Researchers at Stanford University released findings of a study examining what happens to physicians who experience multiple malpractice claims. Where do physicians with poor malpractice liability records go? Where do they practice? Who would hire them? Stanford professors David Studdert and Michelle Mello, both core faculty members at Stanford Health Policy, wanted to know.

The answers to these questions are described in a new study released March 27 in the New England Journal of Medicine. After reviewing more than a decade’s worth of data from nearly half a million physicians, Studdert and Mello found that physicians who were sued repeatedly were no more likely to relocate their clinical practices than colleagues who had no claims. However, they were more likely to either cease practice or, if they continued to practice, to shift to smaller practice groups or solo practice.

“There is an emerging awareness that a small group of ‘frequent flyers’ accounts for an impressively large share of all malpractice lawsuits,” said Studdert, the lead researcher and professor at both Stanford Law School and Stanford University School of Medicine. “This study confirms that, and begins to shed light on the professional trajectories of these physicians.”

In a 2016 study, also published in the New England Journal of Medicine, Studdert and Mello examined demographic characteristics of claim-prone physicians. “When we presented that work, people kept asking us questions about this group that we couldn’t answer, like who would ever hire or insure them,” Studdert said. “Now we have a better idea.”

A small group with many lawsuits

The research team reviewed data from 480,894 physicians who had 68,956 claims paid against them between 2003 and 2015. The researchers estimated that 2 percent of practicing physicians had two or more paid malpractice claims. Those physicians account for nearly 40 percent of all paid claims, confirming results from their earlier study.

“Our main goal was to follow these multi-claim practitioners over time as they accumulated claims and see where they went and what kind of changes they made to their practices,” said Mello, professor of law and professor of health research and medicine at Stanford and a co-author of the study. “One surprising result was that they were no more likely to relocate than their colleagues.”

In the late 1980s, widespread concerns that physicians with poor liability records were moving interstate to put their reputations behind them led Congress to establish the National Practitioner Data Bank. When a malpractice claim is paid on behalf of a health practitioner, or the practitioner is subjected to certain forms of disciplinary action, the information must be reported to the Data Bank. Employers, such as hospitals, are then required to check the Data Bank.

“Given the policy history here, it was gratifying to find that physicians prone to malpractice claims were not flight risks,” Mello said, noting that it is clearly harder for physicians with bad records to escape their past than it once was.

They don’t move, but many go solo

The study also found that claim-prone physicians were more likely than their peers to quit practicing. Nonetheless, more than 90 percent of physicians who racked up five or more paid claims continued to practice medicine.

The study also showed that claim-prone physicians were much more likely than their peers to shift into smaller practice settings. For example, physicians with five or more claims were more than twice as likely as physicians with no claims to switch to solo practice.

“Compared to practicing in large group practices or hospitals, physicians in small or solo practices are subject to less oversight from administrators and peers,” Mello said. “Quality problems with solo practitioner may be more difficult to detect and report. From a patient safety standpoint, this is the study’s most troubling finding. Frankly, solo practice is the last place we want practitioners who pose patient safety risks to be working.”

While a single malpractice claim is a weak signal that there’s a quality problem, when there are repeated paid claims over a relatively short period of time, that sends an important signal about patient safety risk, Studdert said.

“We think the study’s main message is that regulators and the companies that provide physicians with liability insurance should be paying closer attention to this signal,” Studdert said. “I wouldn’t want my family members to be treated by a physician who had paid out six malpractice claims in the past few years. Who would?”

Additional authors on the study include Matthew J. Spittal from the Melbourne School of Population and Global Health, University of Melbourne; Yifan Zhang from Stanford’s Center for Health Policy; and Derek S. Wilkinson and Harnam Singh from the Health Resources and Services Administration in the U.S. Department of Health and Human Services.

Learn More in this Stanford Law School Q&A with Studdert and Mello

The study was supported by a grant from SUMIT Insurance, a company that is wholly owned by Stanford Hospital and Clinics and Lucile Packard Children’s Hospital, and a Future Fellowship to Spittal from the Australian Research Council.

Americans know that choosing a health insurance plan can tough. And once you’re retired and possibly on a limited or fixed income, it can become downright brutal.

