Up to one-third of medical treatment does little or no good for the patient [see the end of my blog entry “Slowing the Growth of Medicare and Medicaid Cost”]. Several accounts have recently become available illustrating our healthcare system’s tendency to overtreat. For example, see the Atul Gawande’s article at
or the radio program available at:
Why do doctors order treatments that don’t benefit their patients? There are at least four reasons:
1. Profit seeking – Doctors spend their long medical education learning how to treat patients. Our fee-for-service payment system then gives doctors a strong incentive to use this training and provide additional services. Medicine is slowly changing from a healing profession to a business. Read the Gawande article.
2. Ignorance – In many cases, doctors don’t have adequate knowledge about the cost-effectiveness of different treatment options. Without clear guidelines, they often will, in good conscience, order the procedures they are trained to provide that earn them the most income.
3. Patient demands – Patients often ask their doctors to treat ailments for which there is no cost-effective treatment. They sometimes demand treatments that their doctor knows are not likely to be effective. These requests are more likely when a patient has insurance and doesn’t have to bear the cost. Doctors often have a difficult time saying no, especially when their income increases if they give in.
4. Malpractice lawsuits – To protect themselves from malpractice lawsuits, doctors may order additional tests and treatments.
The best way to reduce healthcare costs and improve the quality of care in the U.S. is to change doctors’ incentives so they will stop ordering ineffective treatments.
I will devote the next blog entry to discussing the last two reasons listed above and will argue that, while they are important, they are not a primary cause of the high cost of healthcare. Profit seeking and ignorance are the primary causes of over treatment.
Actions to reduce ineffective treatments
A. Improving Payment Methods and Encouraging Self-Monitoring by Groups of Doctors
Dr. Arnold Relman has written a book, A Second Opinion, and many articles, e.g.,
in which he argues that medical costs in the U.S. will be reduced and patient outcomes improved when more doctors start practicing as salaried members of privately-owned, multispecialty groups. The Mayo Clinic is probably the best known such group. The cost of care at the Mayo Clinic during the last six months of life is half the cost of such care at, for example, the UCLA medical school. Several group practices similar to the Mayo Clinic exist around the U.S., including the Cleveland Clinic, Kaiser Permanente, the Billings Clinic and the Health Group in Seattle, and all have been successful in lowering costs. For a video examining these groups, watch
As a salaried member of a group practice, a doctor’s income depends less on ordering unneeded treatments and he has more opportunity to discuss and coordinate care with his colleagues.
Making group medical practice the norm will take many years to accomplish. In the interim, two intermediate steps should be taken now.
1. Accountable Care Organizations
Doctors in an area should organize into “Accountable Care Organizations” (ACO). ACO’s would hold regular meetings at which the member doctors review how medicine is being practiced in the local area and provide feedback to doctors who are either overtreating or undertreating their patients. The ability to review local practice standards would be facilitated by the widespread use of electronic medical records. The formation of ACO’s could be encouraged if Medicare and private insurance companies shared part of any cost savings with hospitals and the doctor members of ACO’s.
2. Increase the use of “capitated” payments and “bundling” of payments
Medicare and private insurance companies should move away from fee-for-service payments and pay part of a patient’s care with a single yearly payment to the group of doctors providing his care (“capitation”). With part of a patient’s care covered by the fixed payment, reimbursement for routine tests and procedures could be reduced—reducing the incentive for extra treatments. “Bundling” of payments would provide hospitals and doctors with a lump sum in advance to provide care for a particular medical condition. “Bundling” would encourage doctors and hospitals to improve quality since repeated treatments or readmissions to the hospital would not be reimbursed.
B. Providing Doctors with Better Information about Treatments
For a surprisingly large number of illnesses, doctors currently have inadequate guidelines about the most cost-effective treatments. Prostate cancer is a good example. Many treatments for prostate cancer are available, including radical prostatectomy, several types of external radiation, brachytherapy (radioactive seed implants), and “watchful waiting.” The cost of these treatments varies enormously—from very little for “watchful waiting” to over a hundred thousand dollars for newer types of external radiation treatment. For early stage prostrate cancer, no consensus exists on whether one type of treatment is any better than another type.
Another example of our failure to provide doctors with adequate information is medical devices (e.g., defibrillators and artificial hip joints).
Healthcare costs in the U.S. could be significantly reduced by funding more research on the effectiveness of different treatments and by giving doctors clearer guidelines on which to base their recommendations.