Posts Tagged ‘reducing health care costs’

Health care costs continue to spiral upward. This can’t go on forever.  Health care reform measures that give the government more power to keep health care costs down is one approach, but another word for this is rationing.  Are we ready for that?  Maybe.

The alternative is to for patients to get more involved in paying for and controlling health care costs.  Are we ready for that?  We have to realize there is no free lunch.  We can’t expect to everyone to get all the health care they can use and not have to pay for it somehow.

I’ve written a lot about how we need to use incentives to control our health care costs, focusing primarily on how insurance takes away patients’ incentives to be mindful of the cost of care.

But financial incentives undoubtedly affect physician behavior, too.  A new study found that physicians who own their own practices are more likely to order patient tests that will make the physician practice more money when compared with physicians who are on a salary (Hollingsworth JM, Birkmeyer JD, Zhang YS, Zhang L, Hollenbeck BK. Imaging Use Among Employed and Self-Employed Urologists. J Urol. 2010 Oct 16).  The study used nationally representative data collected by the Federal government and found that self-employed urologists ordered more imaging tests on their patients than did salaried urologists.

I don’t know what the right amount of testing is, but it is clear from high school economics and confirmed by this study that financial incentives affect the way people — including doctors — behave.  Combine these two ingredients:

  1. Financial incentives for doctors to increase use of care, and
  2. The removal of incentives from patients to conserve on the cost of care.

What do you get?  A recipe for a high cost disaster — unless we are willing to cede to insurance companies or government regulators the control to ration our care, a less palatable solution.

To bring down the cost of health care, we need to make sure our incentives are set up to give people high quality medical care at affordable prices.

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It has been a few months since the health care reform bill was signed into law, and so far, for better or worse, I can’t tell that it has made any major difference. Health care practice goes on as it did before.

Considering the vehemence with which this bill was fought, it seems to me that concerns were overrated. Of course, the long-term effects of this bill have yet to be seen. More importantly, real effort to reign in health care costs is yet to come. When that actually happens, maybe we’ll have more to talk about.

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