Doctors are the true consumers of health care dollars

With computerized health systems, physicians can place orders as easily as they can shop online at Just a few clicks and your physician can purchase a panel of blood tests, futuristic imaging and diagnostic procedures that will hopefully guide their path to solving your ailments.

Search. Click. Submit. Repeat.

Except, unlike online shopping, physicians don’t see the price tags and they never get the bill. Doctors are the true consumers of health care dollars, but the rules of economics falter when the consumers aren’t the ones that pay up. This disconnect is a fundamental cause of the uncontrollable inflation of health care costs in the US. Ignorance about cost fuels spiraling inflation in healthcare because without cost-related restraint in utilization there is no incentive for suppliers of healthcare services to get any cheaper.

But the system’s stuck. While physicians ultimately control the tap of healthcare costs, exerting that control can contradict their primary objectives. Physicians feel a responsibility to do the most they can to make the patient in front of them better. If young doctors don’t order a test, a superior may berate them for not considering it in their differential. Malpractice always lingers as a consequence for a diagnosis missed. Some claim that it is irresponsible or unethical for physicians to consider cost in their clinical decision making. Perhaps good doctoring should be blind to finances. And after all, it’s no skin off the doc’s back to just click a little more, some of that money may even end up back in their own pockets.

Despite all these pressures pushing physicians to just do everything imaginable, many realize that physicians also have a responsibility to balance the health of the individual and the health of the community. No matter how much we try to ignore it, health care is a limited resource and giving more to one inevitably means less for another. In Cooke’s 2010 NEJM article on cost-consciousness in medical education she writes, “[We must] stop hiding behind the myth that every physician should and does apply every resource in unlimited degree to every patient for even minimal potential benefit”. The reality is, physicians already dictate how finite resources are allocated in the hospital. Physicians decide who gets how much of their time, who deserves a consult from a specialist and who should be in an ICU bed. Why don’t physicians exhibit the same judgment and restraint for expensive tests and imaging studies? Cost-consciousness at this scale may be beyond human cognitive capacity, especially when competing with disease differentials and medication lists. It’s far easier to count down the hours in the day and notice when all the ICU beds on one wing are full than to be mindful of the obscure strings of digits and commas that represent their health care spending. The finances of health care are far less visible but just as real.

While respect is growing for skyrocketing health care costs, the average doctor is clueless about the price tag of their day-to-day clinical shopping-sprees. In a 2008 review of 14 studies, Allan et al. found that doctors came up with estimates that were within 25% of the true cost of diagnostic tests less than one-third of the time. And, interestingly, they found that the country, level of training, and specialty of those surveyed did not impact accuracy. This tells us a few things: doctors have no idea how much they’re spending for their patients, it’s not just US doctors or super-specialists who are clueless, and most importantly, it doesn’t get better the farther along young docs get in their training. The Chief of Medicine who can diagnose Peutz–Jeghers syndrome from across the room may have no idea how much it costs to do a colonoscopy or a genetic workup for the patient. It’s not just students who are naïve and, sadly, financial insight doesn’t come with time.

For our generation, this deficit threatens to spin out of control. The stakes rise as physicians become capable of doing more and more for each and every bullet point on their differential diagnosis. Immunoassays and genetic tests are available for the obscurest pathologies. Imaging technology can produce increasingly fantastic windows into the human body. But as these options become more numerous and specialized, our grasp on what’s necessary to produce quality care only slips further.

If cost-consciousness among physicians is the goal, how do we achieve it? Competition for doctor’s time and brain-space is fierce. Cooke thinks that health finance should be integrated into medical school curriculum from the start. Educators suggest dual-degrees in business. Researchers have tried post-graduate education campaigns. Hospitals try to intervene with computerized decision-support systems. Insurance companies stall with mandatory pre-authorizations. But few interventions have shown substantial increases in awareness of cost or changes in physician behavior.

Health information technology (IT) may be partly contributing to the ease of over-zealous ordering, but it may also hold the potential to curb it. Two large randomized controlled trials conducted at a large teaching hospital attempted to show that the inclusion of costs in the ordering system itself might increase awareness of physicians and decrease the over-utilization of diagnostic laboratory tests and radiological imaging. Although it was conducted over four months and involved over 24,000 patients, the study showed a statistically insignificant 4.5% decrease in the number of laboratory tests ordered and almost identical rates in the number of imaging studies ordered. The authors concluded that more intrusive measures were needed in order to affect change, like prompts similar to those in decision-support. Price tags alone weren’t enough.

Ultimately, the judicious and cost-effective utilization of limited health care resources remains a physician’s responsibility. They’re trained to make clinical decisions and manage treatment plans but those same decisions dictate the finances of patients and the health sector as a whole. These dual roles are inseparable and increasingly consequential yet the majority of physicians are too unaware or unprepared to meaningfully incorporate financial consequences into clinical decision-making. Any efforts to reform health care policy to reduce costs and spend our health care dollars more efficiently and equitably must start with assisting doctors make better and more informed decisions for their patients. Physicians must wake up to the reality of modern medical practice and start educating themselves about the economics of their patient care methods and they must demand the information when it’s lacking. This will require a culture shift in how medicine is practiced and future generations of doctors are trained. In a world of competing priorities and information overload, physicians will need help. More cost-effectiveness data is needed so that physicians have an evidence base for rational allocation of resources. Health IT, decision-support, payment reform and institutional leadership are all essential strategies to encourage cost-consciousness and appropriate health care spending, but none can be effective in isolation. The tap of health care dollars that threatens to run dry is controlled by thousands of physicians and their daily interactions with unique patients. Only through innovative programs and education campaigns can we reduce the flow of excessive health care spending and help physicians avoid irresponsible clinical shopping sprees and begin to make evidence-based decisions with a broader context in mind.

