An experiment in paying through the nose for “unnecessary care”

Rats. Harriet stole what was going to be the title of this post! This is going to be something completely different than what I usually write about. Well, maybe not completely different, but different from the vast majority of my posts. As Dr. Snyder noted on Friday, it’s easy to find new woo-filled claims or dangerous, evidence-lacking trends to write about. Heck, I did it just last week, much to the continued consternation of one of our regular readers and commenters. Examining certain other health-related issues from a science-based perspective is more difficult, but I feel obligated to do it from time to time, not just for a change of pace but to stimulate the synapses and educate myself—and, I hope, you as well—about areas outside of my usual expertise.

We spend a lot of time writing about the scientific basis of medicine, clinical trials, what is and isn’t quackery, and how “complementary and alternative medicine” (CAM) subverts the scientific basis of medicine. However, SBM goes far beyond just that. At least I think of it this way. That’s why I’ve looked at issues that go more to the heart of health policy, which should be based on sound science and evidence. That evidence might take different forms than it does for determining, for example, whether Medicaid results in better health outcomes and by how much health insurance does the same. As is the case with policy issues and economics, conclusions are muddled and messy. The error bars are huge, and the number of potential confounders even huger.

One of the most vexing problems confronting the US health care system is the issue of cost. As has been documented in many places, the US health care system spends more per capita than pretty much anywhere else in the world for outcomes that are, at best, equivalent to those of the health care systems of other industrialized countries. How to fix that problem and “bend the cost curve” downward is the single biggest problem our current health care system faces. The Affordable Care Act (ACA, a.k.a. “Obamacare”) tries to make steps in that direction by emphasizing comparative effectiveness research and finding ways to encourage the use of less expensive treatments that are equally effective and to discourage the use of unnecessary procedures. This is a problem that long predates the ACA.

It’s also a very difficult, seemingly-intractable problem. Part of what contributes to it is a host of practices that are not supported by evidence or science but that continue. A classic example, of course, is the prescribing of antibiotics for viral illnesses. Patients, under the mistaken impression that it will help them, demand it, and physicians, even though they (usually) know better, are all too often willing to acquiesce to their patients’ requests because it’s far easier and takes less time to acquiesce than it does to explain why antibiotics are not necessary. Nor are doctors entirely blameless in this, as we all-too-often hate giving the impression of “doing nothing.”

So what’s the answer? According to this story by Sharon Begley entitled “In healthcare experiment, patients pay more for ‘bad’ medicine” that I saw late last week, it might be behavioral modification:

When Tanner Martin, 17, developed excruciating back pain last year, he was sure he needed an X-ray to find out what was wrong. So was his mother, who worried that the pain might indicate a serious injury that could cause permanent disability.

But Konnie Martin was no ordinary parent. As chief executive officer of San Luis Valley Regional Medical Center in Alamosa, Colorado, she is at the center of an experiment, known as value-based insurance, that could transform American healthcare.

One of the central features of a value-based system is a financial “stick.” If patients insist on medical procedures that science shows to be ineffective or unnecessary, they’ll have to pay for all or most of the cost.

In Tanner’s case, when he and his mother went to the medical center, they were invited to watch a short video first. The best approach to back pain like Tanner’s, it explained, is stretching, strength-building and physical therapy; X-rays and MRIs, according to rigorous studies, are unlikely to make a difference. If they insisted on the X-ray, they would have to pay $300 on top of the basic cost.

They passed on the imaging, knowing they could change their minds if Tanner’s condition worsened. After three weeks of therapy, his back was as good as new.

As you can see from this anecdote that introduces the story and the problem, the basic idea is to make patients pay more if they insist on tests or treatments that, according to science and evidence, won’t help them. The concept seems sound on the surface, but is it? And what is the evidence? The clinical encounter described above came about as a part of a two year experiment by San Luis Valley in what is commonly referred to as “value-based health insurance” or “value-based health care.” It’s nothing new, but with the advent of health insurance and health care reform, health policy wonks have been taking more interest in it.

Not too long ago, Scott Gavura and I wrote about an initiative by the American Board of Internal Medicine Foundation (ABIM) known as Choosing Wisely. It is an initiative in which a challenge, if you will, was issued to professional societies to identify five practices in their specialties that are ineffective and add no value to patient care. As I described, in oncology some of those practices involve imaging for extent of disease in breast cancer (which is very commonly done but has never been shown to improve patient outcomes) and a variety of other practices that are still common in oncology and oncologic surgery. Value-based health care sounds to me like Choosing Wisely on steroids. It could be the logical next step in the progression. Obviously, if a treatment or diagnostic modality has not been validated by science and clinical trials, it doesn’t make sense to pay for it.

