Cost-awareness anecdote: Blood Test Surprise (contest finalist)

The following anecdote is from Brad Wright, a graduate student from Durham, NC

In the spring of 2005, the sinus infection returned. I awoke severely congested with a pounding forehead and pain around my eyes that grew worse when I bent to tie my shoes. The feeling was familiar. Two years earlier, I had similar symptoms, but was uninsured and endured a miserable week with nothing but over-the-counter medication. Now they were back.

Fortunately, when I started graduate school, my father insisted that I have health insurance. As a healthy 24 year old, I didn’t see the need, but he agreed to foot the bill for a high-deductible insurance policy to cover me in the event of catastrophic illness. Except for four physician office visits subject only to a $35 co-payment, my policy offered no benefits until I spent $3,000 out of my own pocket. With my sinuses throbbing, I knew I needed to use one of those visits. Overwhelmed by the list of “in-network” providers on the insurer’s website, I picked an internist based on convenience—his practice was located in a medical complex near my home.

Arriving for my appointment, I checked in and presented my insurance card to the receptionist. “Your visit today will be $35,” said the woman behind the desk. I was relieved to hear that my coverage was working as promised. A nurse ushered me to an exam room, where the physician promptly entered, half-heartedly listened to my complaint, and confidently asserted that I did not have a sinus infection because I had no fever. I wanted to say “Really? Mind handing me a tissue so that I can show you what’s been coming out of my head?” but resisted the urge. Instead, I clarified that fever or no, I didn’t feel well, and believed my sinuses were the culprit. At this, the internist lost patience. He ordered some lab work and a sinus CT scan to rule out infection, and said that I could have everything done downstairs.

Despite my $35 office visit, I knew my insurance wouldn’t cover anything else until I met my deductible, so I needed to find out the cost of the CT scan. Doing so was much more difficult than I expected. Admissions didn’t know the cost, so they called the imaging department. Imaging had no idea, and threw it back to admissions where, after much searching, a big black binder full of prices was located in a cabinet, alongside packets of coffee creamer, some paper clips, and a couple of dried up ink pens. The sinus CT would cost roughly $900, which I could not afford. I headed instead to the lab to get my blood drawn, not knowing that I was about to make a costly mistake.

I worked as a phlebotomist during college, so I knew that lab tests were expensive, but that most insurers negotiated discounted rates that were only a fraction of the sticker price. Besides, the lab work was routine—a comprehensive metabolic panel and complete blood count—so I didn’t think to ask how much it would cost. My mistake was assuming that the lab was in-network, because the in-network internist I had just seen worked in the same building and referred me to the lab.

A month later, the bad news came in the mail. The lab was out-of-network, and I owed $478. While this wasn’t the five-figure medical bill many families face, everything is relative. For me, a graduate student living almost entirely on borrowed money, the bill changed how I bought groceries, socialized with friends, and commuted to school. For six months, I fought to scrape together enough money to make monthly payments. The experience, while costly, taught me a lot about our fragmented health care system, how little patients or providers know about the real cost of health care, and how hard it is for patients to make price-based decisions when the system isn’t designed with that in mind.

I had learned my lesson. Later, when a dermatologist put me on medication requiring monthly blood tests, I took out the yellow pages, looked up laboratories, and dialed the phone. “I’m uninsured,” I said (not far from the truth given my coverage) “and I need to have a lipid panel and a liver function test. How much will this cost?” Some labs knew, and some labs didn’t, and the answers varied widely. Needless to say, I chose the least expensive option. Making the decision was easy, getting the information on which to base the decision was—and is—the real challenge.

Cost-awareness anecdote: From Pain to Poverty (contest finalist)

The following anecdote is from Dr. Steve Sanders (Twitter: @spsanders), a primary care doctor from Tulsa, OK.

“What am I going to do now Doc?” asked Mike, a down on his luck, 29 year–old recently unemployed truck driver, as he handed me his hospital bill.

Mike was seen at our local emergency department on a Friday evening with complaints of indigestion. Earlier that day he and his wife Susan celebrated their second anniversary by splitting a store bought pepperoni pizza. Mike had just lost his job and his wife, already working two jobs, managed to keep them afloat. When Mike later complained of indigestion, Susan became alarmed. She had just read about the symptoms of heart disease in the local paper. Mike wanted to get some antacids but Susan demanded he go to the hospital. Mike stated he initially protested, but when it came to his health he looked to his wife for advice.

He said he wanted her to drive him to the hospital and told me his wife wouldn’t hear of it. “We’re going to call 911, she told him. “You could die on the way to the hospital.” Now, Mike admitted, that made him scared and he quickly agreed. Fifteen minutes later he was on a gurney rolling through the double doors of the emergency department.