Stanford Health Policy’s M. Kate Bundorf and Maria Polyakova and their colleagues set out to develop an online decision-support tool to test whether machine-based expert recommendations would influence choice among Medicare Part D enrollees — and make it easier.

“The use of technology seems like a natural way to address the challenges of choosing among plans,” they write in their study published in Health Affairs.

Medicare beneficiaries have been choosing among Medicare Advantage and Part D prescription drug plans for years, and more recently the Affordable Care Act established health insurance marketplaces for those who are younger than 65.

All that choice is supposed to create incentives for plans to offer a variety of low-cost, high-quality products that allow people to choose the plan that best meets their needs.

But sometimes too many good choices can lead to bad outcomes.

“Health insurance is a complex financial product with complicated cost-sharing rules, and the implications of different benefit designs for out-of-pocket spending and health care use vary across consumers depending on their needs,” wrote Bundorf, chief of the Department of Health Research and Policy and an associate professor of medicine at Stanford Medicine.

Another researcher in the study was Albert Chan, chief of digital patient experience and an investigator at Sutter Health, in Palo Alto, as well as an adjunct professor at the Stanford Center for Biomedical Informatics Research. Ming Tai-Seale, a professor of family medicine and public health at University of California San Diego, was also a principal investigator of the study.

Choosing Health Plan is Complicated

“Consistent with these challenges, researchers have documented that many consumers, both young and old, do not understand the characteristics of their plans,” they wrote in the March issue of Health Affairs, which is holding a public briefing on patients-as-consumers at the National Press Club on March 5th. Bundorf will present their research at the briefing in Washington, D.C., which will be streamed live and will be posted here once it has aired.

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“(Patients) often make decisions that may signal inaccurate evaluation of the costs and benefits of coverage — such as staying in their plan when better options are available, not enrolling in the plan that provides the best coverage for their drugs, or enrolling in plans that are objectively inferior to other available choices,” the authors wrote.

The Centers for Medicare and Medicaid Services (CMS) offers a tool to help beneficiaries choose among plans, but older adults — even those with high levels of formal education — find it difficult to use.

So, the research team developed a decision-support software tool called CHOICE to assist Medicare beneficiaries in choosing a Part D prescription plan. The software automatically imported the user’s list of current drugs from their electronic medical records (allowing users to adjust the list if desired); the algorithm would then crunch the numbers to come up with three recommended plans which were likely to be the least expensive for the user.

The team then conducted a randomized trial of this software tool among 1,185 patients of the Palo Alto Medical Foundation (PAMF), a large health-care provider in Northern California. Fifty-four percent of those patients were women, 65 percent were white, and 54 percent were married. Living in the Bay Area, their income and education levels were fairly high: They lived in areas in which the median income is $106,808 and 54 percent of the population has a college degree or more education.

While not representative of the general population of seniors in the United States, the researchers emphasized that it was important to conduct this study among these potential users, who are more likely to respond positively to an interaction with a computer. If these users didn’t find this software helpful or user friendly, it would not likely be a useful tool to roll out across the country as a whole.

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The study participants received access to one of two versions of the CHOICE tool: expert recommendations or individual analysis. Both versions automatically imported information on patients’ prescription drugs from their electronic health records and combined it with information on plan benefit design to provide individually customized information on users’ likely spending on both premiums and prescription drugs in each of the stand-alone Part D plans available in their area. The version of CHOICE that offered expert recommendations combined this information with an explicit recommendation on which plans were best for the user.

Willing and Able

The researchers found that providing an online tool not only increased older adults’ satisfaction with the process of choosing a prescription drug plan, but they also spent more time choosing that plan.

“The most significant finding of our trial is that individually customized information alone didn’t seem to be enough,” Bundorf, who is also a senior fellow at the Stanford Institute for Economic Policy Research (SIEPR), said in an interview. “The tool we developed was most effective when individually customized information paired with a clear-cut algorithmic expert recommendation that highlighted three plans that the computer thought were the best for the user based on total spending for prescription drugs.”

She said she was surprised to see that people spent more time choosing a plan and were more satisfied with the process when they had access to the CHOICE tool.

