Prices should be readily available to save hospitals money

Hospital costs are out of control. We have an aging population living longer with more complicated presentation of disease. We have an insurance driven platform instead of a health driven accountability. The long term sustainability of that architecture is one of guaranteed insolvency.

One way or another hospitals are going to find their lifeline cut off. Medicaid is bankrupt. Hospital profit margins from Medicare have been negative for almost a decade. In addition, the rapid rise in private insurance premiums and industry’s gradual but accelerating exit from the health insurance benefit market all tell me that hospitals must find a way to reduce the cost of providing care.

There are many ways hospital costs can be reduced. Administrators are paid handsomely to make it happen. Either they do or they don’t succeed. Either they survive the coming Armageddon of hospital funding or they don’t. The hospitals least able to reduce their expenses in a market of decreasing payment will fold and other hospitals will become too big to fail. You want to be too big to fail. That’s the goal. If you can survive the coming tsunami, you will be saved and bailed out when you are the only one left standing.  That is what history has taught us.

So, how can hospital costs be reduced? One way is to educated physicians as to the cost of daily hospital labs.  Back in 2009, I wrote a post about the hospital costs associated with drawing routine daily blood tests for hospitalized patients.  Some studies suggest up to 70% of daily lab draws are unnecessary.

Why do physicians order so many blood tests?  I have no idea.  The one question I always ask myself with every single order is “Will this data change how I manage my patient?”  If the answer is no, I do  not order the test, whether that test is a lab an echo an x-ray or an MRI.  To have data for the sake of data is one reason why hospital costs are spiraling out of control.

As an internal medicine resident at an academic institution, I was heavily exposed to the academic nature of doing stuff for the sake of  educational curiosity.  We had physician mentors who focused on  their own cubicle of esoteric research that had no relevance to patient care.  They were expected to teach us clinical medicine.

As a resident, not once was I ever exposed to the idea that hospital costs have any part in the medical decision making for my patients.  It was never brought up.  It was never stressed.  It was never taught.  It was never a part of the educational experience.  To this day, I have never heard, not even once, how much anything  I order on my hospitalized patients cost.

But we live in a different world than even ten years ago where health care funding is rapidly deteriorating while deficits sky rocket.  At some point either hospitals close or patients pay more.  If you are a physician and you want to save your hospital, it is your responsibility to stop creating unnecessary hospital expenses that drive up labor costs and resource utilization.  The days of reflex medicine must come to an end. If your hospital shuts down, you will find yourself at the mercy of a single hospital with all the bargaining chips and too big to fail.  That’s what you do not want.

So physician, educate thy self.  Make yourself an asset to the hospital rather than a liability.  Ask your hospital for the cost of all your routine daily labs and other common expenses your orders set in motion and have them post it nearby on every floor of every unit.  If you have an EMR, comparison of costs before and after education interventions would be seemless.  Heck, if possible, displaying the cost of every single lab order in a physician order entry system, I suspect, could do wonders to control resource utilization in patient care.  Many of my orders and interventions are labor intensive to carry out.  If you’re a hospital, publish your physician resource utilization numbers and let your doctors compare themselves against their peers.  This is a powerful motivator for doctors.  Nobody wants to be seen by their peers as being at the bottom of the ladder.

Duonebs four times a day on pneumonia patients are not necessary and requires the hiring of further  respiratory therapists to meet the need.  Ordering daily CBC requires a phlebotomist to be present.  If you order one on everyone, your hospital must hire more phlebotomists.  Are you ordering a daily chest x-ray on someone with pneumonia?  Stop.  It is not necessary and your radiology department may have to hire more technicians.

All of that comes out of your hospital’s bottom line.  If you knew how much all your orders were costing your hospital, would you change your mind?  The research suggests that you would, even if you don’t want to admit it.  In the May 2011 Archives of Surgery, weekly notifications to attendings and house staff of the total cost of lab for the prior week for all nonintensive care unit patients  resulted in a 30% reduction in lab utilization costs.  After 11 weeks, almost $55,000 was saved, with daily phlebotomy expenses dropping as low as $108 a day from $147 a day before the intervention.

I can’t even imagine how much money we could save at Happy’s hospital if the physicians at my hospital knew how much everything they ordered was costing the hospital that provides the privileges for them to take care of patients.  If your hospital costs cannot be controlled by all means possible, they are going to fail.  And you’ll be left to see patients at a hospital with all the bargaining chips.

At  Happy’s hospital, we recently asked for, and received, the public price charged to patients without insurance for multiple types of routine hospital interventions.    This information should be readily available at all hospitals.  You just need to ask for it.  While I knew hospital care was a lot, I was still floored by the cost charged to the uninsured.   Granted, these are the cash price for patients without insurance.   The actual hospital cost incurred of providing the service to the patient is unknown.  And for the sake of conversation, I would reduce the published hospital price by at least 50-70% for the true hospital cost of providing that service.

Regardless of the actual cost incurred, these expenses add up.  Day after day, week after week, month after month, tens of thousands of patients a  year.  How many unnecessary CBCs were ordered?  How many needless echos in 95 year olds did we do?   How many follow up chest x-rays did we perform that made no difference in clinical management?  The answer is too many.  Here are Happy’s hospital charges for commonly ordered hospital interventions:

“Happy Hospitalist” is a physician who blogs at at his self-titled site, The Happy Hospitalist.

Submit a guest post and be heard on social media’s leading physician voice.