The evidence base for value-based health insurance, however, is rather sparse. Begley notes that the San Luis Valley Health experiment only involves 725 covered members and dependents. That’s not an unreasonable number for a pilot experiment, but it’s far from enough to be able to tell whether value-based health care can deliver on its promises. The experiment is going to wrap up at the end of this year, and the data are to be analyzed in 2014. However, at most what will be able to be determined is whether costs are decreased.

One of the experts interviewed by Begley for the piece was Dr. Mark Fendrick, director of the University of Michigan’s Center for Value-Based Insurance Design and a professor of internal medicine. Since the University of Michigan is just up the road from where I work (well, if you consider 45 miles or so “just up the road”), I figured I’d peruse its website and see what it says about value-based insurance:

The basic V-BID premise is to align patients’ out-of-pocket costs, such as copays and premiums, with the value of health services. This approach to designing benefit plans recognizes that different health services have different levels of value. By reducing barriers to high-value treatments (through lower costs to patients) and discouraging low-value treatments (through higher costs to patients), these plans can achieve improved health outcomes at any level of health care expenditure. Studies show that when barriers are reduced, significant increases in patient compliance with recommended treatments and potential cost savings result.

Note that the concept is not just to penalize care that is not scientifically supported but to reward care that is by decreasing barriers to receiving it. For instance, this is one of the studies cited by the University of Michigan. Basically it looked at the effect of an insurance plan reducing copayments for five chronic medication classes, including: angiotensin-converting enzyme (ACE) inhibitors and angiotensin receptor blockers (ARBs); beta-blockers for hypertension and heart disease; diabetes medications (such as oral therapies and insulin); HMG-CoA reductase inhibitors (statins); and inhaled corticosteroids (such as Advair for COPD and other chronic pulmonary conditions). Copayment rates for generic medications were reduced from $5 to zero. Copays for brand-name drugs were lowered 50 percent (from $25 to $12.50 for preferred drugs and from $45 to $22.50 for nonpreferred drugs). All patients in the treatment firm (treatment and control groups were organized by company, not by individual patient) who were already taking any of the intervention medications without a contraindication were eligible for the copay reduction, beginning with their next prescription fill. Copay relief was also available for those who were not taking the medication if they were identified by the clinical alert system as patients who would benefit from the medication.

The study design was temporal, with results examined pre- and post-intervention. For each drug class, people were selected for the sample in a given year if they used the medication within three months of the study year and didn’t have a contraindication for its use or if they were identified as having a clinical indication for the medication but didn’t use it within the previous six months. The overall results were that, compared to another health plan, participants in the plan that decreased its copays for these medications demonstrated reduced nonadherance by as much as 7-14%. Obviously, there are a lot of shortcomings to this study, such as the question of whether the control group is adequate, but it does indicate that there might be merit to this approach. It also suggests that “value-based” health insurance might actually not be the best way to control costs, because lowering the copays actually increases cost, at least in the short term. Whether that short-term increased cost is later compensated for by decreased costs caring for complications of these chronic diseases over the long haul is something that is yet to be determined.

Indeed, according to this recent review, cost savings from value-based insurance designs have been elusive:

While these copay changes to incentivize the use of certain technologies show improvement in some process indicators, they have not yet achieved cost savings.21 For example, the same Blue Cross Blue Shield study found no cost savings.19 Another recent article by Choudhry et al (2011) found no significant difference in costs between a group with no copay for cardiovascular drugs and a group with regular cost sharing.22 The lack of significant cost savings may be due to the short follow-up times in these studies —usually 1 year. More research is needed in the area of cost savings of incentivizing the use of certain services. This will become especially important as the ACA has also required that insurers provide all the USPSTF recommendations free of charge.

In lieu of long-term follow-up, modeling suggests some long-term savings, but these analyses have often focused on raising copays for “low-value” services. For example, the 3 main treatments for prostate cancer vary greatly in their average costs with no evidence that the more expensive treatments result in better outcomes. A radical prostatectomy costs $7,300, brachytherapy costs $19,000, and radiation therapy costs $46,000 on average. Newer forms of radiation treatment can cost close to $100,000 per case, and have not been shown to have any clinical advantages over any of these less expensive options, including watchful waiting. A simple VBID policy would be to modestly increase the cost sharing for these services to encourage more use of the cheapest and equally effective prostatectomy. The authors of the same prostate treatment study estimate $1.7 to $3 billion could be saved directing patients toward the lower-cost treatments.

