Report: Physicians tighten belts when they see prices
A recent report has shined light on the relationship between costs and patient engagement, highlighting the frugality of consumers when they are provided information on the cost of treatment. Results from a clinical trial were published in the Annals of Surgery in September that found that parents of children with appendicitis were nearly twice as likely to choose a less-expensive surgery when shown prices before the operation.
The families of 100 children with uncomplicated appendicitis were split into two groups and shown videos discussing both open and laparoscopic appendectomies. Only one of the groups was shown prices for the procedures. Afterward, patients and families picked one of the two surgeries. In children of healthy weight, there is no difference in outcomes between the procedures.
Of the group that saw the pricing information, 65% chose the open technique; as opposed to 35% of the group that did not get cost information. The median hospital charges were $1,554 less for those who had the open technique than for those that used laparoscopy. Almost all of the families appreciated the opportunity to have input on the choice and 31% of those in the group that saw the fees listed cost as their primary reason for choosing open surgery. The families chose the less-expensive option regardless of their insurance coverage and income levels.
"Medicine is often regarded as this magical part of our economy where patients can't make any choices," Eric Scaife, a study author from the University of Utah Health Sciences, told the New York Times. "With a bit of information, I can choose my cell phone even though I don't understand how it works."
The impact on physicians
Knowing the cost of services doesn't just keep prices down with patients. It may work with physicians as well.
Last year, physicians at Johns Hopkins Health System wanted to test if cost would affect physicians' treatment choices. Hopkins researchers chose 61 tests that included some of the most frequently-ordered labs and others that are commonly ordered, but expensive. They monitored physicians for six months in their normal practices without the knowledge of the costs.
Then, for another six months, they provided the Medicare allowable fee data to one group of physicians. The other carried on as normal. They found an 8.5% decrease in physician orders, most often for the reflexive, but not always necessary tests: the frequently ordered, inexpensive labs like CBCs and basic panels. In the control group, where there was no cost increase, the number of tests ordered increased by 5.6%. Overall, there was a net reduction in charges of almost $500,000 in six months.
Part of the problem is that no one, save a few choice people in a hospital, are aware of what treatments actually cost. A January 2014 study published in Health Affairs queried orthopedic surgeons regarding the amount their hospital pays for 13 commonly used implants. The 500 surgeons were graded on a curve—if they were within 20% of the actual price the guesses were considered correct. Still, the attending physicians only estimated correctly 21% of the time and residents did so 17%.
Many of the physicians knew they lacked knowledge in this area and rated their awareness of device costs as low. At the same time, more than 80% of the respondents did say that cost should play an important role in the process of selecting devices.
Push for transparency
Price transparency has been a focus of health reform, but remains elusive among most providers. But it will become more important to providers because it is increasingly requested by patients. There are a host of resources online including the Healthcare Blue Book, insurance companies' pricing tools and state sites that have tabulated insurance information to provide general pricing information.
A TransUnion survey from late 2013 questioned the role that cost plays in patient healthcare experience. One of the questions asked respondents to rank the importance of various qualities in how they choose providers. Making it easy to see the cost of services upfront got the second highest ranking right after having world-class specialists and technology. Price ranked above proximity to home and high quality scores.
"We're never trained to think about a cost-conscious, high-value approach to medical care," said Leonard Feldman, an author of the Johns Hopkins study in an interview about the research in Johns Hopkins Magazine. "Doctors just tend to order whatever they want without thinking about it. That's probably not the best way to practice medicine, but it's been part of the culture for decades and decades."
- The New York Times Given Choice, Parents Pick Cheaper Medical Procedure for Children