Physical assessment by the emergency resident physician came quickly followed by an EKG, chest x-ray, CT scan of the chest (“they said I might have had a blood clot”), and lab, specifically including cardiac enzymes. Mike said his only complaint was it took over five hours before he heard any news.

“Everything looks good,” said the resident. “Let me run all this past my attending and see if we can get you home.” Mike said by then his pain had been gone for hours and he relaxed by receiving the good news. When the resident returned, however, Mike said he knew something was wrong.

“Sorry Mike, but my attending thinks you need to stay for a chest pain evaluation, “ stated the resident with no hint of emotion. “Your first cardiac enzyme was normal, but he thinks you need another evaluation in six hours followed by a stress test, “ he continued.

Mike said he tried to protest. “But everything was normal? Can’t I just see my primary physician later,” he quizzed the resident. He said the resident looked down at his chart seemingly trying to choose his words and said, “Can’t be too careful with chest pain.” With that, the resident physician disappeared, followed by the nurse who quickly added insult to his non-injury.

“We don’t do stress tests on the weekends,” she explained. “The Hospitalist will need to keep you until Monday at the earliest.” Mike said upon hearing this news he protested, again wanting to just go home.

“Then you’ll have to sign out AMA (against medical advice). We can’t be responsible if you go home and have a heart attack and die,” she quickly added.

Mike said by then he was too tired to protest. The thought of dying at home also had him upset. He stated when he told his story to the Hospitalist, she just shook her head and laughed. “They just don’t want to get sued,” she explained. “We get these normal cases all the time. We try to tell them this can be handled on an outpatient basis, but what can we do?” She laughed again, which Mike took as a good sign he was really okay.

He left the hospital the following Tuesday—the heart scan machine was broken on Monday—with a clean bill of health and a diagnosis of “gastric reflux,” which I explained was the indigestion he first described.

I looked at his hospital bill. Charges for everything from the ambulance ride to the emergency department evaluation and eventual hospitalization with cardiac stress tests came to just under $11,000. This number was circled at the bottom of the bill with several question marks in red ink written to the side by Mike’s wife.

“We don’t have any money,” Mike explained. “Susan’s insurance won’t cover it, since we forgot to put me on her policy when I lost my job,” he continued. “We’re gonna have to file bankruptcy Doc. I don’t know what else we can do.”

What would have been a 15–minute office visit providing reassurance and education to a patient we knew quite well became a 72–hour ordeal by a health system treating a disease and not the patient, trading a patient’s pain for financial poverty. Surely we can do better.

Essay Contest Finalists Announced!

On Labor Day we asked doctors and patients to send us anecdotes that illustrate the importance of cost-awareness in medicine. What was in it for them? A chance to shine a national spotlight on a big problem: doctors and patients have to make decisions in a vacuum, without any information on how those decisions impact what patients pay for care. Also in it for them was a chance to win one of two $1000 prizes.

The launch of the contest was covered in newspapers, radio, TV and dozens of blogs.

Two months later we received 115 submissions from all over the country - New York to California, Texas to North Dakota, Alaska to Oklahoma. According to essay contest judge Dr. Atul Gawande, a surgeon and staff writer at the New Yorker, "These [stories] are powerful just for the sheer volume of unrecognized misery alone."

There were many outstanding submissions, which we ultimately narrowed down to six finalists - three clinicians and three patients.

Clinicians
Dr. Steven Sanders: a primary care doctor from Tulsa, Oklahoma
CNM Tarcia Edmunds-Jehu: a nurse midwife from Boston, Massachusetts
Dr. Grayson Wheatley: a cardiovascular surgeon from Phoenix, Arizona

Patients
Jessa Hartford: an unemployed mother from Sacramento, California
Brad Wright: a graduate student from Durham, North Carolina
Kelly Cheramy: the wife of a man with a chronic illness from McFarland, Wisconsin
________________________________________________________

Leading up to the $1000 prize winner announcement on December 15, we will publish each of their stories separately for you to read on our blog. Starting after January 1st, we will also publish 52 of the additional outstanding stories we received - there will be a new story here every week until 2012.

In the mean time, on behalf of the Costs of Care team, I would like to thank everyone who sent us their stories, our esteemed judges, and our contest sponsors. Stay tuned!

(Image courtesy of Dr. S. Ifran Ali, a physician from Tampa, FL who submitted a photograph of his daughter with his entry to our contest)

With or without GPOs?