This suggests another issue. Surgery might be the cheapest treatment for prostate cancer (yes, contrary to what many believe, surgery is often the least expensive option for treating certain diseases), but it is the most invasive and likely to have the most impact on quality of life, with its known complications of retrograde ejaculation and erectile dysfunction. True, radical prostatectomy costs even more if, as is all the rage these days, the da Vinci robot is used. It’s always better with robots, isn’t it? I’m sure Sheldon Cooper would agree—except that it isn’t always. There’s no compelling evidence that robotic prostatectomy results in better outcomes than current laparoscopic prostatectomy. Add to that the problem of overdiagnosis and overtreatment of prostate cancer, which leads to the question of which prostate cancers even need to be treated and even what the very definition of “cancer” should be. The new focus on cost is going to force medicine very quickly to decide how much it values quality of life, because treatments that are effective at eradicating the disease but less so at producing high quality of life are often cheaper.

This is just one example, of course. There are thousands of examples, ranging from common mild conditions to common serious conditions to uncommon conditions. One area, however, where such initiatives might bear fruit and change behavior is by simply hitting doctors and patients over the head with data indicating which treatments do and do not have science and clinical evidence behind them:

The very idea that some diagnostic tests and treatments might not help patients comes as a shock to many Americans.

The Choosing Wisely message is difficult to convey to the many patients who “think that when it comes to medical care newer is better and more is better,” said Dr. Yul Ejnes of Brown University’s Alpert Medical School. “So when patients have more skin in the game (in terms of cost), they’re more likely to ask, do I really need this?”

San Luis Valley Health is self-insured, and the experiment involves only its 725 covered employees and dependents.

The experiment puts medical services in green and red “buckets.” Green is for procedures that should be encouraged because they are cheap and effective, like vaccines. Red is for expensive ones that, research shows, are usually unnecessary, ineffective or even harmful. They include endoscopy for heartburn, surgery for enlarged prostate and the imaging tests that Konnie Martin’s son declined.

Patients (and, unfortunately, a lot of doctors) have a tendency to assume that more care must be better, when in fact often it is not. We here at SBM have discussed how and for what diseases that is often the case many times in the past. On the other hand, policy wonks seem to make a related assumption, namely that “preventative” care will save money, an assumption for which the evidence is at best mixed. The reason is obvious. Preventative medicine costs more and results in more costs treating the diseases and conditions that it uncovers. However, it is not entirely clear that it saves money in the long run through earlier treatment and intervention to prevent the complications of chronic diseases and diagnoses other diseases at an earlier point in their courses. As value-based insurance advocates admit:

It has that potential, although whether the kind of patient targeting VBID proposes saves in long-term costs remains an open question. “Does it make good business sense?” asks Chernew. “It depends on how it is designed. It certainly can. Lowering copayments itself does not necessarily save money, but the programs are designed to make people healthier. We do know that the long-term benefit still requires a comprehensive look.”

Notwithstanding a lack — so far — in established long-term savings, the concept is most certainly gaining favor with large employers, including several members of the National Business Coalition on Health, who are pushing for VBID when they solicit vendors.

That is the crux of the issue, as I’ve mentioned. Will the short term investment yield long term savings? No one knows, and the evidence is mighty sparse. However, it’s another truism in medicine that it’s not possible to wait for perfect data. We have to make the best judgments we can with the science and data that exist now, hopefully making adjustments as new data and science are reported.

Another issue that comes up is the perception of fairness. Communication is the hard part. Consumers love carrots like reduced copays, but they aren’t particularly fond of sticks (like making them pay much of the cost of “unnecessary” tests and treatments out of pocket in addition to their existing health insurance premiums), so to speak, which are perceived as punitive, even if employed in the service of “encouraging” patients and practitioners to use more science- and evidence-based medicine and to stop using medicine that is not supported by science. Advocates of value-based systems claim that they don’t intend to penalize patients for treatments in which the evidence is conflicting, or, as it was stated in Begley’s article, “subject to debate.” However, this question really does bring up an incredibly dicey issue: How much evidence is “enough” to demonstrate that a test or treatment is not of value and therefore should be subject to financial disincentives? Doctors will disagree. If a physician tells a patient that he really needs a treatment, and that treatment is one that is not covered, the patient will feel abused and betrayed, as will the doctor. The example above, in which the patient is offered education, might be the way to handle this problem, but it requires physician buy-in.

More and more, I find myself having to consider issues that I never had to consider much before, such as quality of medical care and cost of services. I never really saw myself ever becoming a health policy wonk or a quality of care analyst, but increasingly such skillsets are becoming necessary to my career. Part of the reason is because, quite through a strange quirk of fate that landed me in the right place at the right time, I find myself co-director of a statewide quality initiative for breast cancer care. I’ve had to learn, and the curve is steep. It’s a fascinating and ridiculously complex area that makes some of my old lab experiments seem very straightforward in comparison. (I am, after all, used to being able to control most variables.) However, it is every bit as much a part of SBM as clinical trials and bench research. We as SBM advocates would do well not to neglect it, because it really is where the “rubber meets the road.”