Ian Metzler is a medical student.

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    I have a question: What influences the costs of the orders themselves? Can an MRI or a colonoscopy possibly get less expensive? You can’t drive down the price of a car much if each tire costs $10,000…

  • Paul Dorio

    Preposterous. Dollars do not “get consumed,” first of all. Second, to suggest that doctors are the consumers because they order the tests that cost those healthcare dollars, is incorrect. 

    Consumer = “One that consumes, especially one that acquires goods or services for direct use or ownership rather than for resale or use in production and manufacturing.” (

     mOtherwise, your point, while a bit wordy, is reasonable: DON’T ORDER A TEST UNLESS YOU HAVE A DIRECT QUESTION AND, THROUGH THE TEST, WILL OBTAIN A DIRECT ANSWER.

    Patients, lawyers, America’s “now now now” culture, Doctors who self-refer, to name several components, are the drivers of utilization of healthcare resources. 

    You can’t possibly suggest that fewer dollars would be spent if doctors just turned off the spigot. While it seems to make logical mathematical sense, the argument is nonsensical and irrational. Doctors don’t just “order tests” because they feel like it. Therein lies the conundrum that defeats your argument.

    But keep trying. As physicians we all need to focus on what we can do individually to improve the system.

  • marc

    This is a good article as far as it goes. But the only way to control health spend is to manage resources according to evidence. Individual physicians cannot act independently to do this. 

  • Michael Judge

    As a graduate student in healthcare administration who happens to have a solo practice PCP for a father, I think this is an interesting point. My father practices in rural America with a fair population of Amish who are by definition self pay (thought this population probably has a higher percentage of payment than the standard self pay demographic). He also has a decent sized group of Medicare patients who utilize Part D and pay out of pocket expenses. He is very cognizant of these patients’ consumerism and makes orders reflective of that understanding. That in turn drives his thinking for commercial insurance patients where his orders reflect similar patient/consumer cost awareness even if they don’t carry the same level of consumerist thinking. In a hospital were inpatients are essentially a “captive audience,” they aren’t true consumers because their choices are limited. A cost conscious physician could only decrease utilization to lower the bill with the way today’s financial dynamics operate. Showing prices of procedures and tests in this environment doesn’t by itself create a facility
    that is the “high quality, low cost” buzz word thrown around today.

    To make greater leaps in the coordinated effort of “bending the cost curve” in healthcare, I don’t think that a cost conscious physician should have to decide between doing this test or procedure or not. The patient must also be involved. The physician and the consumer decide together how to ration their healthcare dollars. As insurance companies and large employers begin to shift more healthcare cost to the consumer/employee, a physician must be able to say that you ought to have this test/procedure and there are many places you can receive this.  Here are the places nearest to you and the cost at each facility. f you are a physician and provide this procedure, make sure yours provides the best quality for the patient’s healthcare dollar! If healthcare can move away from a contracted payment model and move toward a more free market where prices and eventually quality are as transparent as in nearly every other industry, a cost conscious physician won’t necessarily have to cut utilization (and put themselves at greater risk for malpractice or an attending’s wraith). Facilities and providers in competition with one another could actually drive people to their facility with a lower price (and eventually with quality transparency, some type of value measure that combines the two metrics). All parties who are a part of the healthcare system must adjust our thinking away from “Oh, insurance will pay for it” because more and more people will begin reaching into their own pocket first.

    This model allows care to be rationed in coordination by those parties that are most affected by the outcome, the physician and patient. It allows for transparent prices and quality so that “high quality, low cost” providers and facilities can be easily found by both patients and physicians. The patient is more engaged with their care from both a medical and financial perspective which makes for a more productive patient-physician encounter. The real question is, with so many moving parts and massive companies operating in healthcare, how can the market begin to shift the historic way it operates? From my end, as a future healthcare administrator, I am becoming a self-taught expert on time driven activity-based costing in healthcare. A fantastic article can be found in the September issue of the Harvard Business Review. If administrators can determine what amount of cost is truly associated with providing a healthcare service, then a true market price can be established. This must be met with equal reengineered thinking from payors. Creating an equal profit margin across all services will not create the service line preferences to areas like orthopedics which carry a much higher margin than other service lines today.

    The amount of care that is provided today on a truly emergent basis where someone wouldn’t have the ability or time to make this type of decision is significantly overshadowed by the volume of healthcare that is elective or needed but not immediately necessary. If prices are driven by this majority, then emergent care prices would also fall to the prevailing market value. It then creates the spillover benefit that when emergent care is truly necessary, you are still paying for a service that has prices and quality driven by market competition even without the ability to make this choice yourself.

    Are doctors the real consumers of health care dollars? Partially so, but it’s only half the equation. Patients are as well. In combination, they are the real consumers of health care dollars. The doctor orders, and the patient pays.