“Prior to our trial, I thought people might spend less time choosing a plan when they had access to expert recommendations because it would make the process easier,” Bundorf said. “But taken together, these results suggest that people are more engaged in decision-making when they have access to a patient-centered tool.”

Polyakova, who is also a faculty fellow at SIEPR, said a key takeaway from the trial is that people who are likely to use sophisticated tools are already more likely be more sophisticated shoppers of health care and prescription plans.

The national opioid epidemic has grown at such breakneck speed that public health experts have been left scrambling to keep up. Though they understand the reasons behind the abuse — the solutions are complicated and costly.

Yet there appears to be some success at reducing at least one area of opioid abuse.

In new research by Health Research and Policy’s Eric Sun, the risk for chronic opioid use among patients with musculoskeletal pain actually decreased slightly between 2008 and 2014. 

The Stanford Medicine assistant professor of anesthesiology and pain medicine found that measures such as avoiding opioid use soon after diagnosis can further reduce the risk of addiction, especially among patients at highest risk for chronic opioid use.

"We found that early opioid use after diagnosis is predictive of opioid use longer term, suggesting that it may be prudent to minimize opioid use where possible for patients with musculoskeletal pain,” said Sun, whose research was published earlier this week in the Annals of Internal Medicine.

His co-authors are Jasmin Moshfegh, who is working on her PhD in health policy, and Steven Z. George, director of musculoskeletal research at Duke University School of Medicine.

Patients with lower back or chronic neck, shoulder and knee pain are at the highest risk for opioid abuse since pain meds are typically prescribed to help ease their spasms. 

Patients who suffer musculoskeletal pain may unwittingly transition to chronic opioid use, which means filling 10 or more prescriptions or having a supply for at least 120 days. The prescription drugs include hydrocodone, hydromorphone, methadone, morphine, oxymorphone, and/or oxycodone. Those don’t include heroin and synthetic opioids such as fentanyl.

Sun and his fellow researchers at the Stanford University School of Medicine used a large health-care database to assess the risk and risk factors for chronic opioid use among more than 400,000 “opioid-naïve” patients — those who have never been prescribed painkillers before — recently diagnosed with pain in the knee, neck, lower back or shoulder. 

The sample was restricted to privately insured patients, thereby excluding other policy-relevant populations, such as those who were prescribed pain medications under Medicare or Medicaid.

They found that risk for chronic opioid use ranged from 0.3 percent for knee pain to 1.5 percent for multiple-site pan and decreased for some anatomical regions during the timeframe studied. They discovered a relative decline of 25 to 50 percent across all pain types from 2008 to 2014.

Opioid Abuse

Opioid abuse has its roots in the late 1990s when pharmaceutical companies assured the medical community that patients would not become addicted to pain relievers. Clinicians began prescribing them at greater rates because they worked so well and seemed safe.

Today, more than 130 people die every day from opioid-related drug overdoses from prescription pain relievers, heroin and synthetic opioids such as fentanyl, according to the U.S. Department of Health and Human Services, From 2002 to 2017, there was more than a fourfold increase in opioid deaths, with some 49,000 people dying in 2017.

The Centers for Disease Control and Prevention estimates that the total economic burden of prescription opioid misuse alone in the United States is $78.5 billion a year, including the costs of health care, lost productivity, addiction treatment and criminal justice involvement.

“While our research found that only about 1 percent of patients with musculoskeletal pain progress to chronic opioid use, this is potentially concerning because it’s an extremely common diagnosis,” Sun said. “By pointing out the scope of the issue and identifying factors that place patients at risk, we hope this research will guide further efforts aimed at reducing opioid use among patients with musculoskeletal pain.” 

The Trump administration has proposed a new rule that would require direct-to-consumer TV advertisements for prescription drugs to disclose the price of their products.

The Centers for Medicare & Medicaid Services (CMS) said the disclosures would help consumers “make informed decisions that minimize not only their out-of-pocket costs, but also expenditures borne by Medicare and Medicaid, both of which are significant problems.”

The idea enjoys broad public support, since medical care and drug costs continue to skyrocket.  A U.S. Senate report earlier this year revealed that the cost of the 20 most commonly prescribed brand-name drugs have risen tenfold in the past five years.

