When shopping, people tend to search for the best deal with the greatest value. But when it comes to receiving health care services, why is the price tag never a clear part of the discussion?
After TIME Magazine featured the report “Bitter Pill: Why Medical Bills Are Killing us,” Cleveland Clinic CEO Dr. Toby Cosgrove argues that one potential cause of out-of-control healthcare costs may be that doctors often have no idea how much medical procedures actually cost. He argues that by informing doctors about the specific costs of health care procedures, doctors may try to find more cost-effective alternatives.
And in a new study by Johns Hopkins published in the journal, JAMA Internal Medicine, researchers showed that informing doctors of the cost of tests, services, and supplies they use actually can lead to hefty medical savings.
The researcher split physicians into two groups over the six-month experiment to see if showing the tests prices would change a physician’s decision about services. One group was given the tests with prices on them, while the other group’s tests did not have a price.
The researchers compared the buying behavior of the physicians and found that showing the pricing information resulted in a 9% cut in use of the tests overall and a savings of over $400,000 over the six months. By comparison, there was a 6% increase in the use of the tests without pricing information over the same time period. Read More…
The researchers say the savings can be largely credited to the simple principles behind comparison shopping.
To challenge this theory, CEO Dr. Toby Cosgrove decided to make it a point to deconstruct the costs of their top three procedures, record the price of sutures, the number of instruments uses and record how long patient’s spend in post-anesthesia care.
“Take, for example, nitric oxide, a drug commonly used in heart, lung and chest surgeries to keep tissues well-supplied with oxygen during the operation. When it’s effective, it’s very effective, but it doesn’t help all patients. When we realized we were spending $2 million a year on the drug, we drilled down to see who was using it and why.
We found that doctors and OR staff did not have a standard protocol to guide them on when and how much to rely on nitric oxide; we had to educate them that if the drug didn’t work within a half hour of being administered, it won’t work at all, so repeated doses were wasteful. The result: nitric oxide use dropped by half, saving $1 million without any adverse effect on patient care,” Dr. Cosgrove said.
When his team saw where they could easily cut costs, they made a goal to save $100 million in a year by focusing on what and how they use equipment and supplies they purchase. Within a year, they topped their $100 million goal and after three years have saved $155 million.
And while it’s crucial that quality of health care services always comes before price, it is equally important to realize that even the smallest cost saving practices create a monumental difference in our costly health care system.
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