Posted in: Clinical Trials, Diagnostic tests & procedures, Politics and Regulation, Public Health

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47 thoughts on “An experiment in paying through the nose for “unnecessary care”

  1. BillyJoe says:

    I thought it was a well known myth that preventative health saves on cost. It just delays the inevitable while adding the costs of preventIon.

    But why are item costs so high in the USA?
    Why is the cost of an MRI of the spine in Australia ($300) equal to the cost of an X-Ray of the spine in the USA ($300). The exchange rate is roughly dollar for dollar.

    Also, no gastroscopy for heartburn?
    Doesn’t that depend on the circumstances? Wouldn’t the first onset of heartburn in an over forty year old demand a gastroscopy? Isn’t a delayed diagnosis of gastric cancer tantamount to a death sentence?

    On the other hand, considering the lack of evidence for benefit, surely all men should cough up the full cost of their annual/biannual DRE and PSA.

    1. Andrey Pavlov says:

      Hi BillyJoe!

      Hope all is well down under.

      In brief, the reason why such things cost vastly more in the US than elsewhere is because we allow it to be so. We tend to pray at the altar of the free market here and where other countries impose upper limits to what manufacturers and other providers can charge for medical goods and services, here we believe that such legislation is not only draconian but – gasp! – communist. So companies charge whatever they can get away with which drives up the cost of everything. Furthermore, there is a lot of behind the scenes dealing where different prices are charged for those with different insurance or different systems of hospitals. Large hospital systems tend to do well because they can leverage their size for cheaper prices (which is precisely what is done in other countries, just on a unified and national scale). Also, insurance tends to be charged a LOT more for the same services as those who are uninsured because the latter can’t pay it and the former is gouged to make up for it which passes on the costs.

      In other words, the highly fractionated and heavily free-market system allows for entities to charge whatever they can get away with, which is a lot because it is medical care not luxury TVs. This is just one aspect of it of course and there are many other inefficiencies and problems which contribute to and compound the issue.

      1. windriven says:

        Insurance companies are, in my opinion, expensive parasites on the medical care system. Under ACA insurers are mandated to spend 80 to 85% of premiums on benefits and, in a sop to the industry, “activities to improve healthcare quality”, a veritable slush fund for burying expenses.

        I’m all for a single payer system.

      2. Dave says:

        Actually I think that the people with insurance are often charged less than uninsured patients as the insurance companies have negotiated decreased prices from the hospital. The uninsured are charged more but much less likely to be able to pay it. Generally “self-pay” means “no pay” or bankruptcy for the individual with assets. I could be wrong on this as my personal experience s limited to a few hospitals. My wife had cervical spine surgery a few years back. The adjusted charge, because we had BC, was much less than the unadjusted charge we would have had if she was not insured.

        Most hospitals (and many practices for that matter) have a 15-20% uncollectable rate. This cost is obviously passed on to others. But the uninsured aren’t charged less.

        Don’t forget the enormous administrative fees which parasitize out current “system”.`Far higher than elsewhere.

        1. windriven says:

          Many hospitals – and I presume physicians practices – will negotiate fees with uninsured patients. But many of these patients* lack the sophistication to know this or to negotiate effectively. It is a shame as it destroys people financially without actually benefiting the hospital.

          Your point on enormous admin fees is well taken.

          *I just went through this with the uninsured ‘significant other’ of one of my employees. The hospital ended up with a few cents on the dollar and wrote off a huge chunk. But there was no litigation, no bankruptcy, and both parties emerged bruised but breathing. But really, what a totally messed up system.

        2. Jeff Rubinoff says:

          The arcana of coding and billing has to be considered, too. It’s been 20 years since I worked in an American hospital, so excuse me if things have changed. But where I worked, there was a complex system of payor codes showing insurance type or lack thereof, procedure codes, and diagnosis codes. Perhaps an insured patient would pay less for the same procedures and diagnoses as an uninsured patient, but there was enough ambiguity in the coding (also, primary vs secondary diagnoses) that an uninsured and an insured patient could end up with different codes for the same things. And the final bill depended on the codes. The billers had a very large set of offices and were well paid for their expertise, as I recall.

          1. Dave says:

            A physician friend of mine works for Blue Cross/Blue Shield. He recently told me that there were over 16,000 billing codes but that the plans were to expand this to over 64,000 in the next few years “for greater accuracy”. It’s way too complex.

      3. “Also, insurance tends to be charged a LOT more for the same services as those who are uninsured because the latter can’t pay it and the former is gouged to make up for it which passes on the costs.”

        Andrey, prices are higher for the self-pay folks at the hospital here and apparently many places elsewhere, Google it. That some can’t afford to pay sounds correct, but the uninsured that do pay their bills pay a LOT more. Please clarify because it sounds like you’ve got it backwards.

