If Doctors Lead, Will Health Care Costs Follow?

Can doctors and other health care providers be the driving force in achieving cost-effective health care? In their commentary in the New England Journal of Medicine, Stanford professors Victor Fuchs and Arnold Milstein, call this the “$640 billion question.” That figure represents the savings to the national health care bill if all U.S. physicians and health care organizations could follow the example of individual providers who already deliver high-quality care at a costroughly 20% lower than the average.

The authors ask “Why don’t cost-effective models diffuse rapidly in health care, as they do in other industries?” The answer, according to Fuchs and Milstein, is that a long list of stakeholders has interests that are effectively blocking the “diffusion of cost-effective care.” These include drug and medical device-makers who tout their new, more expensive products as always better than older (and cheaper) alternatives; insurance companies with high administrative costs; employers who offer just one or two benefit plans to workers; legislators who accept donations from health industry insiders, academic health centers that tolerate cost inefficiency as the price of training residents; and others whose vested interests keep them from fully embracing cost-effective care.

The media is also to blame, write the authors, by publishing articles that tout miracle cures and treatments to boost newsstand sales and failing to convey risk/benefit information accurately.

Trying to cut health care costs has often been compared to squeezing a balloon; pinch the air out of one end and it will fill up the other. Or as the Canadian economist Robert G. Evans recently told a Group Health audience, “look carefully at so-called ‘waste’ in the U.S. health care system. ‘Nothing is ever wasted… Every dollar ‘always goes somewhere, which is what makes it so difficult to bend the (cost) curve.’ In other words, one person’s waste is another person’s income.”

Of course physicians have their own interests that keep them from embracing cost-effective care—including a reluctance to give up “autonomy,” pressure from patients to treat and the clear financial benefits of “doing more.” But, Fuchs and Milstein insist that fundamental payment reform is politically infeasible without strong support from doctors:

“There is not much that physicians can do directly to change the behavior of insurance companies, employers, or other stakeholders, but physicians are the most influential element in health care. The public’s trust in them makes physicians the only plausible catalyst of policies to accelerate diffusion of cost-effective care. Are U.S. physicians sufficiently visionary, public-minded, and well led to respond to this national fiscal and ethical imperative? It’s a $640 billion question.”

How can physicians lead this charge?

As we know, changing the culture of medicine is a formidable task. But one practical first step is to make both physicians and patients more acutely aware of how much care actually costs. Bob Wachter, writing recently on the Healthcare Blog, gives the example of a “neat little study” presented at the Society of Hospital Medicine’s annual meeting in May by Lenny Feldman of Johns Hopkins:

“Feldman randomized 62 tests either to be displayed per usual on the computerized order entry screen or to have the cost of the test appear next to the test’s name. Some of these were relatively inexpensive and frequently performed tests,” others were more expensive tests that were ordered less often. “The educational intervention was surprisingly powerful,” writes Wachter. “Over the six-month study, the aggregate expenditures for each test whose costs were displayed went down by $15,692, while non-displayed tests had a mean increase of $1,718. Over the entire group of 31 tests whose costs were shown to physicians, costs fell by nearly $500,000.”

This seems promising, and supports other studies that have found similar savings from merely making physicians aware of the costs of interventions. At Rhode Island Hospital, for example, an announcement was made weekly to all surgical staff and attending physicians tallying the costs of laboratory services charged to non-intensive care unit patients. After 11 weeks of these regular announcements, charges for unnecessary daily blood drawing went down by a total of $55,000. In a commentary accompanying this studyin the May issue of the Archives of Surgery, A. Benedict Cosimi, a surgeon at Massachusetts General Hospital, compares the routine—but unnecessary—blood testing of hospital patients (particularly in teaching hospitals) to the “bloodletting” that was practiced in ancient times.

He commends the authors of the Rhode Island Hospital study, adding, “I believe that such simple, low-cost, and readily repeatable interventions provide one of the most easily applied strategies for influencing clinicians’ test and medication requesting behavior.”

Cosimi mentions an effort at his own unit to make doctors more aware of the “10-fold difference in cost between essentially identical medications (eg, ciprofloxacin vs levofloxacin).” Once patient charges for these and other commonly ordered medications were posted at unit work stations, there were major changes in prescribing behavior toward more economical choices.

Cost-reduction efforts like this are becoming more common across the health care universe and studies like the blood test effort in Rhode Island point to their potential. But Wachter wonders, “Have we found the Holy Grail, the key to flattening the cost curve? A little physician education leads to increased awareness of the cost consequences of their choices and, voila, our economy is rescued from the brink of disaster. How nice.”

As you might have surmised, Wachter is not convinced that physicians alone will be the driving force for cost-effective care. He cautions; “Before we get too ecstatic, it’s worth reflecting on the long, sobering history of cost reduction efforts in healthcare.” This includes past efforts dating back to the 1970’s that were chronicled recently by Steven Schroeder, Distinguished Professor of Health and Health Care at UCSF (and Wachter’s mentor), “ranging from reducing the ‘pro-technology bias’ of our payment system, to training more generalists and fewer specialists, to giving physicians information about the costs of care.”

