Practice Economics

Should Physicians Care about Costs?


The healthcare industry is under major stress from steady declines in all sources of revenue. The drivers are multifactorial but include declining reimbursement from payors, a shift from fee-for-service to pay-for-performance, and state-by-state variability in patients covered by Medicaid, by high-deductible plans, or by being uninsured. In academic medical centers, rising overhead costs coupled with a reticence to raise student tuition and declining research funding streams have further compounded the situation.

Regardless of the actual numbers, all healthcare institutions are feeling the financial pinch. Most are intensely focused on cost-reduction efforts. The question is, what do physicians think about their role in these efforts, and what efforts will be most effective?

A recent survey of a large physician group practice found that many physicians do not know what their cost drivers are or do not think it is their role to participate in cost-reduction efforts.1 Of note, the group practice in the survey is a Pioneer Medicare accountable care organization (ACO) and participates in a combination of fee-for-service and capitated contracts.

Within the survey, the researchers embedded a cost-consciousness scale, which is a validated survey tool designed to assess daily cost consciousness. They also embedded other survey items to determine the physicians’ concerns for malpractice, comfort with diagnostic uncertainty, and perception of patient-family pressure for utilization of services. The average overall cost-consciousness score was 29 out of 44, with higher scores indicating more cost consciousness.

Almost all physicians agreed that they need to reduce unnecessary testing (97%), need to adhere to guidelines (98%), and have a responsibility to control costs (92%). However, 33% felt it was unfair for them to have to be both cost-conscious and concerned with the welfare of their patients.

Approximately a third of respondents also felt that there was too much emphasis on cost and that physicians are too busy to worry about costs.

More than a third (37%) said they did not have good knowledge about test-procedure cost within their system.

More than half of physicians felt pressure from patients to perform tests and procedures (from 68% of primary-care physicians, 58% of medical specialists, and 56% of surgical specialists) and felt pressure to refer to consultants (from 65% of primary-care physicians, 35% of medical specialists, and 34% of surgical specialists).

Based on this survey and other literature about physicians’ perceptions of their role and their ability to control costs, it is clear that the first step in understanding how to engage physicians in cost-reducing efforts is to understand what the drivers are for utilization and what the concerns are for reducing cost. Many hypothesize that the drivers to support the status quo include a fear of litigation, fear of missing a diagnosis, and patient demands for services. Another major driver of current utilization is that there is ongoing support for the status quo, as the majority of reimbursement for providers is still based on fee-for-service.

Change Efforts

One cost-reducing effort that has gained widespread enthusiasm from medical societies is the Choosing Wisely campaign. This campaign is an effort originally driven by the American Board of Internal Medicine (ABIM) Foundation to help physicians become aware of and reduce unnecessary utilization of resources. Each Choosing Wisely list is generated and endorsed by the relevant medical society and widely advertised to physicians via a variety of mechanisms. More than 70 medical societies have participated in the effort to date.

The recommendations are often widely accepted by those in the specialty since they are evidence-based and derived and advertised by their own specialty societies. In the survey mentioned above, almost all physicians agreed that their Choosing Wisely was a good source of guidance (ranging from 92% of surgical specialties to 97% of primary-care physicians). In order to drive the movement from the patient perspective, Consumer Reports has developed educational materials aimed at the consumer side of healthcare (ie, patients and families).

As Consumer Reports suggests, the first step to implementing cost-conscious care is to measure awareness of cost and causes of overutilization. By first understanding behaviors, a group can then work to impact such behaviors. It is highly likely that the drivers are different based on the specialty of the physician, the patient population being served, and the local healthcare market drivers. As such, there will not be a single, across-the-board solution to reducing unnecessary utilization of services (and therefore cost), but interventions will need to be tailored to different groups depending on the drivers of cost locally.

Depending on the issues within a group, successful interventions could include:

  • Decision support tools (for appropriate use of consultants and diagnostic tests)
  • Display of testing costs (not just at the time of ordering)
  • Efforts aimed at patient education (both as general consumers as well as at the point of care)
  • Malpractice reform to support physicians trying to balance cost consciousness with patient welfare

In Sum

We have a long way to go in engaging physicians in efforts to reduce unnecessary utilization and cost. I recommend that hospitalist practices utilize the survey tool used in this study to understand the perceived barriers and drivers of cost within their practice and work with their local administrative teams to better understand patterns of overutilization among their group. Then interventions can be designed to be evidence-based, tailored to local workflow, and both reliable and sustainable.

If done well, hospitalists can have a huge impact on utilization and cost and position their groups and their hospitals well to succeed in this cost-constrained era of healthcare. TH


  1. Colla CH, Kinsella EA, Morden NE, Meyers DJ, Rosenthal MB, Sequist TD. Physician perception of Choosing Wisely and drivers of overuse. Am J Manag Care. 2016;22(5):337-343.

Dr. Scheurer is a hospitalist and chief quality officer at the Medical University of South Carolina in Charleston. She is physician editor of The Hospitalist. Email her at [email protected]

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