Doctors should know how much lab tests cost

Doctors should know how much lab tests costAccording to a recent study, providing physicians with the cost of lab tests cut costs.

As reported by the WSJ’s Health Blog,

A new study finds that simply making physicians aware of the cost of regular blood tests cut the daily bill for the tests by as much as 27% … At the beginning of the program, the daily cost per non-intensive care patient was $147.73. Over the 11 weeks of the study, that dipped as low as $108.11, in the eighth week.

It’s important to note that there was no pressure on doctors not to order expensive tests. Only the price of the test was provided.

Often, physicians have no idea how much tests cost. The opaqueness is in part due to a multitude of insurers and facilities charging different prices.

But we live in the year 2011 folks. It should not be difficult, especially with electronic medical records, to bring up the price of a test based on the patient’s insurance and preferred laboratory facility.

This is a problem on the hospital side of patient care as well, and was recently addressed in a piece asking whether hospitalists should be better informed of the price of the tests they are ordering.

When talking cost control in health care, we’re at a political standstill debating contentious issues like end of life care and Medicare funding.

Instead, we’d be better off with ideas like providing doctors with better price transparency. That’s lower hanging fruit.

Kevin Pho is an internal medicine physician and on the Board of Contributors at USA Today.  He is founder and editor of, also on FacebookTwitter, and LinkedIn.

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  • ninguem

    To the extent that we’re getting any price transparency at all, it is because of consumer-directed healthcare, specifically, HSA’s.

  • Guest

    HSAs help people know the cost, but usually only after they’ve been charged. Most people don’t have any idea what’s a fair price for the services received either.

  • AustrianSchool

    There’s little incentive to cut costs in our system in which neither the physician nor the patient is paying the bills.

  • Accountable Care Technology

    Dr. Pho, you are exactly right! As you know, medical school is a place where students learn how to apply the latest medical techniques and diagnostic technologies to care for their patients. There is little if any discussion about the cost of care or the business of medicine.

    This is unfortunate. I truly believe that physicians would make more financially-informed decisions if they knew that expensive test A provided less total value than inexpensive test B. Aligned incentives would help, too, but absent those arrangements, I still think physicians would practice more cost-effective medicine if they had the necessary information presented at the point of care.

    There are a few technology companies working on sharing this information with physicians, but it all requires payers to adopt a new spirit of transparency and physicians to be willing to learn a little more about the business side of medicine.

    Anyway, good post.

  • Dr Sam Girgis

    Personally, I think that this is a great idea. As a hospitalist, I often order tests, labs, and radiological evaluations without thinking of the price tag. I think this would definitely decrease the cost of hospitalizations, and the overall cost of medicine in this country in general.

    Dr Sam Girgis

    • horseshrink

      According to the Institute of Medicine, one of our basic priorities in the practice of medicine is stewardship. While I agree with this philosophically, learning and implementation of this is not simple.

      For example, how motivated am I to practice resource stewardship while simultaneously worried my next patient may sue me?

      Why should I worry about this anyway? Third-party payers are paying the bill. And I’m too busy dealing with the misery created by those third-party payers as they awkwardly impose their own brand of pseudo-stewardship.

  • soloFP

    It is amazing the price differences in something as simple as a UA. If you use the network UA lab, it is often free. The out of network lab price ranges from $15-$25. Lipid panels are $113 at a local lab, whereas the going HMO rate is $12. Chest x rays at local hospitals are $200 a pop, while independent centers with faster turnaround times can do them for $40. CTs of the head same day at my local hospitals $2,000 a pop, but only $400 at an independent center. It save the patient a lot of money to shop around.

    • horseshrink

      There is limited incentive to interject usual market considerations into the relationships between doctor, patient, and procedural providers so long as somebody else is picking up the tab.

      If a magic wand suddenly made all third-party payers vanish, the cost of various procedures would become a routine, necessary item for discussion and negotiation.

  • MD

    Certainly the costs of tests would make some physicians think twice before ordering, as this study showed. Seems to me like many tests are ordered by physicians for fear of medical malpractice litigation however. Wonder what would happen to the cost of medicine if you told physicians you could not get sued? That would be an interesting study!

  • Buckeye Surgeon

    Yes, just add one more mindless, rote task to the daily activity schedule of a physician. Put the onus of responsibility on individual physicians to “shop around” and find the most cost efficient facility for a CBC to get done. That makes perfect sense—the one who does all the legwork stands to gain absoluetly nothing. Why not also make doctors accountable for where patients buy gas. Or make us check a box on reimbursement forms indicating that we did due diligence to find the cheapest CT scan location within a 10 mile radius for our patients. Come on, man. First they tell us that it’s “illegal” for doctors to have any entrepreneurial stake in hospitals or lab facilities. Now you say that the optimization of how private health insuirance company’s dollars get distributed ought to rest on the already leadened-down-in-paperwork shoulders of doctors????

    • family practitioner

      I agree.
      The only criterion for ordering a test should be is it necessary or not. If yes, order it. If not, don’t. If we feel it is necessary but the patient thinks it is too expensive, then they need to decide to follow our advice or not.

      • EK

        Family Practitioner, that seems overly simplistic to me. I’ll bet some of you don’t like it when patients take a flip attitude about what you cost them and decide not to pay you because you are a doctor and therefore rich.