Misaligned interests – they happen far more often than we think. At the core of the 2008 financial crisis for instance were rating agencies being compensated by the very firms whose securities they assessed that lead to unreliable ratings leading bankers and investors astray. The Enron mess – ring a bell? Did we not learn anything for that? In the healthcare space – we see this happen too. Robert Litan and Hal Singer write a great article in HBR drawing our attention to broken compensation structures that result in higher cost outcomes for healthcare consumers. I don't mean the dysfunctional fee-for-service payment model for doctors.

What am I trying to get at? GPOs. GPOs or group purchasing organizations are organization whose role is to serve their member hospitals money by relieving them of some of the transaction costs associated with procuring medical supplies on their own. Without a doubt, they play a very critical role in cost containment by leveraging buying power in the market. If hospitals were to independently contract for medical supplies they would be stumped with astronomically higher costs for supplies. We're talking in the billions here. In essence, GPO's "seem" indispensible.

The issue however is not that they stand to serve a critical function but how reliable they are. A recent GAO report questions the price saving intent of GPOs. Drawing on the most relevant conclusions from the article reveal that GPO contracts did not ensure that hospitals saved money. In many cases, among hospitals of all sizes, GPO negotiated contracts were often higher for supplies like pacemakers and safety needles. The GAO study is in stark contrast to the GPO funded studies touting substantial cost savings for hospitals – go figure!

This brings us to examine how GPO's make their money. By hospitals themselves. By charging a percentage of the total outlay their member hospitals pay to preferred medical suppliers on the negotiated contracts. The economics of it are simple – higher the expenditures - higher the GPO compensation. Are you thinking about kickbacks? Back in the 1980's GPOs convinced Congress of their indispensible role in reining in healthcare costs and they are thus exempt from the "general statutory ban on kickbacks where the government covers health care costs".

A recent article I read over the summer, does a great job in bringing to light GPOs engaged in a partly dirty business under the guise of helping hospitals. What the author here focuses on is how GPOs stifle innovation and even went as far in stating that GPOs keep life saving devices from entering the market. He relates his particular experience of getting a needless-syringe proven to lessen catheter infections into hospitals. His product was significantly less expensive and more effective. That's why he was thwarted time and again.

With the perverse incentives for GPOs, their "intended" pro-competitive stand is questionable. What is needed here? The HBR article concludes that these perverse incentives need to be reversed by repealing the safe harbor provisions that exempt GPOs. Over and above policy change – how about transparency of GPO contracts to start with?

Itemized receipt for my health insurance premium

There’s been lots of discussion recently on transparency. Whether that means getting a receipt for the income tax we pay and what it’s used for or providing a price list to consumer/patients for different medical procedures in a geographic region, the buzz of transparency is everywhere. All this talk has gotten me thinking about renewing my auto insurance - Bear with me, I swear health care costs are related. When I asked for a quote, I got to see exactly how much I pay for each point of coverage. Having auto insurance liability coverage is required by law in my state, but for other types of coverage, I chose the level of coverage that best fit my own risk tolerance. After playing around with different levels of coverage I received a calculate premium payment. I knew that 50% of the premium was for liability coverage, 30% for collision, 10% for additional medical coverage and 10% for services that save me time. Then I took that same standard language and shopped it around. There is lots of competition, and I have a vested interest in getting the right coverage for me for the lowest cost. I own a lot of the responsibility for controlling the premium and the costs of my coverage are very transparent. I have a direct incentive to encourage me to drive safely and to take care of my car. While I could not tell you the statistical likelihood of me getting in an accident; I know that if I do my best to avoid accidents and take care of my car then my risk is reduced and so is the increase in my premiums. My behavior doesn’t eliminate the risk entirely, but then that’s why I have insurance, isn’t it?

I sure wish health insurance worked this way. I have insurance coverage through my employer. Don’t get me wrong, I’m really grateful for it. But my employer gets to figure out what is the most cost effective coverage for them and only then do I get to choose from the couple of selections that they provide. I feel very disconnected from the cost of insurance. Even though I only pay a portion of the total premium, I know vaguely that I might play a role in keeping health care costs in control by diet and exercise and regular checkups, but I don’t have a very visible way of seeing the impact. I sort of know what my health insurance covers. For instance, I know my employer ensures that all major plans cover approximately the same thing. But then my choice is based on which doctors I have access to and the overall portion of the premium I pay. I also know what my co-pays are and what my deductible is. But I don’t know how much of my health insurance premiums go to catastrophic coverage, preventive care services, chronic care management, prescription coverage, etc. I feel very disconnected from the premium cost and even more disconnected from how I impact that premium.