In a June 2018 poll, 76 percent of Americans favored required drug advertisements to include a statement about how much the drugs cost.

But Michelle Mello, a Stanford Law School professor and Stanford Medicine professor of health research and policy, writes in this New England Journal of Medicine perspective that the proposed rule raises substantial public health and legal concerns.

A potential unintended consequence of price disclosure may be to dissuade patients from seeking care, writes Mello and her co-author, Stacie B. Dusetzina of Vanderbilt University School of Medicine, because of the perception that they cannot afford treatment. For example, Trulicity, a widely advertised drug for type 2 diabetes has a list price of $730 a month.

“Patients who could benefit from diabetes treatment may assume that they cannot afford it, when in fact insured patients’ costs for Trulicity may be much lower, and cheaper treatment options available,” they write. Metformin, for instance, costs $4 per month for patients who pay cash.

CMS would demand drug makers use the list prices from the Wholesale Acquisition Cost (WAC) in their television ads, including that costs “may be different” for those who are insured.

“This wording doesn’t communicate that costs to patients are probably much lower than the WAC,” writes Mello, a core faculty member at Stanford Health Policy.

This could have important legal implications as well, as compelled disclosures in advertising impinge on commercial speech protected by the First Amendment. Furthermore, they write, “disagreement about whether the WAC accurately represents a drug’s price could affect how courts assess the rule when constitutional challenges are inevitably filed.”

The researchers say three aspects of the proposed rule undercut the government’s ability to argue that it would improve patient decision-making and reduce drug spending: 

1. Price information does little to inform consumer decisions if it inaccurately represents actual cost.
2. Consumers can already obtain information on cash prices online and their own cost from their insurer.
3. The rule contains no meaningful enforcement mechanism; CMS plans only to list violators on its website, calling into question whether companies will comply.

“We think that a better alternative would be making patient-specific cost information accessible at the point of prescribing, “ the authors write. 

The cost of prescription drugs should become a routine part of clinician-patient discussions, although they acknowledge that this would put more time constraints on medical practices.

“Providing salient cost information at the right time could help reduce drug spending while preserving patient choice, but we believe that direct-to-consumer advertising is the wrong vehicle,” they write.

Research by Stanford Health Policy’s Michelle Mello looks at what happens when a group of hospitals started systematically acknowledging adverse outcomes in care by apologizing and proactively offering compensation where substandard care caused serious harm. 

Hospitals have traditionally “crouched in a deny-and-defend posture when things go wrong in medical care,” said Mello, a professor of law at Stanford Law School and a professor of health research and policy. The new approach, called “a communication-and-resolution program,” or CRP, is being adopted by an increasing number of health-care facilities.

“None of the hospitals experienced worsening liability or trends after CRP implementation, which suggests that transparency, apology, and proactive compensation can be pursued without adverse financial consequences,” Mello and her co-authors write in the study published Monday in Health Affairs. However, despite the growing consensus that CRPs are the right thing to do, concerns over liability risks remain.”

Stanford Health Policy asked Mello some questions about the research:

Could this new approach to resolving patient conflict be a thing of the future?

Hospitals that adopt CRPs believe they will help improve patient safety and are consistent with the ethical obligation to disclose medical errors; they also hope they will reduce liability costs. However, there is a lot of uncertainty about their effects on costs. On the one hand, being honest with patients could avoid the anger that prompts patients to sue, and compensating injured patients early on saves on litigation expenses. On the other hand, in the traditional system, very few patients injured by substandard care ever get compensated. Offering up admissions of error and early compensation could mean a lot more patients receive payment, raising total costs. Uncertainty about this issue continues to be a barrier to widespread adoption of the CRP approach.

What were the key findings in your study?

We evaluated the liability effects of CRP implementation at four Massachusetts hospitals by examining before-and-after trends in malpractice claims, volume, cost, and time to resolution. We then compared those to trends among similar hospitals in the state that did not adopt CRPs. We found that CRP implementation was associated with improved trends in the rate of new claims and legal defense costs at the two big hospitals that implemented these programs — favorable developments that were not seen at comparison hospitals with no communication-and-resolution programs in place. CRP implementation was not associated with significant changes upward or downward in trends of new claims receiving compensation, compensation costs, total liability costs, or average compensation per paid claim, nor was it associated with a significant change in time to resolution.