        I’m not a doctor, but isn’t it sometimes a bit of a gray area when it comes to if a test is needed or not? There are always differences of opinions. For example, I’ve got a OB/GYN doctor that wants me to do the BRACA testing ($$$$) because of a breast cancer history in my family. I had my mother ask her well-respected oncologist about it. She said, “What would it change?” My mother’s cancer was not that agressive and so I’m not inclined to do preventative masectomies/ oophorectomy and I already plan to watch carefully for it. I’m new to this city and the doctors in my old city were much less inclined to just reflexvily order tests.

        Financial health is important to patients too and I agree that it should be easy for you (and me!) to find out costs. If doctors aren’t at least willing to participate in this conversation (and I really appreciate the ones that do), we are in trouble because you are mostly the ones navigating the system. In the end if the system is unsustainable, aren’t you just as screwed as the rest of us?

        • family practitioner

          This sort of agrees with my point.
          Your doctor presumably thought a BRACA test was necessary and ordered it. You thought it was too expensive and chose not to get it done.

          I do acknowledge that my prior comment was simplistic. I also agree with you that BRACA testing is probably not indicated.

    • Primary Care Internist

      yes and we should only see one patient per day.

      those directly using (ie. patient) and directly paying (ie. insurer) should play the money game. the doc’s job is to decide if the test is indicated then give the patient a rx for the test. everything that happens in between, most docs do not want any part of. that’s what clerical staff are for.

  • pcp

    The original post was about in-patient lab work.

    I don’t see how this would work in the out-patient world. Each insurer has negociated different fee schedules with each lab and rad facility, and I can’t access that information.

    • EK

      Maybe it wouldn’t always have to be exact to be helpful. It would be interesting if the labs were required to put out the range of prices charged for their services. This way doctors could see what the best negotiated rate was and what the highest possible charge was. It would at least be a start. It is a problem that you can’t access that information easily.

  • Marc Gorayeb, MD

    Physicians should not be required to keep up with (1) the costs and (2) the actual charges associated with tests. It is inefficient and misses the point. The costs and actual charges should be provided directly to patients UP FRONT by those who set them or bill for them. Un-obfuscated price transparency with the ultimate consumer should be an ethical requirement of all providers of medical services and products. There are many actors right now who don’t want that to happen, including providers, hospitals, manufacturers, insurers, and even the government.

  • Su

    It’s startling to realize that test costs are obscured at all. It seems that it price list for a test menu would be standard issue. Of course, doctors don’t want to base their decisions on cost, but there’s no reason it shouldn’t be part of the equation.

  • Jim

    During my school’s microbiology course, we used a case-based program (created by faculty) that listed costs for each test we could order – I thought it was a great idea. The natural competitiveness of medical students can be exploited this way to hopefully train “stingy” test orderers.

    Unfortunately, it didn’t catch on.

    • Disillusioned Citizen

      Yep, at my medical school we also had cost-based tests in cases. Nobody cared a bit about buying everything on there. Money wasn’t an issue.

  • horseshrink

    Had a very wise old general practitioner as one of my attendings during the Family Medicine portion of my internship in 1988. The bulk of his practice career occurred before managed care. Simple lessons I learned from him persist still.

    One story I remember… At the bedside, he challenged us to justify a usual, knee-jerk, reflexive arterial blood gas on a particular patient by asking us fundamentally unfamiliar questions, e.g., what’s it going to tell you that you don’t already know from the physical exam? Do you have any idea how much one of those tests costs? Do you have any idea how uncomfortable that test is? … So, are you really going to order this expensive, painful lab test to tell you something you already know?

    He also had another strange saying. “Hospitals are bad for people… Get them out as fast as possible.”

    My next lesson came in private practice. I hadn’t paid attention to medication costs until I started having patients who weren’t filling their prescriptions because they couldn’t afford them. Finally, at that point, my prescription pad met financial reality, and if I was going to be useful to my patients, I had to learn to live in that reality.

    Though third-party payers are critical financial risk buffers, they have also insulated doctor and patient from financial reality. Since neither doctor nor patient wish to put the reins on that financial reality, the “evil” third-party payers are left with the task.

  • imdoc

    So, if the need exists for price transparency and price shopping, why doesn’t some business model exist to supply this? There are market agencies for every other product and service in the economy.
    I am thinking mis-aligned incentives and powerful opposing stakeholders…

  • Kathy

    I think it would be great, on two fronts. I have had doctors kick, scream and wail over ordering tests that would have cost nothing. I now have a chronic disabling disease that would not have done nearly so much damage if a doctor had simply ordered about $200 in follow up tests for positive test results about six years ago. The hundreds of thousands of dollars resulting from cheaping out ….

    By the same token, I have had doctors order insanely expensive tests with almost no (low cost) work up to make sure that they were really appropriate. I don’t pay for labs, so it’s no skin off of my nose, but there are many instances where a more thorough exam, patient history or basic bloodwork could save thousands. I have had some docs INSIST that I use a certain facility because it was convenient for them. With a price difference of $6000 vs $350. Guess how they are paying for those nice “free” golf trips doc.

    There is a limited “pie” for medical costs. If doctors are spend happy on tests and the latests, most expensive med, guess who is going to get cut — doctors. This is why your reimbursement rates keep getting worse and worse. That’s reality. In a very real way, you are spending YOUR money when you order a $3000 blood test for no good reason.

  • Sebastián Defranchi

    The complexity and increased costs of medical practice evoled in such a way, that has became a need for any doctor to know about expenditures. We are the ones dealing with patients everyday and I think that knowing about the costs we are incurring make us more consious about our decisions. This should not interfere with patient care, that I believe should be the priority of every healthcare professional.

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