      4. windriven says:

        @Dave and DC

        I don’t speak for the distinguished Dr. Pavlov but I believe he meant to say that the uninsured pay less, not that they are charged less. I think his point was that the costs of treating the uninsured get passed up the chain to insurance companies and ultimately to rate payers.

        1. Donna B. says:

          I think windriven is partially right — the uninsured often don’t pay at all and that drives the costs up for insurance companies and the few uninsured that do pay (either the amount charged or a negotiated lower amount).

          However, acknowledging that still does not explain the huge difference in what hospitals/doctors bill and what insurance companies “allow”.

          The following example is anecdotal, but it’s also representative of the past 10-15 years of hospital charges vs. what insurance paid. Fifteen years ago is when I began to notice the difference in charges and allowables.

          Late afternoon ER visit after stomach pain and fever for 2 days. Past history of incisional hernia and bowel obstruction. Admitted and scheduled for laparoscopic surgery following morning. Released next afternoon. Hospital billed $49,000, was paid by insurance (and apparently happy to get) $9,500. Surgeon & anesthesiologist billed separately.

          So there’s $30,000 of “capitalism” floating around there. When health care costs are calculated for the U.S., which figure is used — the $49,000 the hospital wanted or the $9,500 they got? If the amount insurance paid is enough to keep them in business (and apparently it was) why the inflation? What is the benefit of such a write-off?

          While I’m all for science-based medicine, I don’t think that should be confused or conflated with economics or used to denigrate or praise any sort of economic system. The two are unrelated. If the treatment doesn’t work, it doesn’t matter which economic system pays for it.

          Where economic systems matter is in how the science is paid for.

          1. windriven says:

            @ Donna

            I must be slow tonight because I don’t grasp your point in the last two paragraphs.

            The ‘billed’ and ‘allowed’ game is something that makes me crazy. It reminds me of the old Soviet era joke that Pole’s made: “we pretend to work and they pretend to pay us.” In the insurance situation hospital groups set ridiculous ‘list prices’ then discount them deeply to earn contracts with insurers. The hospital pretends their real price is this crazy thing and insurers pretend they’re beating the hospital down. Like the Three Stooges in a camel bazaar.

    2. Young CC Prof says:

      Preventative care does save money when it actually prevents things, vaccines for example. The price of flu vaccine is less than that of treating a single uncomplicated case of flu. Add in the hospitalizations and you’re miles ahead of the game.

      Other aspects of preventative care, the cost-benefit analysis can be less clear.

    3. Vicki says:

      It depends on which preventive care. Polio vaccines are a lot cheaper than iron lungs, even if you ignore the quality-of-life issues. A smallpox or measles vaccine is cheaper than a funeral, and cheaper than the required days of nursing care for someone who gets sick but survives. This may be hidden because the health plan isn’t paying for the nursing, it’s being done “free” by a relative, and her extra work and possibly lost wages don’t show in the spreadsheet. (It’s very hard to get a valid cost comparison when the expectation is that significant parts of nursing are done “free” by parents and other relatives, even if they have to miss time from work and lose pay to do so.)

      As Dr. Gorski notes, it’s very hard to include quality of life measures in these comparisons. Even lifespan is sometimes ignored, and a lot of these comparisons ignore the value to an individual of everything from sex (in the case of prostate cancer treatment) to being able to continue playing a sport or taking long walks with a friend or grandchild.

  2. windriven says:

    It seems to me that that this value proposition lies at the heart of Science Based Medicine: delivering effective care with little waste or inefficiency results in affordable care that can be extended to everyone.

    In round numbers the US wastes $1.25 trillion each year on health care compared to Northern European countries delivering essentially equivalent medical outcomes. To put that in perspective the total annual US defense budget is less that $800 billion.

    Initiatives like VBID are excellent experiments in delivering better and less expensive care. One hopes that more and different initiatives will be tried elsewhere and that costs and outcomes are compared.

    Sadly, this is as much a political issue as a medical or financial one. The left seems to be promising far more than it can deliver and it is easy to imagine medical costs as a fraction of GDP actually rising over the next few years. Meanwhile, the right seems perfectly content*with a medical system that works well (if very expensively) only for those with good insurance programs generally paid for by someone else.

    *before you flame me on this ask yourself precisely what any Republican administration in the last 50 years has done to improve this situation.

    1. Rick L, RN says:

      I found this over at
      The chart shows how many FTE’s it takes at gain one billion dollars in revenue in a giving industry. Compared to the ones shown healthcare is the least efficient; however, I would like to see it compared to other like industries (education for one). The orgainal paper can be found here-

      At the very least this should make people stop and think

      1. windriven says:

        Interesting chart, Rick. I’ll look at the JAMA over the holiday.

        I have a couple of problems with the chart. First, I’m guessing that they count a lot of low value workers such as home health attendants – lots of bodies generating very little revenue.