So then why are the findings important?

The study helps resolve uncertainty about the liability effects of admitting and compensating medical errors, especially since the study design was much stronger than that of previous studies. We found that the CRP approach does not expand liability risk and may, in fact, improve some liability outcomes. Therefore, hospitals can “do the right thing” — be honest about errors, apologize, and compensate patients who are injured by negligence — without adverse financial consequences.

Who began the CRP approach and what is the average payment proactively made to patients who did not receive proper care?

The approach dates to the late 1990s and was first publicized by a Veterans Affairs hospital in Kentucky and then by the University of Michigan Health System, both of which reported very positive outcomes.  Stanford was also an early adopter.

The model calls for patients to be compensated at about what the hospital estimates their claim would be worth in traditional litigation. In our study in Massachusetts, the median payment to patients was $75,000. That’s a lot lower than the median payment in the tort system, but the mix of injuries is different. In traditional litigation, 85 percent of claims involve very serious injuries or deaths, because smaller claims aren’t attractive to plaintiff attorneys. They just go uncompensated. In CRPs, it’s easier for patients with moderate-severity injuries to have access to justice.

Some 450 million patient visits to primary care clinics occur in the United States each year. And as the shortage of doctors grows larger each year, primary care teams face increasing pressure both during patient encounters and outside the examining room.

The growing time constraints on primary care clinics — conducting patient consults faster, logging results in EMRs sooner, keeping up with regulatory changes — are worrying patients and physicians alike. 

Stanford Health Policy’s Kathryn M. McDonald and colleagues wanted to better understand the organizational influences of time stressors and the impact they are having on patients.

“Patients get interrupted often when doctors and their care teams are rushed,” said McDonald, MM, PhD, executive director of the Center for Health Policy and Center for Primary Care and Outcomes Research. “They worry about whether their concerns and needs will be addressed adequately. Getting the right diagnosis, treatment and support are all important to patients, so any risk of experiencing suboptimal care due to time stressors is worth understanding better.”

In a study published in the American Public Health Association journal, Medical Care, McDonald and her colleagues wrote that despite concern about the impact time pressure has on the delivery of health care, “scant evidence exists about types of time stress, the organizational factors that shape such stressors in routine care settings, and consequences for patients and practitioners alike.” 

So the researchers analyzed cross-sectional survey data collected from January to August 2016 from primary care teams at 16 randomly selected primary care practices associated with two large Accountable Care Organizations (ACOs) and their patients with cardiovascular disease, diabetes, or both. Through April 2016, they gathered data from 353 physicians and staff members of the clinics.

Then from May to August 2016, the researchers surveyed 1,291 patients by mail and telephone follow-up calls to ask about their concerns.

They determined that the responses translated into two types of stressors related to the lack of time: practice-level time pressure and encounter-level time pressure.

“The stressor condition is similar to the weather—determined by both barometric pressure and temperature — in potentially different way,” they posited.

They found that different organizational factors are associated with each form of time pressure. A patient-centered culture, for example, may include specific patient engagement initiatives, and is associated with reductions in encounter-level time pressure. Similarly, health information systems that provide true support for clinical workflow and good teamwork also corresponded with less encounter-level time pressure. A different organizational influence — leaders that are responsive to the clinic teams — was associated with reductions in practice-level time pressure.

The potential consequences for patients are missed opportunities in patient care and inadequate chronic care support — two very important factors behind successful health care.

“The findings underscore the importance of linking all levels and aspects of physician practice organizations to mitigate  the negative effects of time pressure on patient care” said Stephen Shortell, principal investigator of the Patient Centered Outcomes Research Institute (PCORI) grant that funded the study.  Their other co-author is Hector Rodriguez at the UC Berkeley School of Public Health.

They discovered that one-third of medical team respondents indicated they work in a chaotic practice atmosphere, juggling patient calls, documentation, quality reporting, and many other tasks. The more senior the staff member was, reports of working in a chaotic environment lessened.

