Are Your Health Cost Savings an Illusion?

flying cadeuciiThe New England Journal of Medicine carried an excellent article by David Casarette, MD, on the topic of health care illusions and medical appropriateness. Click here to read the full article. Hats off to Bob Stauble for a heads up on this article.

Casarette observes that humans have a tendency to see success in what they do, even if in truth there is none. Casarette writes, “Psychologists call this phenomenon, which is based on our tendency to infer causality where none exists, the ‘illusion of control’.” This illusion applies in all walks of life, especially in politics and parenting, and it includes medical care as well.

In medical care, the phenomenon has been referred to as “therapeutic illusion“, and it impacts both doctors and patients. Undoubtedly, therapeutic illusion is why placebos can so effective.

In one clinical study, faux surgery worked as well or better than an actual surgery for the treatment of specific conditions. If patients perceive they need surgery for a procedure, e.g. for knee pain, even though it may not be medically appropriate, some will search for a surgeon who can validate the need and perform the surgery.

Casarette further writes, “…physicians also overestimate the benefits of everything from interventions for back pain to cancer chemotherapy.” Of course, that’s simply a form of confirmation bias.

Casarette’s article is most interesting to us. Why? We’ve often felt that doctors who perform unnecessary surgeries have ethical problems. The reality is that it may be a little more complicated than that. When you throw in confirmation bias, the surgery decisions may have a subconscious influence.

The attention today is on value-based contracting and data analysis. A group of 20 national employers have come together to share data, so they can assess the healthcare supply chain. As noted in our last blog post, analyzing big data is complex, especially since claims data are just a collection of medical bills. How are employers assessing medical appropriateness? What reports can be generated to assess a need for care?

As we know, price X volume = costs. Medicare generally has more aggressive discounted prices than commercial plans, but there is still significant cost variation – in 2014, one states’ Medicare costs was $6,631 per capita while another was $10,610. A big driver – variation in volumes.

Toomey had an interesting conversation with the Chief Medical Officer (CMO) of a major health system. He relayed that his wife was having pain in her hand, so they scheduled an appointment with one of their system’s highly recommended specialists. The specialist looked at the wife’s hand, and after a few minutes, he stated that she needed surgery. Since the specialist did not know he was a physician, the CMO questioned how the specialist could arrive at a diagnosis from just looking at a hand, and the response was, “based on his years of experience.” They got a second opinion and opted for the recommended therapy instead, which solved her issue.

Healthcare involves people – patients, physicians, and other providers, and the human element makes it even more complex. So how do those involved in healthcare address the variation in medical care that is driving up costs? We are biased – we believe the employers are the catalyst to drive change for increased consistency by working collaboratively with suppliers (think six sigma). It’s time for change.

Tom Emerick and David Toomey are founders of Thera Advisors. Their focus is to help employers maximize their role as the purchaser of healthcare services in working with suppliers to impact their population’s health and to lower costs. 

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  1. Everyone tends to find the solution in what they get paid for.

    I watched a fascinating story on “60 Minutes” about the effectiveness of placebo and faux operations. I am still a little suspicious of placebo solving real mechanical issues such as the need for knee or hip surgery when x-rays show there is a clear problem. However my last choice is always surgery until I’ve exhausted other rational solutions. I never take a doctors first diagnosis as I have found it usually wrong.

    “we believe the employers are the catalyst to drive change for increased consistency by working collaboratively with suppliers (think six sigma).”

    I disagree with this as employers look for least cost, and quite frankly price controls are the only measure that will eventually get our health costs down as has been proven in other industrial countries.