A real-life example of irrational health care spending

This week at work, I had a patient in the hospital who had been through a pretty challenging illness, and he was going to have to be discharged to a skilled nursing facility (SNF) to rehab for a few weeks. Sadly, SNFs in my area do not currently allow any visitors due to the pandemic. The patient is very close to his daughter, who lives out of state, and she was flying in the next day to visit him and lend support in his challenging time.

Unfortunately, he was ready for discharge to the SNF now, and upon hearing my discharge plans, the family requested we keep him in the hospital until he could see his daughter. Because she would be arriving late afternoon the next day, it would be too late to send him to the SNF that day, so he would be stuck in the hospital an extra two days so that he could see his daughter for a few hours.

It is a perfectly reasonable request, right? But what am I to do when I get a request like that? What is the socially responsible thing to do? If I assume that every day spent in my hospital costs at least $2,000, I am left judging whether $4,000 of society’s money is worth spending on this brief visit from the patient’s daughter.

As all these things were going through my mind, I gave them my response: “Sure.”

Maybe that is an irrational use of society’s resources, but it is a rational response to the situation. As a physician, I am often asked the be the incidental steward of society’s limited resources.

And I face experiences like this every week at work. Actually, I would contend that thousands of these illogical spending decisions are happening every day across the health care system.

The issue at play here is this: The people making decisions about health care purchases are not the people directly paying for it.

But what if Medicare patients were required to pay even just a portion of the $2,000/day cost of staying in a hospital? Of course, not all patients could afford it, so there would have to be a policy to account for that, but let us focus for a moment on the people who could afford it. Suddenly, the conversation with that family changes quite a bit.

“Can you keep him in the hospital two extra days so he can see his daughter for a few hours?”

“Sure, I’m happy to do that. Medicare requires patients to pay 50 percent of the cost of each hospital day though, which means it’s costing him $1,000 per day to keep him here, so you need to decide if it’s worth paying $2,000 extra for him to see her for a few hours.”

Maybe the doctor is not the right person to have that conversation, but I hope the point is clear: When the people making the purchase are directly bearing at least a portion of the cost of that purchase, the utilization of resources becomes more rational.

In my Healthcare Incentives Framework, I focus so much on removing the barriers to people bearing at least part of the cost of their health care purchases for this very reason. And the way there starts with changing insurance plan designs and enabling patients to obtain price information upfront.

Taylor J. Christensen is an internal medicine physician and health policy researcher. He blogs at Clear Thinking on Healthcare.

Image credit: Shutterstock.com

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