Only 31 percent of those respondents said that during patient visits, it was very unlikely for the team to miss all seven specific opportunities related to screening, diagnosis or treatments. 

“Doctors’ offices may increase their chances of preventing adverse effects of time stressors by becoming more patient-centered, coordinating care among team members better and assuring that information technologies make work easier,” McDonald said in an interview about how the results might lead to some solutions. 

“I was struck by the importance of leadership’s responsiveness to their frontline team’s input about changes needed when doctor’s offices are more chaotic,” she said. “Likewise, for clinics that are part of larger groups, like Accountable Care Organizations, the corporate office’s decisions seem to play a role in the perception of time stressors at the practice level.”

The United States is in the grip of an opioid epidemic, which is affecting millions of Americans and claiming thousands of lives. Many trace their opioid dependence back to their doctor’s office, the drugs prescribed for pain after an injury, surgery, or dental procedure. Were these painkillers over prescribed? Did drug manufacturers exaggerate opioids’ effectiveness while deliberately underplaying their danger? Did drug distributors and retailers take necessary steps to ensure that pills weren’t falling in to the wrong hands?  

In this Q&A, Stanford Law Professors Michelle Mello, an expert in health law and core faculty member at Stanford Health Policy, and Nora Freeman Engstrom, an expert in tort law and complex litigation, explain the scope of the opioid problem and discuss the latest cases and legal challenges.

Just how big of a problem is the opioid crisis in the United States? Can you describe the problem’s scope and seriousness? 

Engstrom: The opioid problem is monstrous. Some 2.4 million Americans have an opioid use disorder, and the epidemic has already claimed 300,000 American lives, including 42,000 in 2016 alone. Worse, if the problem isn’t addressed, death tolls will rise: opioids are on track to claim the lives of another half-million Americans within the next decade. That’s like wiping out the entire city of Atlanta. The economic cost is also astronomical. The Council of Economic Advisors has estimated that, in 2015, “the economic cost of the opioid crisis was $504.0 billion, or 2.8 percent of GDP.”

Mello: If there’s one picture that brings home the shocking toll, it’s this one, showing trends in U.S. deaths based on data from the Centers for Disease Control and Prevention.  Nearly all of the “Poisoning” deaths shown here are opioid related. In terms of what’s killing Americans, opioids dwarf car crashes and guns.

Opioid lawsuits are now making news . Some of the actions are criminal, pursued by the states and federal government. Others of those suits are being initiated by cities, counties, and even states. What do those latter suits allege and what damages are the public plaintiffs trying to recover?

Engstrom: In the past four years, roughly 400 cities, counties, and states have initiated lawsuits seeking recovery for their additional public spending traceable to the opioid epidemic. The governmental entities claim they have been injured because defendants—typically, opioid manufacturers, distributors, and big retail pharmacies—have pumped opioids into the hands of their citizens and, in so doing, increased their spending for governmental services. Everything from policing, education, foster care, the provision of health care, even the operation of coroner’s officers, have all been made more expensive because, as compared to a healthy citizenry, an opioid-addicted populace is far less productive and needs much more by way of government help. Facing these spiraling costs, the governmental plaintiffs contend that the opioid defendants—who, they contend, caused and profited from this crisis—should foot the bill.

So, the typical defendants in these cases are opioid manufacturers, distributors, and big retail pharmacies. What is it that the plaintiffs are alleging these defendants did wrong?

Mello: There are some variations state to state, but for manufacturers, plaintiffs are typically claiming that they made false statements to prescribers and others that the drugs were safer and less addictive than alternatives, even when mounting evidence showed otherwise; that they failed to warn physicians and patients about the risks; and that the products were defectively designed—for example, because manufacturers didn’t make the pills tamper-resistant. For distributors and retailers, the claims are that these defendants failed to monitor, detect, investigate, and report suspicious orders of prescription drugs, even though reasonably prudent suppliers would have done so and the federal Controlled Substances Act requires suppliers to maintain effective controls against diversion of controlled substances to illicit markets.

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There is a wealth of data that could help hospitals cut costs while still providing high-quality service for patients, if physicians were willing to join forces with administrators to truly understand how much their services cost, according to a new article by Stanford researchers.

