Study: Unnecessary health spending fueled by low-cost, low-value services
Low-cost, low-value, high-volume health services contribute the most to unnecessary healthcare spending, according to a new analysis published in Health Affairs.
Researchers analyzed 2014 data from the Virginia All Payer Claims Database of 44 low-value health services and found more than $586 million in unnecessary costs.
Low-cost, low-value services result in nearly twice as much money — combined — as high-cost services, according to the study.
Reducing low-value services is seen as a way to cut healthcare costs, but usually that discussion focuses on expensive procedures and tests. Researchers in this study found cutting low-cost services can add up in terms of savings and wouldn't be as controversial within the industry as reducing high-cost services.
The researchers found the most costly unnecessary low-cost services included baseline lab tests for low-risk patients having low-risk surgery; stress cardiac or other cardiac imaging in low-risk, asymptomatic patients; and annual EKGs or other cardiac screening for low-risk, asymptomatic patients. Lab tests for low-risk patients having low-risk surgery cost more than $227 million in unnecessary costs, according to the data.
The study authors acknowledged that reducing low-value, low-cost services will require changing physician practice patterns, but even a modest decrease in those services would create savings. Minor actions by clinicians “can have a sizable impact on reducing unnecessary healthcare spending,” according to the report.
The authors suggested reducing low-value, low-cost services would also not be as “politically charged” as reducing the more high-profile services that are of lower value.
“A focus on reducing low- and very-low-cost services is likely to be less controversial than a policy that targets high- and very-high-cost services because the former strategy would not present a financial threat to any particular clinical specialty or advocacy group,” they said.
Of course, any reduction of services will mean less funding for providers and hospitals. They’re already feeling squeezed financially because of lower reimbursements, fewer inpatient stays and payer policies that look to cut costs, such as Anthem’s new imaging policy.
If healthcare is going to reduce the low-cost, low-value services, payers may need to incentivize hospitals by finding methods that don't involve providers losing out on reimbursements, or which includes making up that funding in other areas. If that isn't accomplished, health systems will be looking for ways to recover that lost revenue elsewhere. That has already become a common theme in healthcare, however, and some organizations may be running out of ideas.