Want to help fix health care? First you have to care about costs.

An excerpt from How Physicians Can Fix Health Care: One Innovation at a Time.

I’ve studied lots of industries. In general, cost and quality compete on equal terms. Some companies emphasize cost, others quality, but both are always in the picture.

And then there is health care. Uniquely among industries, health care has evolved with minimal attention to cost. Forces of cost constraint have historically been so weak as to be irrelevant. With fee-for-service reimbursement and with most patients paying only a small fraction of the incremental cost of each service, only payers have had the incentive to try to control costs. Most have struggled to intervene productively, and many have simply passed as much risk as possible onto employers.

I don’t enjoy being the bearer of bad news, but that era of obliviousness to cost has definitively come to a close. We can mourn its passing, but we must move on.

Cost matters.

Want to help fix health care?

First you have to care about costs.

***

I want you to be part of the solution. I want you to innovate to fix health care. On the other hand, I’m pretty sure that you didn’t choose medicine as your profession because you were keenly interested in solving abstract macroeconomic problems such as the burden of escalating health costs on the federal budget. So here are some motivators that perhaps will hit closer to home.

For starters, you might choose to care about costs because you care about your patients. Among the many screening questions you ask, how often do you ask your patients whether they are concerned about their ability to pay their medical bills, or even to refill their prescriptions? Even when the Affordable Care Act is fully implemented, many patients will have insurance that leaves a substantial financial burden on their shoulders. Are you doing patients any favors if you lessen their back pain but simultaneously render them unable to pay their rent?

That’s a direct connection between cost and the overall well-being of the patient in front of you. In most cases, however, the connections are less immediate and more diffuse. Indeed, it may feel like the only clear and immediate benefit of cutting costs might be to fatten some large organization’s bottom line or to make a tiny dent in the Medicare budget. Seen that way, money is a filthy commodity. It is a number, devoid of any human virtue.

What if, however, we viewed money through a longer-term and broader lens — and not as an end in and of itself, but as an intermediator between real human choices? It may be helpful to pull out of the world of medicine for a just a moment to the simpler world of personal finance. A quick example: Much of my income comes from self-employment — from traveling and giving speeches and workshops about innovation. In good years, I have been faced with the happy problem of having more opportunities than I could fulfill. I was confronted with the question Just how hard do I want to work?

I never found it very helpful to ask: “Will my family be happier if I earn X more dollars this year?” That’s too difficult a question to answer. It’s just a number on a tax return. Instead, I found it helpful to ask questions on the other side of money. “Will my family be happier if I’m away from home a bit more, but we can go on a longer vacation?” Or, “Will we be happier if I’m away from home a bit more, but we save more and reduce the odds that my wife and I will ever become a financial burden on our children?”

So what’s on the other side of money in health care? One innovation I studied — a simple one, but one that required the formation of a new kind of team — saved roughly $400,000 annually. That’s just a number, and not a huge one in a $3 trillion industry. On the other hand, it’s a number that’s easy to convert to a human scale. It’s enough to pay for health insurance for nearly 50 average Americans. That’s 50 people who no longer have to worry about the possibility of an illness forcing a choice between treatment and personal bankruptcy.

And, honestly, how can you put a price on that?

A wasted dollar is not a triviality for someone else to worry about. It has real consequences. It makes health care more expensive for everyone. It increases the number of uninsured and underinsured. It squeezes budgets everywhere. It reduces what individual families can direct to good living, what governments can spend on education or infrastructure, and how much businesses, both small and large, can invest in growth and job creation.

A wasted dollar does harm. It is not as obvious or as direct as the harm you might inadvertently cause with, say, a misdiagnosis, but it is every bit as real.

One physician I have spoken with is deeply engaged in the cause of innovation in health care delivery and likes to talk about developing an ethic of conservation in medicine. To me, such a principle dovetails naturally with a more familiar one: First, do no harm.

Chris Trimble is an adjunct professor, Tuck School of Business, Dartmouth College, Hanover, NH.  He is the author of How Physicians Can Fix Health Care: One Innovation at a Time. Reprinted with permission from the American Association for Physician Leadership.

Image credit: Shutterstock.com

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