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Provider-led cost control

Policymakers are demanding cost-effectiveness from physicians who may not know the cost of equipment.

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Photo by Phalinn Ooi (Flickr / Creative Commons)

In an era of increasing government pressure to contain costs, policymakers have encouraged providers to re-evaluate the use of expensive medical devices for cost-effectiveness. This requires physicians to be familiar with the pricing of commonly used devices, and to actively choose less expensive alternatives. However, physician knowledge of device costs remains largely unexplored.

To shed light on this knowledge gap, Okike et al. surveyed 503 orthopedic surgeons from seven academic medical centers (96% response rate) regarding the cost of three common implantable orthopedic devices. Participants were considered to have correctly estimated cost if their estimate was within 20% of the actual cost. The accuracy of responses was then correlated with individual physician characteristics, such as years in practice, regular use of the device, and participation in device cost activities.

Okike et al. had three major findings: First, while attending physicians were able to correctly identify the more expensive device 99% of the time, they were only able to provide an accurate estimate of the cost 21% of the time. Second, the price of low cost devices was consistently overestimated (80% of the time). Finally, physician self-assessed knowledge was correlated with actual knowledge (p<0.001 for trend).

Commentary

Okike et al. provide meaningful data on a significant question: Do surgeons know the cost of commonly used devices? The orthopedic field was an excellent study choice since it accounts for the single largest procedural payments from Medicare and the device cost is often the largest contributor (up to 87%) to the cost of an orthopedic procedure.

The study highlights an important point regarding the failures of physician-led cost-containment: providers have inadequate knowledge regarding the cost of devices, supplies, and services. Unfortunately, as the authors note, prior attempts to pass legislation mandating public disclosure of medical device prices has stalled in congressional committees. To make further progress at reducing the cost of care without reducing quality, payers, policymakers, and providers need to strongly advocate for transparency.

Okike K et al. Health Affairs. 2014. 33(1). 103-109.

by

Andrew A. Gonzalez, MD, JD, MPH

Andrew A. Gonzalez , MD, JD, MPH
About Andrew A. Gonzalez , MD, JD, MPH

Andrew A. Gonzalez, MD, JD, MPH is a general surgery resident at the University of Illinois Hospital and Health Sciences System in Chicago and a lecturer in health policy at the University of Illinois at Chicago (UIC) College of Medicine. Contact: Facebook | Twitter | More Posts

1 Comment on Provider-led cost control

  1. Cedric Dark // March 3, 2014 at 4:40 pm //

    I find it hilarious that there is this huge push for transparency in health care pricing yet only 1 in 5 docs from this study is in the ballpark of guessing the correct cost for surgical equipment. Transparency has a long way to go before it hits prime-time with patients.

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