Medicare reimbursements are declining, and hospitals are scouring the books looking for ways to cut costs. They’re also looking for new allies, new thinking, and new technologies to help.
DOCTORS DON’T KNOW AND DON’T CARE ABOUT COSTS? THAT’S HALF RIGHT.
Having been in healthcare for over 20 years, I have heard many times from many people that “doctors don’t know and don’t care about the cost of healthcare.”
Like many things that we hear over and over, we begin to believe they are true. In this case, it turns out this one actually is true. Well, at least it’s half true.
The data will surprise you
Two recent studies have found that doctors know very little about cost. But that same research has also confirmed that, contrary to the popular narrative, doctors actually do care about cost.
Recently a study was published in Health Affairs where 503 orthopedic surgeons and residents at Duke University, Harvard University, the University of Maryland, Mayo Clinic, the University of Pennsylvania, Stanford University, and Washington University in St. Louis were asked to estimate the costs of thirteen commonly used orthopedic devices.
Here’s the part that was really interesting. If their response was within 20 percent of the actual cost (a pretty large variance), the answer was considered to be correct. What’s shocking is that even with that buffer, physicians were correct only 20 percent of the time. In other words, as stated above, as it relates to cost, doctors don’t know.
So, this leads to the second part of the headline, ‘Do doctors care actually care about cost?’ In the same study referenced above, those same doctors were asked whether they thought cost should be considered in the decision making process for devices.
Eighty percent said ‘yes.’ It turns out they do care.
And that isn’t an isolated data point. Last year, Bain & Company conducted a survey and asked 502 physicians a similar question – do they agree with the following statement, “I feel it is part of my responsibility as a physician to help bring healthcare costs under control.”
Incredibly their response was identical to the first study – 80 percent of physicians agreed that they were responsible for keeping costs under control.
So, two different studies of over 500 physicians with the same conclusion – physicians do care about cost.
Doctors won’t do anything with the data, right?
The concern I hear many express is that while physicians say they want the information, they won’t do anything with it. It turns out this one is wrong as well.
Two studies provide data points that counteract that argument.
The first, published in JAMA Internal Medicine, was conducted at Johns Hopkins University. Physicians were presented with cost information on order sets via their electronic health records at the point of care in real-time. During the study, the test group saw a 10 percent reduction in test order volume translating to over $400,000 in incremental savings versus the control group where cost information was not presented.
And, surprisingly, it doesn’t matter if cost data is provided in real-time, while the decision is being made, or retrospectively. A second study, conducted at the University of Miami and published in Archives of Surgery, took a retrospective approach.
In this study, a weekly announcement of the dollar amount charged to non-intensive care unit patients for lab services during the prior week was sent to surgical house staff and attending physicians. In this case they saw a 25 percent reduction in the dollars charged per patient per day for routine blood work.
Taken together, these two studies reach the same conclusion – if you provide cost information to physicians, they will take action and drive down cost.
A $2 trillion opportunity
It has been estimated that doctors control 60-80 percent of the cost of care with the decisions that they make: medications, devices, hospitals, whether to pursue surgery or therapy, etc. As our healthcare spend as a nation is fast approaching $3 trillion per year, this would mean physicians control roughly $1.8 to $2.4 trillion of that spend. And they do it with no information on cost.
Clearly there is an enormous opportunity to change the game regarding the cost of healthcare, but it will require providing physicians with not just the clinical information they need to make better decisions via an EHR, but the cost information they require via advanced financial decision support solutions, specifically advanced cost accounting applications.
They don’t know about cost, but they want to know. They do care about cost and they will take action if we provide them the information.
And everyone will win when they do.
Written By Dan Michelson, Chief Executive Officer of Strata Decision Technology