        Second, it compares healthcare, a service, with consumer products and industrial goods – both industries where automation can easily leverage the productivity of labor.

        The chart does have a bar for ‘other service providers’ and I’d like to know the composition of that. But if you count home health workers in healthcare, you’d better be counting barbers and gardeners in the ‘other service providers’ category.

    2. squirrelelite says:

      Actually, windriven, I agree with most of your points.

      Since we’re stuck with an inefficient and expensive hybrid system for the near future, it would be good to see more extended and systematic testing of methods like VBID.

      As for the Republicans, certainly they have opposed these reforms for the last 30 years or so. But, Richard Nixon actually supported health reform in the early 70’s along with liberal Democrats and Republicans like Nelson Rockefeller. These attempts failed at least partly because of opposition from conservative Democrats like Wilbur Mills, who have largely been replaced by Republicans since then.

      Also, I sometimes wonder if Republicans would have become so doctrinaire in opposing taxes if President George Bush hadn’t been pilloried by Democratic campaign ads after agreeing to a needed tax increase. But, that’s neither here nor there.

      1. windriven says:

        “Also, I sometimes wonder if Republicans would have become so doctrinaire in opposing taxes if President George Bush hadn’t been pilloried by Democratic campaign ads after agreeing to a needed tax increase. But, that’s neither here nor there.”

        Yeah, you have a bunch of politicians playing ‘whose got the biggest penis’ but they all look like eunuchs to me.

  3. Young CC Prof says:

    Changing physician practices is also important. I recall any number of occasions when expensive tests unlikely to affect treatment decisions were ordered for me before basic treatment measures very likely to help. A couple times, this meant treatment was delayed for months in search of a precise diagnosis that never emerged.

    At this point in my life, I question things more, including the waste of money. If the doc says I need a blood test or something I just do it, but if he says I need, say, abdominal CT scan, I’ll question it, especially if I get the impression that he’s doing it only to make absolutely sure, or to rule out something he doesn’t think is at all likely. (Also, unlike a regular x-ray, a CT scan is just enough radiation that I really don’t want to have one without reason.)

    1. Andrey Pavlov says:

      Agreed. Also one of the myriad issues which contribute to the costs. It is hugely multifactorial – in other words, the SYSTEM is inefficient and wasteful, not just one particular part of it.

      There is awareness of this particular issue these days and I have participated in mandatory exercises for the medicine residents where we have a competition to accurately diagnose a patient (typically a real case) in the cheapest way possible.

    2. Melissa says:

      Last year I had to turn down an x-ray for minor back pain. And also antibiotics suggested for an infection that was viral. And I would estimate most patients would not do that. At this point I believe we are in a place where there is a lot of low hanging fruit. Maybe some patients would ask for x-rays, but if we just remove the practice of doctors suggesting unnecessary treatment in the first place, I think it would do a lot of good.

  4. Harriet Hall says:

    ” Harriet stole what was going to be the title of this post! ”
    Not evidence of theft, evidence that great minds think alike and appreciate Monty Python. :-)

  5. Denise B says:

    I would be willing to pay for the cost of tests that relieve my anxieties about, for example, breast cancer. But how much? A reasonable cost that bears some relationship to the cost of the equipment and the performing the test, but not five times that amount in order to arbitrarily cover hospital overhead.

    I have, in fact, already looked into doing this; my doctor, because of my many risk factors and dense breasts, recommended that I have MRIs instead of mammograms, but my insurance won’t pay for it. But of course it is impossible to even find out what it would cost, let alone to comparison shop. You have the test and then you find out the price. And it’s much, much more than it would have cost my insurer.

    This is part of the craziness. The pricing has to be made rational and published.

    1. windriven says:

      “This is part of the craziness. The pricing has to be made rational and published.”

      This should be a point of law with serious penalties for obfuscation.

  6. dh says:

    Apropos of nothing…. There are anecdotes about buddhist monks in Thailand being diagnosed with cancer in the big city hospital and sent home to die, only to live another 20-30 years. This was apparently a fairly common scenario, and is possibly related to the combinations of plant-based diet, meditation and metta practice.

    1. windriven says:


      1. Anecdotal, as you noted
      2. Confirmation bias (remembering the stories of those who survive, not those who die)
      3. Regression to mean (not all cancers stage up and some spontaneously remit)
      4. Misdiagnosis
      5. Clean living and loving their Jesus ;-)

      1. BillyJoe says:

        6 Chinese whispers.
        7 Outright lying.

        1. mousethatroared says:

          What do the Chinese have to do with anecdotes from Thailand?

    2. WilliamLawrenceUtridge says:

      Even if a plant-based diet prevents cancer, there’s no reason to think it would help treat cancer. The solution to a gunshot wound is not to unload the gun.