“That’s right,” observes Wachter, “in JAMA in 1984, Schroeder and colleagues reported the results of an educational intervention designed to sensitize residents to the costs of their care. Combining lectures on costs with chart audit and feedback, they found a slight reduction in the use of a few selected laboratory tests like the PTT, but no overall impact on costs. The effort was a bust.”

“Schroeder’s bottom-line message is sobering,” writes Wachter. “While he applauds the fact that we are now trying several new strategies (curbing fraud and abuse, using electronic health records, paying for performance) layered on top of the traditional ones, it seems naïve to assume that these latest efforts will be any more successful than their predecessors.”

What will make a difference is going to be politically more difficult than “sensitizing” providers (and consumers) to the cost of care; it will require payment reform that takes into account the inherent value of interventions—whether they are beneficial and cost-effective. Here is where doctors can be leaders. Because of their often enhanced standing with patients, they can play an important role in communicating the difference between “inherent value” in health care and the dreaded “rationing”;  the latter simply referring to restricting the use of any intervention, regardless of its effectiveness or value.

As Fuchs and Milstein put it; “the public’s visceral distrust of policies aimed at improving the cost-effectiveness of health care can be neutralized only by their confidence in what their physicians support.”

Gaining this confidence will require physicians, group practices and hospitals to be cognizant of more than just the itemized costs of tests or interventions. According to a recent article on “High-Value, Cost Conscious Care” in the Annals of Internal Medicine, “the cost of an intervention should include not only the cost of the intervention itself but also any downstream costs, defined as costs that occur as a result of the intervention.”

The Annals piece gives several examples of how downstream costs figure in determining the cost-effectiveness of a particular intervention—including the case when a more expensive initial choice of treatment leads to savings in the future. One such example is the use of anticoagulants in patients who have a heart condition known as non-valvular atrial fibrillation. The cost savings achieved by avoiding strokes in those affected far outweighs expenses associated with the drugs and necessary regular visits to the doctor for monitoring. On the other hand, write the Annals authors, “Routine imaging for low back pain is expensive in part because it may lead to subsequent treatment costs from invasive procedures, including surgery” further downstream.

Of course, decisions about cost-effectiveness are not always cut and dry. Physicians and policy-makers will sometimes have to yield to ethical imperatives when faced with expensive but questionably effective interventions. An example of this is the $93,000 prostate cancer drug Provenge that Medicare recently agreed to cover that extends the life of patients an average of just four months. As Jim Kling writes in Medpage, “The definition of value can also vary from one patient to another. A dying patient with cancer may consider the high cost of an intervention to be worth the expense, and in the United States, it is politically unacceptable to put a price tag on the few additional months of life that such a patient might receive from an expensive treatment.”

To truly realize savings in health care we must combine real-world knowledge about the price of medical tests and interventions with comparative-effectiveness data. It isn’t going to be easy and it is definitely going to be controversial. Just look at the growing and vocal opposition to the Independent Payment Advisory Board, a group that would issue recommendations to Congress for reducing Medicare spending. (IPAB, notably, is prohibited from ever recommending changes that would result in “rationing,” or before 2020, recommending changes that would reduce provider payments.)

As to Fuchs’ and Milstein’s $684 billion question, I think physicians can—and must— play an important role in the “diffusion of cost-effective” care. But I also agree with Schroeder’s more realistic view that, “In the long run, reining in costs will require mobilizing political forces that can withstand the inevitable claims of rationing sure to come from the industries currently benefiting from the 17% of the economy spent on healthcare, and from consumers who have come to expect unlimited access to what they feel they need.”

With the passage of the health reform law the stage seemed set for this mobilization. But as the current maddening battle over the budget crisis has revealed, those political forces willing to make significant steps towards reining in health care costs while braving the stigma of “rationing” are as yet treading softly. A populace effort–led by physicians–might very well speed the diffusion of cost-effective care throughout the system; but breaking through the current barrier of vested interests will be a tough first challenge.

Naomi Freundlich writes for the Century Foundation at the HealthBeat project. Prior to joining the Century Foundation, she served as Science and Medicine Editor at Business Week from 1989 – 1997. Her work has appeared in numerous publications, including the New York Times, Business Week, Real Simple and Parents magazine.

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  1. I ran an experiment to see how much I alone could potentially save my patients with a single month of extra attention toward cost. The results were surprising, supporting the grand numbers mentioned above.


    Note that the piece’s writing style is not typical for me, as it was for an essay contest.

    There is no doubt in my mind that health care providers (and patients themselves) can make a huge difference in global medical costs.

    One of the greatest obstacles is not emphasized above–time. It takes extra effort to attend to cost, as it is an additional layer of complexity to a person’s care. Health care providers barely have time to adequately render the care itself. Where will the extra time (to better address costs) come from?

    Stephen Meyers, MD

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