The ultimate challenge in controlling healthcare costs: reducing needless care

October 8, 2014  |  General

Efforts to reduce overuse of health care services run counter to the dominant financial incentives in our fee-for-service system, challenge the cultural assumption that more is better, and raise concerns about stinting on necessary care.

That quotation is from a recent editorial in the New England Journal of Medicine. It points out the often quoted estimate that 25-35% of all medical care either doesn’t do any good or is actually potentially harmful, what the editorialist calls low-value care. That is a huge problem, one that will prove very difficult to solve.

The fundamental issue as I see it is that, although founded on science, medicine is very imperfect as a science. It’s a mixture of science, near-science, intuition, guesswork, and blind luck. Depending upon the disease or condition, the more uncertain portions of medical practice figure much more prominently than the certain ones. Over the past several decades we have tried more and more to use evidence-based medicine, that is, doing only things and using only treatments that hard evidence has shown to be beneficial. Unfortunately, rigorous studies of what works and what doesn’t work are difficult and expensive to do. More than that, a great deal of what we do doesn’t even lend itself to that kind of research. We’re often stuck with what committees of experts recommend based upon weaker studies or just opinions.

The other huge problem is with how fee-for-service medical practice works: doctors are generally paid  much more for doing things than for not doing things. Low benefit or even useless treatments represent somebody’s revenue stream; limiting or even eliminating them takes money out of practitioners’ pockets, creating a strong impetus to keep going as we are. But the enormous cost may finally be convincing the public that something has to change:

Public acceptance of a role for policy in reducing the use of low-value care in the United States is tenuous but increasing with growing awareness of the burden that health care spending places on federal and state budgets and with patients’ increasing exposure to health care costs.

I have no doubt that ultimately physicians will be told what they can and cannot do, most likely through the mechanism of what insurance payers will pay for. We’ve been seeing various forms of that kind of limitation for years and the process will accelerate. The mechanism of high co-pays was hoped to help by giving patients a financial incentive to avoid needless medical care. But there is a problem with that, too.

Demand-side interventions — targeting patients — principally include financial incentives and education. Increasing patient cost sharing is a blunt instrument: research shows that it can reduce use of both low- and high-value care, which suggests that patients do not have the information or skill required to differentiate between the two.

Many people outside the medical field think that applying simple market principles would help. If things cost so much, why not just increase the number of physicians and let them compete with each other on cost. Surely the result would be, as with other supply and demand commodities, that costs will come down. It doesn’t happen that way. In medical care, supply drives demand rather than the other way around. Adding more physicians who do things results in more things being done, something known for 50 years.

I don’t know what will happen with all this, but something will. But this will be the general direction:

To address overuse, we now need to work against the current of culture and payment models that still largely reward volume over value.


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