Physicians need to be more cost aware

I had lunch with my old college roommate last week. She’s a new grandmother and was telling me about her daughter who lives in another state.  Her daughter is self pay because she and her husband own a restaurant and have opted out of insurance due to the cost.  She received her hospital bill in the mail and she was surprised at the cost of some of the items.  As she looked through her bill, she saw some items that she wasn’t even aware that she used.  In my county, 20% of our population is uninsured and these charges are important.

What if this was her scenario?

Doctor:  Hi Ms. Kim, so glad to see you.  I see that you are here to have your labor induced.  Welcome to our hospital.  We are going to use something to help get your cervix ready.  You have 2 choices – we have something that costs $12.00 and we have something that costs $810.  They work pretty similarly.  I kind of like the $810.00 one, but you’re paying for it. Which one would you like?

Patient:  Gee Dr. Greene.  I think I would like the $12.00 one if it’s all the same.  You see, I’m self employed and we can’t afford health insurance so we’re self pay. I would prefer to pay $12 over $810.00.

Doctor:  That’s great.  I’ll see you in the morning on the labor floor.

Next day:  The labor and delivery goes well and a healthy baby boy is born with Apgars of 9/9.

Doctor:  Now Ms. Kim, we’re going to draw a little test on your baby’s cord blood to make sure he is as healthy as he seems.  His fetal heart rate looked good during labor and his Apgars are great, but sometimes we just like to do things to “make sure”.  It only costs $225.00 for you, but it’s a good test for us doctors to do.  It just makes us feel better and it’s what we have always done here at our hospital.

Patient:  Gee, Dr. Greene, the baby is crying and looks really good.   If it’s all the same to you, I’d like to pass on that.  I can probably use that $225.00 to buy him diapers and food and such.  But thanks for thinking of me.

Doctor:  That’s great Ms. Kim.  Now we’re going to send you over to postpartum.  You had a few stitches and we’ll have pain medicine and ice packs and some other lotions that you can use.  You can ask for whatever you want.  We have witch hazel pads, a nice spray lotion and some foam.  The foam costs $155.00 and we use over 200 of these a month around here so I think it’s a good product.  We’ll bring all of them to you.  That way you’ll have all of them even if you don’t need them.

Patient: Gee Dr. Greene, I think I’ll try some ice and Advil first. I did that with my first baby and I was fine. Like I said, I have to pay for all of this myself and I really don’t want anything that I don’t really need.

Doctor:  Sure, Ms. Kim.  We’re here to provide the best care ever.

The scenario above is pretty much true – all except for the fact that we physicians do not typically know the costs of these items and we often do not consider cost when we write an order.

In Greenville County, where I live, nearly half of our residents are either uninsured or have insurance but have to postpone medical care because of cost. Most of the uninsured are employed, but many aren’t offered insurance at work, while others have access to coverage but can’t afford it.

I am working on a project to increase cost awareness among OB/GYN physicians.  Through this project, I believe that we can identify products, services, and tests that are unnecessary, and if eliminated, will not decrease the quality of care. I know that I can do better.  And maybe, just maybe, Ms. Kim will leave the hospital with more money to spend on her baby.

Lauren Demosthenes is obstetrician-gynecologist. This article originally appeared in Costs of Care.

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  • Johanna Kremberg

    Welcome to Veterinary Medicine!

  • Homeless

    So what do you do when your hospital patient is unconscious? Not provide care until all prices are approved?

    • Tisburygirl

      Really, this article is talking about a planned event where things are discussed prior to it happening. And it’s also not talking about emergency care

  • portia chalifoux

    In a hospital setting, it’s critical to get all of the key players to the table: materiels management director (she who price/volume/delivery schedule negotiates with vendors/suppliers), registered nurses who are key product user influentials, and patients who have been product users or who are in a population of likely product users, hospital marketing director to translate the actual cost/markup to a transparent price list (good luck with that as hospital competition is a driver for obfuscation and opaqueness) and accounting administrator/CFO. The Institute for Healthcare Improvement website has a plethora of successful models, research, evidence and algorithms to help initiatives such as this one.

  • JPedersenB

    Very true!. iThe medical industry needs to do a lot better with cost consciousness. Too often, when a doctor is queried about cost, the answer is a shrug or “i don’t know.”

