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Report: 'Comparison Shopping' by Doctors Saves Money

Knowing costs of lab tests up front reduces waste, authors find (Apr. 15)

Research at Johns Hopkins suggests that if hospitals would show physicians the price of diagnostic laboratory tests at the time the tests are ordered, doctors would order substantially fewer of them or would search for lower-priced alternatives.

In a study of up-front price transparency at the Johns Hopkins Hospital (JHH), researchers found that the practice of offering price information reduced the overall use of tests by approximately 9%. Currently, hospitals typically keep both patients and providers essentially blind to the cost of medical services, a system that wastefully contributes to the astronomical cost of health care in the U.S., the researchers say.

“We generally don’t make decisions based on what is cost-effective or what is known to be absolutely necessary for our patients, but knowing the cost of things appears to make us more thoughtful about what we think might be best for their health,” said study leader Leonard S. Feldman, MD. “There’s a lot of waste in medicine because we don’t have a sense of the costs of much of what we do.”

Sharing the price of tests saved hundreds of thousands of dollars at JHH over the course of 6 months, the researchers found.

For their study, Feldman and his colleagues identified 62 diagnostic blood tests frequently ordered for patients at JHH. Dividing the tests into two groups, they made sure prices were attached to one group over a 6-month period from November 2009 to May 2010 at the time doctors ordered the lab tests. They left out the pricing information for the other group over the same period.

When they compared ordering rates with a 6-month period a year earlier when no costs were displayed, the researchers found a nearly 9% reduction in tests when the cost was revealed, as well as a 6% increase in tests when no price was given. The net charge reduction was more than $400,000 over 6 months.

“Our study offers evidence that presenting providers with associated test fees as they order is a simple and unobtrusive way to alter behavior,” Feldman said. “In the end, we ordered fewer tests, saved money, and saved patients from extra needle sticks without any negative outcomes.”

Feldman cautions that there is no “one size fits all” formula for ordering diagnostic tests. When a patient comes into the hospital with an unclear diagnosis, it may make more sense to order five blood tests at the same time, even when some of them may ultimately prove unnecessary. In the long run, it is less expensive to run more tests to get a quicker diagnosis than to have someone rack up bills in the hospital while waiting for that diagnosis, he said.

Source: Johns Hopkins; April 15, 2013.

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