The Centers for Medicare and Medicaid Services (CMS) has been pushing physicians and providers toward population-based payment, which requires that providers reduce their internal costs below payment levels.

In this effort, the beleaguered health-care payer for the elderly has been undertaking innovative payment models, such as accountable care organizations (ACOs) and bundled payment that require providers to better coordinate care and reduce reimbursements and unnecessary or redundant patient procedures.

“However, it has proven challenging for the models, which focus on costs from the payer perspective, to achieve the desired effect of reduced Medicare spending,” writes Merle Ederhof, PhD, in this Health Affairs Blog. The researcher who focuses on issues at the intersection of health-care and accounting is with Stanford’s Clinical Excellence Research Center.

Her co-authors, Alexander L. Chin, MD, MBA and Jeffrey K. Jopling, MD, MSHS, are also at the center, which is dedicated to discovering, testing and evaluating cost-saving innovations in clinical care.

Changing old patterns at hospitals and among physicians

“Highly detailed cost data generated by internal cost accounting systems already exist in a large, and growing, number of health-care organizations,” says Ederhof. 

As Ederhof wrote in this New England Journal of paper last year, the data collected by the Healthcare Information and Management Systems Society shows that more than 1,300 U.S. hospitals have adopted sophisticated internal cost accounting systems.

The authors argue that the cost data produced by these accounting systems can be used in hospitals internally to lower their costs of providing services to all their patients, both within and outside the Medicare system. But physicians must get on board.

“The high adoption rate of these cost-measurement systems is not surprising, considering that the systems are designed around the existing data infrastructure that providers must have in place for billing purposes,” the authors write. “However, while provider administrators have used such cost accounting systems for some time, we are only now beginning to see them being used by interdisciplinary teams involving physicians to restructure clinical processes.”

Some large health-care systems have already started using these accounting systems alongside teams of physicians.

Partners HealthCare in Boston has started to use this approach to analyze costs for a set of services, for example, in a recent project a team of spine surgeons reviewed and discussed unblinded comparisons at the episode and cost-category levels. 

“Analysis of the costs in the individual categories revealed variation in clinical processes across surgeons, which was very illuminating to the team,” the authors wrote.

Leaders at NYU Langone Health have also started to use the cost data in the organization’s “Value-Based Management” initiative. A key feature of the initiative, the authors write, is a dashboard that is accessible to all physicians. For each specific diagnosis-related group (DRG), the dashboard shows cost averages for each physician performing the procedure, at the procedure level and at the level of individual cost categories, such as the ICU, laboratory, operating room and therapies.

“Physicians have been highly engaged and interested in the dashboard since it allows them to compare their costs to their peers and external benchmarks, and to learn how they can restructure clinical processes to lower their costs,” the authors write.

This Value Based Management initiative at NYU, which incorporates cost savings targets, development-level incentives and quality components, has apparently resulted in substantial cost savings for the organization.

Stanford Health Care has also joined the movement to promote value-based care, recently launching its Cost Savings Reinvestment Program. 

Compare, for example, the average cost for a hip replacement surgery among five surgeons who perform the surgery in the same hospital. Then take the “positive outlier,” or the surgeon with the lowest cost for the surgery.

“Once positive outliers are identified, detailed analysis that combines physicians’ clinical expertise and administrators’ insight can uncover ways in which clinical processes can be restructured to deliver high-quality care at lower total episode cost,” the authors wrote.

Then the interdisciplinary team of physicians and administrators must try to understand why that surgeon’s costs are lower and what he or she does differently. Did she order physical therapy sooner after the hip-replacement surgery? Did he use a different anesthesia approach that resulted in a shorter recovery for the patient? 

But you still have to get those four, more expensive surgeons to adopt the less-expensive treatments. And that can go to the heart of a physician’s identity.

“Even just a few years ago concern for the cost of providing health-care services still heavily clashed with physicians’ professional identity,” Ederhof said in an interview. 

The authors believe there is no turning back.

“In my view, the shift in recent years is attributable to the fact that physicians are starting to realize that the rising costs of the U.S. health-care system are no longer sustainable and that things will have to change — with or without their collaboration,” Ederhof said.