      Test of cognitive behavoural therapy and other mind-based interventions for cancer have been primarily negative.

  7. D. C. Sessions says:

    Why would it be surprising that preventive care is not cost-effective?

    Obviously, the most cost-effective strategy is to cover nothing (and insurers seem to head that way by default.) Past some point, any treatment delay/denial reduces total costs. It’s the same as the reason that smoking actually reduces Social Security/Medicare prices: people die young and after a relatively short acute illness instead of dragging on for years and years with Alzheimer’s or whatever.

    The old saying that “they know the cost of everything and the value of nothing” applies to medicine (as well as the management of several companies I’ve worked for WRT engineering labor.) If all you want is low cost, just don’t treat anything.

    1. windriven says:

      Death is cost effective.

      1. windriven says:

        But inconvenient for the deceased.

        1. mousethatroared says:

          The dead have no worries.

    2. jag says:

      imho it’s the quacks and the insurance companies that

      know the cost of everything and the value of nothing.

      Most of the doctors I know care very much for their patients.

  8. mousethatroared says:

    Policy seems fixated on the idea that American patients are choosing to waste money on unnessasary medical care. Yet, The U.S. Health Care Spending: Comparison with Other OECD Countries*, a report written for congress by the Congressional Research Center, suggests”

    As previously discussed, Americans do not lead the world in per capita doctor visits or hospitalizations. When Americans receive health care services, they appear to receive a higher-than-average amount of certain surgical procedures and advanced medical technologies, but generally do not have the highest levels in the OECD. This leaves price as the last remaining factor in the equation to explain the high level of U.S. health care spending.

    In assessing what drives the difference between U.S. health care spending and the rest of the world, some leading health economists responded this way: “It’s the prices, stupid.”14 Put more formally, a report from the OECD declared that “there is no doubt that U.S. prices for medical care commodities and services are significantly higher than in other countries and serve as a key determinant of higher overall spending.”15

    So if americans already use less healthcare overall than countries that appear to have better health outcomes. How is using a stick to guard against unnessasary consumption going to significantly lower healthcare costs? The wasteful American consumer narrative seems to be impacting policy more than the actual research.

    Sure, we do have higher consumption in some areas. Some surgical interventions and new technologies.The surgical interventions they appear to be discussing are cardio surgery, angioplasties, ceasareans, organ transplants, etc. This is not a worried teen with back pain scenario. Are there a lot of patients insisting upon getting angioplasty or ceasareans against their doctor’s recommendations? I guess that is one cost drive that this paper doesn’t address. In the areas where we so see higher consumption of care than comparable countries, who is the major driver? Is it the patients or the doctors?

    But overall the reports conclusion was “It’s the prices, stupid.” Why is it the, that so many health care policy I see are entirely focused on the model of over consumption?
    It’s like a struggling farmer continually assuming his cows are eating too much while refusing to consider the price of his feed.


    1. windriven says:

      Interesting to me mouse is that US doctors do not make that much more than OECD average on a PPP basis after costs of medical education are weighed. And only 10% of US healthcare spending is on pharmaceuticals. Yet we spend nearly twice as much as our OECD neighbors. So … where is the money going? One place is insurance companies. Our OECD neighbors generally have single-payer systems. Another is rope-a-dope marketing schemes by “purchasing groups” and large suppliers.

      But worst in my opinion is the three card monte accounting procedures used by hospitals that make it impossible to understand where money really gets spent. Whenever numbers are used to obfuscate rather than illuminate, my radar lights up.

      1. Young CC Prof says:

        An awful lot goes to transaction costs, due to our incredibly complicated insurance system. I mean, a doctor’s office with two doctors probably has a full-time clerical employee who spends most of the day figuring out insurance forms and billing.

        And yes, drug and device manufacturers make all their profit (and a lot of their research money) in the US. The poorer countries pay what they can (and the fancier drugs and devices just aren’t available there) other first-world countries negotiate at a national level, but the American consumer pays full cash price.

        And physician/provider education comes out of health care pockets, not education pockets. It costs a LOT of money to make a doctor.

        1. mousethatroared says:

          cc prof “An awful lot goes to transaction costs, due to our incredibly complicated insurance system. I mean, a doctor’s office with two doctors probably has a full-time clerical employee who spends most of the day figuring out insurance forms and billing.”

          That makes sense to me. I have talked to many clerical folks who specialize in working with us on dealing with insurance companies at our son’s children’s hospital. Sometimes my son has partial coverage through Children Special Health (State Coverage for children with special health needs) and other coverage through our insurance company at the time (changes annually).

          Often, the minimum clerical person for this job is one per department. It’s an incredible task, sorting out all the different co-pays, restrictions, codes, procedures, etc.

