTER other, less invasive and expensive methods have been tried and failed.

    Tim Richardson, PT

  16. Chiropractor or Physical Therapist: Either way an expensive way to wait it out.

  17. Wait until they get burned by the white envelope with the green border. Guidelines are mistaken for standards of care. They are not. Therer will be plenty of hostility.

  18. This is garbage; NPs have literally 1/4th the training that real doctors get, and there’s absolutely ZERO evidence that they are more “cost conscious” than doctors.

    In fact, NPs are more likely to refer patients to expensive specialists than doctors are, thus driving up costs considerably.

  19. Well Tim Richardson PT certainly isnt biased. It just so happens that the physical therapists he represents want the SAME AUTHORITY TO ORDER EXPENSIVE IMAGING TESTS AND PRESCRIBE EXPENSIVE MEDICATIONS THAT THE DOCTORS DO. Imagine that.

    What a joke. We have a physical therapist on here telling us that doctors order too many tests. IN the same breath, his lobbying organizations are trying RIGHT NOW to get state legislatures to certify physical therapists as “primary care providers” SOLELY because that means they can order the same imaging tests that doctors do.

    Dont piss on my back and tell me its raining, Mr Richardson

  20. I’m the blogging physical therapist and, like the blogging nurse, I don’t see cost-consciousness in my cold, dark corner of healthcare.

    I see physicians practicing according to predictable patterns like routine lumbar x-rays for non-radiating lumbar pain.

    I see routine MRI and neurosurgical referrals prior to physical therapy for uncomplicated spinal pain.

    I especially see these patterns when the physician owns the x-rays and the MRI to which she refers the patient.

    Yes, I understand I’m biased. I also understand what the evidence says about my small niche of healthcare. Expensive imaging and complex specialty services are vastly overutilized for lifestyle problems.

    I’m encouraged by the Cost Conscious Doctor but I’ll need to see behavior change and not just good intentions from young residents.

    Tim Richardson, PT

  21. Your argument is twisted, illogical and mischaracterizes Krugman’s remarks. First, you state that “MDs are our personal shoppers in the world of health care goods and services.” You go on to acknowledge that your MD may not be cost-conscious because, after all, “she’s in business with overhead and student loans to pay (so I read),” implying that your personal shopper would have you over-utilize medical services for her financial gain; but never mind, you can put your “foot down” and control costs by figuring out which prescribed tests and screenings are superfluous. Give me a break.

    Contrary to your implication that Krugman believes in unrestrained medical care, the whole point of his piece is made when he states that “we can’t maintain a system in which Medicare essentially pays for anything a doctor recommends. And that’s especially true when that blank-check approach is combined with a system that gives doctors and hospitals — who aren’t saints — a strong financial incentive to engage in excessive care. ”

    Contrary to your bald, unreasoned assertion that patients can do a good job at restraining costs, Krugman points out that (1) “America has the most ‘consumer-driven’ health care system in the advanced world. It also has by far the highest costs yet provides a quality of care no better than far cheaper systems in other countries. ” And (2) life and death decisions about medical care “require a vast amount of specialized knowledge,” and “often must be made under conditions in which the patient is incapacitated, under severe stress, or needs action immediately, with no time for discussion, let alone comparison shopping.”

    What Krugman fails to mention is that consumer choice is meaningless without the proper tools, which do not exist.. There is no way of comparing results of various caregivers. This is true for patients as well as insurers, employers, and Medicare. As George Halvorson succinctly put it, “Results are not identical and choices matter. Creating a new health care marketplace based on best care outcomes and optimal care results is entirely possible. It can be done and will be done if the market wants it done and is willing to pay for it.”

    Of course, I am not surprised to find remarks like yours. They parrot the mindless babble of those who have no real solutions to the health care cost crisis, but who have an agenda of destroying Medicare.

  22. As a practicing RN in the acute care setting, I do not witness these cost-conscious doctors you speak of. I find this article refreshing to read and I hope you are right.

    Just last week, I had a conversation with a colleague discussing the fact that it doesn’t seem as though Medical students are taught to consider the financial reprocussions of ordering a “just in case” test. I work in a teaching hospital and Interns, Residents and doctors all the way up the chain of command order test after test. Some necessary, some not.

    As a future Primary care provider (Adult Nurse Practitioner), I was taught the importance of weighing out the cost/benefit ratio of all choices, for the healthcare system at large and the patient alike. Adherence to evidence-based clinical guidelines are also stressed. I hope this will become the norm for all PCPs in all settings, not just in theory.

    I do also think that if Americans weren’t so sue-happy, PCPs (who are humans too) would be less inclined to order every possible test and rely more on judgement than the “what-if” scenarios.

  23. Tim —

    What’s your guess for how long it will take until the surgeons in the not hostile to clinical guidelines group reaches sufficent critical mass to drive the healthcare system generally toward more cost-effective practice patterns and more convergence around clinical outcomes and choosing patients who are appropriate candidates for surgery in the first place?

  24. I recruit and hire surgeons, and I can tell you the younger ones are not hostile to clinical guidelines like the older generation was.

  25. Wonderful!
    Now, if only we can convince Dr. Krugman (Paul, PhD) who writes
    …that it blights the “sacred” Dr/pt relationship to refer to pts as consumers, but we ARE consumers, whether we know it or not, and MDs are our personal shoppers in the world of health care goods and services.

    Not only are patients consumers, it is incumbent on us patients and our doctors to be cognizant of how we spend OPM (other people’s money), whether that OPM is pooled by a private insurer or govt plan.

    I value my doctor’s education and opinion, but she’s in business with overhead and student loans to pay (so I read), and I can put my foot down about one more “just in case” lab test or “why not, it’s covered” screening.

    I sincerely hope this is a growing trend, and phooey on Krugman, who apparently believes in “free” medical care.

  26. If accurate, this is good news indeed, and it’s about time. Better late than never.