Better Value Care Requires Physicians to Know Costs
The fiscal field on which hospitals operate remains, ironically, unfamiliar ground for many of the players that shape its terrain—namely, the clinicians. Though generally aware of the cost implications of care decisions on a qualitative level, for reasons that almost certainly relate to Hippocratic values and the traditional separation of clinical care and cost concerns, the coarse economic details of hour-to-hour decision-making are kept at arm’s length. This disconnect translates into an economic no man’s land, where a chasm exists between the physicians who run hospitals and the executives who must ensure their fiscal survival. Further, it almost certainly contributes to the growth in national healthcare expenditures, since the performance of tests and studies whose marginal benefits are outweighed by their costs translates into wasted resources.
One simple example of this inefficiency is the paradigm of the routine blood tests performed on hospitalized patients on a near-daily basis.
The practice of routinely drawing patients’ blood in the morning to perform lab tests is as commonplace to the hospital as the physical exam. These blood draws almost universally include two tests, a complete blood count (CBC), which consists of a composite of the patient’s white blood cell count, hematocrit and platelet count, and a basic metabolic panel (BMP), which reports serum concentrations of sodium, potassium, chloride, bicarbonate, blood urea nitrogen, creatinine and glucose.
These tests, among others, are invariably ordered at the time of a patient’s admission to the hospital, but the practice of repeating them on each of the following days is the rule rather than the exception. Though the insight that these lab tests initially provide can be invaluable to patient care, their repetition often fails to be useful. Indeed, the prevalent use of “routine” blood tests and lab studies undoubtedly translates into a significant waste of time, personnel and equipment each year.
To make the problem more concrete, consider that Quest Diagnostics charges patients $55 for a BMP and $30 for a CBC, totaling $85 for both tests. Though their production infrastructure differs from that of a hospital, it is a reasonable starting point from which to draw conclusions. Adjusting for the difference between charges and costs, the marginal cost of these tests—which includes tangible components such as vials and needles, the labor of the phlebotomist and laboratory technician, and physician time spent on interpretation—likely falls somewhere between $1 and $10. A hospital with an average occupancy size of 500 patients each day and a “routine” blood draw rate of 100 percent would save anywhere from $50,000 to $500,000 by reducing their rate by merely 25 percent.
The case for checking “routine” labs, which is similar to the case for ordering low-yield imaging or diagnostic studies, is predicated on the worry that important information could be missed in their absence. The historically risk-averse medical field and longstanding concerns about medical liability catalyze these beliefs. Though the latter stands as a separate and important issue of its own, the former is easily debunked with a simple thought experiment rooted in the most basic of economic principles. If the burden of physically performing blood draws were placed on physicians and not phlebotomists, the number of lab tests performed would almost certainly fall. This decline would be led not by high-value tests, but rather by a drop in the number of low-yield tests that would otherwise be ordered. In economic terms, tests for which the marginal benefit of the information reaped is outweighed by the costs would not be pursued. Efficiency—or something close to it—is achieved in this scenario by placing the burden of the test on the physician and not the phlebotomist.
The underpinnings of any solution to bridging the gap between cost and value must bring clinicians closer to the divide. Simple measures—like even educating physicians further on the costs of various laboratory and imaging studies that make up the bulk of clinical care—would begin to address this issue. Left unaddressed, efforts to rein in high and rising healthcare costs will continue to be inadvertently undermined.
The opinions expressed in this column are not necessarily those of Harvard Medical School, its affiliated institutions, or Harvard University.