  • Michael Rack

    An alternative scenario:
    Patient: “Why are you telling me the cost of everything? Are you saying that I should get second class care because I am not as rich as you are? Are you trying to imply that I am going to skip out on my hospital bill? You doctors are so greedy…”
    Overall, I agree with the author, and I am sure she is sensitive when discussing costs with patients (as I am also).
    Michael Rack, MD

    • JPedersenB

      I seriously doubt that anyone would accuse a doctor of being greedy because the doc was trying to save the patient money. What ususally happens is that the MDs are not aware of cost and so do not consider the financial consequences for their decisions on behalf of the patient…

      • RJones

        It should not be legal not to disclose every penny, unless the patient is incapacitated, and in an emergency status.

    • RJones

      Disclosure, disclosure, disclosure. It’s never an incorrect approach.

  • Chad Bonhomme

    Portia’s comments are exactly right. We have implemented this strategy in our pacemaker/defibrillator negotiations. However, I must say that the most significant barrier for us in doing this was the purchasing manager trying to protect turf. Unfortunately, the other confounding factor is that the mechanisms of accounting within hospital networks are quite rudimentary. The ability to quantitatively assess operations is just so poor. For example, with pacemakers, much of the “cost” actually occurs on the back end in ease of management within the device clinic post-implant rather than $100 here or there on the purchase price. This is where a multidisciplinary approach needs to be embraced.

  • Dave Miller

    This article portrays what I consider to be the reason insurance has driven up the cost of health care. Because insured patients aren’t exposed to the cost of health care, they are much more likely to agree to doing anything and everything because it doesn’t cost them much more than a more stream-lined approach that is more inexpensive. It’s the self-pay patients who are highly motivated to do only what is necessary and cut costs wherever it is safe to do so.

    If all patients “had some skin in the game,” through a Health Savings Account, for example, then costs would be controlled to a certain extent. While it wouldn’t solve every problem, it would go a long way.

    One of the problems with this approach, however, is that health care has been viewed as a right for so long that folks don’t like to think about the cost of it. It’s a right so we need to get it, regardless of the cost (which we rarely have to pay directly anyway). Add class envy (as Dr. Rack pointed out) and it creates a really bad situation where even the incentive for cost savings is threatened. Afterall, if “those rich people” are getting something, then so should I! Especially if I don’t have to pay for it.

    We’re all very comfortable with the economics of resources. Indeed, there are only so many apples at the supermarket and we only have so much money available to spend on them. As a result, I believe that we need to get away from viewing health care as a right and back to viewing it as a resource, a limited and [only somewhat] fungible resource. This kind of thinking might help motivate us to actually access the system more wisely and want to control costs at both the physician and the patient level.

  • RJones

    I am always shocked at the lack of financial disclosure from hospitals. Whenever I see my billings, whether covered by insurance or not — there are multiple pages of charges for things I know I didn’t use. That’s not right.

  • RJones

    The system is rife with fraud and lack of financial disclosure. Those two major problems go hand-in-hand with why costs have skyrocketed out of control.
    … the age old phrase “If I ran my business this way, I’d be out of business” certainly applies.
    Patients should be looked at as consumers. Unless they are incapacitated, or in an emergency status, every penny of their care should be disclosed, at each step of the way. I realize that there must be steps as things change, but disclose, disclose, disclose.
    It’s the only way to proceed.

  • southerndoc1

    One test x twenty insurers x fifty docs = 1000 different prices. Then factor in deductibles, co-pays, cost-sharing percentages, secondary coverage . . .

  • lissmth

    It is nearly impossible to find out what a procedure costs. “We’ll know after it goes through insurance” is the common reply. When one has a $10,000 deductible policy, cost matters. For the agreement an insurance company has with providers, a $500 procedure would be allowed at say, $250. Once the insurance company tells the provider the allowed price, then the provider has to bill the patient. If he’s a little slow that month, the provider has to bill him again, and again. All that activity is not inexpensive. Why can’t he just pay the $250 and turn bills into insurance when he reaches $10,000? It would be so simple. But the government wouldn’t have details of our most personal information. That data collection was authorized in HR-1, the Stimulus bill.

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