          Some of the sweetest clerical folks I’ve ever dealt with…I hate to suggest that they should be out of a job. :(

          1. Young CC Prof says:

            “Some of the sweetest clerical folks I’ve ever dealt with…I hate to suggest that they should be out of a job”

            That’s a real sticking point. These aren’t fat cats here, they’re ordinary hardworking folks doing a tricky and often thankless job as well as they can. (This applies to both the doctors’ clerical workers and the insurance company’s employees who process claims, by the way.) It’s not their fault that, in a better system, their job wouldn’t exist. Single-payer healthcare with reasonably efficient payment systems would make health care more affordable by making most of these people unnecessary, but it would also mean putting a lot of people out of work.

      2. mousethatroared says:

        Agreed Windriven!

  9. PMoran says:

    “So … where is the money going? One place is insurance companies. Our OECD neighbors generally have single-payer systems.”

    That seems to be the key. That gives come ability to place caps on expenditure. And that seems to be the only sure way of keeping control of costs.

    1. windriven says:

      Peter, is all, or at least the vast preponderance of care single payer in Australia? Is there a private market and if so is it large? Are most hospitals public or are some private? How does Australia handle end of life issues? Does Australia have ‘right to die’ legislation? How, in your professional estimation, does Australia do compare to other first world countries on tough nuts such as colon cancer, organ transplantation, and expensive surgery that does more for quality of life than longevity? I apologize for the shopping list. I have studied Denmark and Sweden (though by no means exhaustively) and Canada to a lesser extent. But I know little about the Aussie approach, its merits and its failings. Any light you might shine would be much appreciated.

  10. PMoran says:

    W, Sorry, I can’t answer some of your questions.

    Australia’s system is, I think, like an untidy version of Canada’s. It stems from similar mildly socialist ideals: that basic, more or less equal health care is a human right, while incorporating sometimes conflicting objectives such as keeping a lid on costs and especially on doctor incomes. Australia probably has a stronger private insurance and private hospital system than Canada but still with substantial government control over their operations.

    I am no expert on health care systems, but I was a bit of an activist when the Australia’s Medibank (now “Medicare”) system was being brought into being, and studied the relevant health economics to some extent.

    I think the billions of dollars spent upon CAM demonstrates some validity to the argument of health economists that .there is no limit to the ability of the public to consume health care services, nor the inclination of and incentives for medical professionals to provide them, but that returns diminish as expenditure rises.

    This is the theory behind having single payer systems, with their ability to place ceilings upon expenditure (it is also best to have salaried professionals if politically achievable — so the theory goes).

    The system then does the best it can with what it’s got. That is where a solid evidence-base could help deliver better health care, but I doubt if it will on its own do much to control costs, because any settings are subjective and very often determined by the individual in a system having any flexibility at all.

    Of course there have been a lot of unintended consequences to this kind of system, which I won’t go into. There seems to be the need for constant tinkering to deal with those, but everyone eventually seems to adjust,. The system will eventually become staunchly defended, just as UK doctors will now do with theirs, despite earlier violent opposition to nationalised health care and features that populations in other countries would probably strongly object to..

    1. windriven says:

      Thank you, Peter. Canada’s system isn’t all that tidy either with individual provinces exerting a fair bit of control. But it does seem to work fairly well. Back when DRGs (a diagnosis based payment system) were coming on line in the US I gave a number of talks to industry groups and used Canada as a bogeyman. At that time there were more MRIs in Los Angeles county than in the entire nation of Canada. I didn’t look much further to question the link between MRI mania and outcomes though.

      The US system is just a train wreck and I fear that ACA (Obamacare) will do at least as much harm as good. It seems idiotic to spend 18% of GDP on health care when the OECD average is more on the order of 10.

      But you hit the nail squarely on the head when you noted that health care is a scarce resource meeting with nearly insatiable demand but that actual outcomes do not, after some point, respond much to increased spending.

      The question is: what to do?

  11. daedalus2u says:

    I am surprised that there has been no mention of the placebo effect. The more expensive a placebo, the better it seems to “work”.

    That is likely a factor in the many quack treatments that are expensive and which “seem” to work.

    Charging more for a less effective treatment could be considered ethical, if the increased price did elicit a stronger placebo effect. But then there is the issue of exploitation if the increased fee goes to the provider of the less effective treatment.

    I suspect that some of the “satisfaction” of American health consumers is based on knowing that the US has the most expensive health care in the world. Pushing the (false) mantra of the free market: “most expensive equals best”, is exactly the point of most marketing in a profit based system. The system is configured and optimized to generate profit, not to generate good outcomes.

  12. windriven says:

    daedalus nailed it here:

    “The system is configured and optimized to generate profit, not to generate good outcomes.”

    I might quibble that maximize could be a better verb than generate in this instance but the underlying concept is unassailable. For insurance companies and for-profit hospitals and chains it is true by definition.

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