How to Cut Health Costs in One Easy Step
Policy + Politics

How to Cut Health Costs in One Easy Step

iStockphoto/Nicolas Loran

In a six-month study, researchers found that offering upfront price information decreased overall use of diagnostic tests by roughly 9 percent, saving hundreds of thousands of dollars.

“There’s a lot of waste in medicine because we don’t have a sense of the costs of much of what we do,” says Leonard S. Feldman, assistant professor at the Johns Hopkins University School of Medicine.

Hospitals typically keep both patients and providers essentially blind to the cost of medical services, contributing to the astronomical cost of health care in the United States, researchers say.

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“There’s no other area of our lives in which we don’t even think about costs,” says Feldman, leader of the study published online in JAMA Internal Medicine. “If one test costs three times what another does and provides basically the same information, that’s a pretty easy decision. We need to give that information to those who need it, and we really have done a disservice to society by having our head in the sand about costs.”

Feldman and colleagues identified 62 diagnostic blood tests frequently ordered for patients at Johns Hopkins. Dividing the tests into two groups, they made sure over a six-month period that doctors knew the prices of one group when they ordered the lab tests. They left out price information for the other tests.

When they compared ordering rates to a six-month period a year earlier when no costs were disclosed, they found a nearly 9 percent reduction in tests when the cost was revealed as well as a 6 percent increase in tests when no price was given. The net charge reduction was more than $400,000 over six months.

“Our study offers evidence that presenting providers with associated test fees as they order is a simple and unobtrusive way to alter behavior,” Feldman says. “In the end, we ordered fewer tests, saved money and saved patients from extra needle sticks without any negative outcomes.”

Much of the savings came from simple comparison shopping. For example, the price of a comprehensive metabolic panel—a blood test that checks fluid and electrolyte status, kidney and liver function, blood sugar levels, and response to various medications—was $15.44. A basic metabolic panel, which checks many of the same things but not liver function, was $3.08 cheaper.

During the study, comprehensive metabolic panels ordered fell by roughly 8,900, and basic metabolic panels grew by about the same number. That cost shift alone saved more than $27,000 over six months.

“It’s like getting practitioners to switch from a $3.50-a-day latte habit to a cheaper $1-a-day cup of regular coffee,” says Daniel J. Brotman, associate professor of medicine and the study’s senior author.

The study also found a decrease in orders for a common lab test called a complete blood count with differential, a test that gives basic information about blood cells with extra data on white blood cells. Prices of both the CBC with differential ($1.35) and CBC ($9.37) were revealed to ordering physicians, enabling them to make fully informed choices about which one to order.

While the number of CBCs with differential dropped, the number of CBCs did not rise proportionally. Providers typically order a CBC every day a patient is in the hospital. Feldman says he thinks that seeing the prices listed convinced some doctors that less frequent testing would be sufficient.

In the study and an earlier one looking at price transparency in MRIs and other imaging tests, the researchers also found that the most expensive diagnostic tests continued to be ordered regardless of whether price was noted.

Brotman says that’s likely because these are often very specialized tests without cheaper alternatives, providing information vital to a diagnosis. That type of test typically only needs to be ordered once per patient per hospital stay.

Changing ordering patterns for smaller-ticket lab tests will likely make more difference long-term, says Brotman, director of Johns Hopkins’ hospitalist program. “The total cost of cheaper tests dwarfs the cost of expensive tests, which are ordered less frequently.”

There is no “one-size-fits-all” formula for diagnostic tests, Feldman says. When a patient comes into the hospital with an unclear diagnosis, it may make more sense to order five blood tests at the same time, even when some of them may ultimately prove unnecessary. In the long run, it is less expensive to run more tests to get a quicker diagnosis than to have someone rack up bills in the hospital while waiting for that diagnosis.

The research was funded, in part, by the Johns Hopkins Hospitalist Scholars Program.

This article originally appeared in

Source: Johns Hopkins University.