Reducing Costs in the Changing Fabric of Healthcare

CHICAGO—In 1946, President Truman signed the Hill-Burton Act. The Act, which was intended to launch a program that would improve the health and healthcare of Americans, offered federal funding for the construction and modernization of hospitals, nursing homes, and other healthcare facilities, provided these facilities would offer reduced-cost care to “a reasonable volume” of patients. The legislation aimed to fund the construction of 4.5 hospital beds for every 1,000 people. Currently, however, the United States has 2.5 beds/1,000 people. That said, the number of beds can vary a great deal from state to state. Pennsylvania, for example, has 2.7 beds/1,000 people, while California has 1.8 beds/1,000 people.

Jonas T. Johnson, MD, professor and chair of the department of otolaryngology in the University of Pittsburgh School of Medicine in Pennsylvania, delivered the Joseph H. Ogura Lecture during the 119th annual meeting of the Triological Society, held as a part of the Combined Otolaryngology Spring Meeting. He described the shift in the healthcare landscape from 1946 to the Affordable Care Act (ACA) and made predictions for the future of healthcare. He began his presentation not by calling out California for having too few hospital beds but rather by stating, “We’re overusing healthcare in western Pennsylvania compared with other regions.”

The world of healthcare has changed a great deal since President Truman signed this legislation. The new landscape includes modern technology, accelerating costs, failing hospitals, and evolving practices. Physicians continue to specialize and yet, while there are, as Dr. Johnson explains, “hospitals everywhere,” fewer specialists are available to staff them. In fact, he said, the United States currently has one ear, nose, and throat physician for every 35,000 people and one head and neck surgeon for every 125,000 people.

Medical spending is growing rapidly and, “Of course, most of the spending tends to be at the end of life,” said Dr. Johnson. This has led to the introduction of the value equation. While the old paradigm of healthcare delivery focused on volume, the new paradigm centers around value (quality divided by cost). This means that “we will be increasingly penalized for related readmissions,” said Dr. Johnson, adding that value will be driven by factors such as customer satisfaction. “These are changes that we are going to have to live with.”

Studies have also shown that the number of dollars spent per patient varies greatly by region. Thus, the volume-to-value evolution will require an appreciation of the geographic variation in Medicare services. One thing that is consistent across all regions, however, is the escalating cost of healthcare, which is not sustainable. Moreover, studies have shown time and time again that higher spending does not result in better quality care.

Managing Costs

In response to this revelation, the American Board of Internal Medicine (ABIM) Foundation began the Choosing Wisely campaign in 2012. The campaign now encompasses 70 participating organizations. The American Academy of

Otolaryngology–Head and Neck Surgery (AAO-HNS) is one such participating organization, contributing many relatively obvious recommendations to the campaign, including the following: Do not order a computed tomography (CT) scan of the head and brain for sudden hearing loss, and do not prescribe oral antibiotics for uncomplicated acute tympanostomy tube otorrhea. While the specifics of the Choosing Wisely recommendations may be trivial, the program itself underscores a larger issue: Physicians have a responsibility as financial stewards in the management of healthcare costs. Such stewardship benefits patients individually and the system as a whole.

While the old paradigm of healthcare delivery focused on volume, the new paradigm centers around value (quality divided by cost).

Patients also participate in cost management. In particular, the ACA introduced price-sensitive consumers to the playing field. While the ACA has allowed for more individuals to receive insurance coverage, in some cases their insurance deductibles are between $3,000 and $6,000. This is a tremendous sum of money for many Americans, half of whom do not have enough money to meet such a large deductible, which results in a decrease in healthcare utilization and reduced revenue for the provider. Providers then respond by trying to compete by lowering cost, and insurance companies respond by dropping the higher cost physicians.

The result is a practical reality that affects the practice of medicine. “We are suddenly being treated like everybody else on Angie’s List,” said Dr. Johnson. Not only are physicians competing with other physicians in their geographic area, but they are also competing with physicians online. This competition can take the form of services like Doctor on Demand and Zipnosis.

Identifying Low-Value Care

The new landscape raises the issue of low-value care. “We have to stop operating on people who won’t benefit,” said Dr. Johnson. While there is a natural human tendency to overestimate one’s capabilities, “to intervene under certain circumstances is going to be low value.… We have to do a better job of identifying the frail.” In its most basic sense, frailty is a syndrome of decreased physiological reserve, and it has multiple causes and contributors. Frail patients have diminished strength, coordination, and endurance. Dr. Johnson suggested that it might be important to operationalize the identification of the poor and create a “second pathway” to the operating room. The result would be an identification of potentially inappropriate interventions paired with the offer of an alternative intervention that can stabilize the patient.

We are suddenly being treated like everybody else on Angie’s List. Not only are physicians competing with other physicians in their geographic area, but they are also competing with physicians online. —Jonas T. Johnson, MD

The identification of low-value care will require physicians to understand and live with the uncertainty of their recommendations, while also becoming better at discussing the risks and benefits of action as well as inaction.

Dr. Johnson then introduced the topic of shared decision making, noting that physicians must learn to inform, explain, and discuss preferences with the patient. Once the conversation is complete, the physician and the patient can, together, decide on a course of action.

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Lara Pullen is a freelance medical editor based in Illinois.