Out of curiosity, I asked the insurance agent from whom I purchased auto insurance whether their health insurance quotes were itemized in the same way as their auto insurance quotes. Let’s just say that the lack of transparency is not just a symptom of employer coverage.

We keep asking for transparency on health care costs thinking that it will help align consumer and practitioner incentives to use health care effectively. Maybe we could start by asking for transparency on the costs we, as consumers, have a real relationship to, the amount we pay for insurance. It’s all well and good to know how much a triple bypass costs at the different hospitals in my town; I just don’t know that knowing the difference would induce better health behavior on my part. What is relevant to me is what my premium actually buys me and where I might play a role in controlling it.

Costs of Care Essay Contest!

On September 7, 2010 Costs of Care launched a national essay contest, with $1000 prizes for the best anecdotes from patients and clinicians illustrating the importance of cost-awareness in medical decision-making. We have a great line-up of high-profile judges. Details available at www.costsofcare.org/essay

Gov. Michael Dukakis, former Democratic nominee for President of the United States
Tim Johnson, Chief Medical Correspondent of ABC News
Atul Gawande, surgeon and New Yorker staff writer
Jeffrey Flier, Dean of Harvard Medical School
Gov. Michael Leavitt, former United States Secretary of Health and Human services

Entries must be no longer than 750 words, and should be typed and double-spaced. Students strongly encouraged to submit an anecdote. E-mail submissions to contest@costsofcare.org are preferred, however entries may also be mailed to

Costs of Care
21 Father Gilday Street, Suite 115
Boston, MA 02118

Deadline: November 1st, 2010

Additional submission information available here

Will it be misery or happiness for hospitals?

- Kristine Komives

How do hospitals make money? - By spending less than they earn.

But here is the situation that hospitals and health centers will be facing as health care reform legislation is implemented - there will be growing demand to eliminate wasteful spending, including excess care that would otherwise bring in revenue.

In the last few days, Moody’s downgraded the outlook for non-profit hospitals and health centers due to decreases in volume and lower reimbursement. In 2009, many hospitals saw salary freezes, suspension of construction projects or other capital improvement projects, layoffs and other drastic cost saving measures. But Moody’s predicted that “management teams will find it increasingly difficult to cut additional expenses.”

One of the overarching goals of health care reform is to bend the health care cost curve. One approach to do this is for third party payers to simply pay less for the health care provided. The inevitable cuts in Medicare and Medicaid reimbursement that will take place over the next several years will do just that.

Another approach involves patients using less services. There appears to be evidence that consumers are certainly spending less in light of the recession economy: not filling prescriptions, not following up on appointments or opting for plans with lower premiums and lower out of pocket expenses. In a recent article in Health Affairs, looking at Health spending by source show that “spending by households grew at 4.3 percent in 2008, a deceleration from 5.9 percent growth in 2007.” The article concludes “In response to poor economic conditions in 2008, people may have reduced their spending on health care and forgone some medical treatment. . .” Recent estimates on current spending in health care in 2010 corroborate the ongoing slowdowns in overall health care spending across all payment sources. USA Today just published its review of health spending finding that “Spending on doctor’s hospitals, drugs and other medical care climbed at a 2.7 annual rate person in the first half of 2010, the smallest increase since the Bureau of Economic Analysis began tracking medical care in 1959.”

The key to bending the cost curve correctly however is not for patients to stop getting the services they need to be healthy, as currently appears to be the case. Moreover, many health care costs are far beyond the realm of patient control. One thing seems certain however, bending the cost curve is going to mean decreasing revenue for those who provide care, especially hospitals and health systems.

Many of the strategies hospitals used to control their own costs in 2008 and 2009 were short term. In the long term, hospitals will need to invest money and resources to drive down costs they incur for the revenue they achieve. They will need to bend their own internal cost curves compared to the revenue earned. This will take investment in process reengineering and IT resources. They will need to achieve better alignment between clinical and administrative systems. This alignment must be completed not only to foster transaction level improvement but must be built to generate a better feedback loop of information to lead to large scale transformation. And all this will be taking place in a climate of unpredictable and likely declining revenue streams and difficult capital markets with which to raise funds. Otherwise their future will continue to be misery and not happiness.

Kristine Komives

Kristine is a recent graduate of the Executive Masters of Health Services Administration at the University of Michigan School of Public Health. She has 12 years of experience working in information technology, most recently in aligning information systems used throughout the supply chain at the University of Michigan Health System. She is very interested in strategic information management and the promise it holds in helping shape long term changes in the way we deliver patient care.