Hospitalists Can Address Causes of Skyrocketing Health Care Costs


Alarms about our nation’s health-care costs have been sounding for well over a decade. According to the Centers for Medicare & Medicaid Services (CMS), spending on U.S. health care doubled between 1999 and 2011, climbing to $2.7 trillion from $1.3 trillion, and now represents 17.9% of the United States’ GDP.1

“The medical care system is bankrupting the country,” Paul B. Ginsburg, PhD, president of the Center for Studying Health System Change (HSC), based in Washington, D.C., says bluntly. A four-decade-long upward spending trend is “unsustainable,” he wrote in the New England Journal of Medicine with Chapin White, PhD, a senior health researcher at HSC.2

Recent reports suggest that rising premiums and out-of-pocket costs are rendering the price of health care untenable for the average consumer. A 2011 RAND Corp. study found that, for the average American family, the rate of increased costs for health care had outpaced growth in earnings from 1999 to 2009.3 And last year, for the first time, the cost of health care for a typical American family of four surpassed $20,000, the annual Milliman Medical Index reported.4

Should hospitalists be concerned, professionally and personally, about these trends? Absolutely, say hospitalist leaders who spoke with The Hospitalist. HM clinicians have much to contribute at both the macro level (addressing systemic causes of overutilization through quality improvement and other initiatives) and at the micro level, by understanding their personal contributions and by engaging patients and their families in shared decision-making.

But getting at and addressing the root causes of rising health-care costs, according to health-care policy analysts and veteran hospitalists, will require major shifts in thinking and processes.

Contributors to Rising Costs

It’s difficult to pinpoint the root causes of the recent surge in health-care costs. Victor Fuchs, emeritus professor of economics and health research and policy at Stanford University, points to the U.S.’ high administrative costs and complicated billing systems.5 A fragmented, nontransparent system for negotiating fees between insurers and providers also plays a role, as demonstrated in a Consumer Reports investigation into geographic variations in costs for common tests and procedures. A complete blood count might be as low as $15 or as high as $105; a colonoscopy ranges from $800 to $3,160.6

Bradley Flansbaum, DO, MPH, SFHM, an SHM Public Policy Committee member and AMA delegate, says rising costs are a provider-specific issue. He challenges colleagues to take an honest look at their own practice patterns to assess whether they’re contributing to overuse of resources (see “A Lesson in Change,”).

“The culture of practice has developed so that this is not going to change overnight,” says Dr. Flansbaum, director of hospitalist services at Lenox Hill Hospital in New York City. That’s because many physicians fail to view their own decisions as a problem. For example, says Dr. Flansbaum, “an oncologist may not identify a third round of chemotherapy as an embodiment of the problem, or a gastroenterologist might not embody the colonoscopy at Year Four instead of Year Five as the problem. We must come to grips with the usual mindset, look in the mirror, and admit, ‘Maybe we are part of the problem.’”

The culture of practice has developed so that this is not going to change overnight. An oncologist may not identify a third round of chemotherapy as an embodiment of the problem. We must come to grips with the usual mindset, look in the mirror, and admit, 'Maybe we are part of the problem.'

—Bradley Flansbaum, DO, MPH, SFHM

Potential Solutions

Hospitalists, intensivists, and ED clinicians are tasked with finding a balance between being prudent stewards of resources and staying within a comfort zone that promotes patient safety. SHM supports the goals of the ABIM Foundation’s Choosing Wisely campaign, which aims to reduce waste by curtailing duplicative and unnecessary care (see “Better Choices, Better Care,” March 2013). Also included in the campaign (www.ChoosingWisely.org) are the American College of Physicians’ recommendations against low-value testing (e.g. obtaining imaging studies in patients with nonspecific low back pain).

“Those recommendations are not going to solve our health spending problem,” says White, “but they are part of a broader move to give permission to clinicians, based on evidence, to follow more conservative practice patterns.”

Still, counters David I. Auerbach, PhD, a health economist at RAND in Boston and author of the RAND study, “there’s another value to these tests that the cost-effectiveness equations do not always consider, which is, they can bring peace of mind. We’re trying to nudge patients down the pathway that we think is best for them without rationing care. That’s a delicate balance.”

Dr. Flansbaum says SHM’s Public Policy Committee has discussed a variety of issues related to rising costs, although the group has not directly tackled advice in the form of a white paper. He suggests some ways that hospitalists can address cost savings:

  • Involve patients in shared decision-making, and discuss the evidence against unnecessary testing;
  • Utilize generic medications on discharge, when available, especially if patients are uninsured or have limited drug coverage with their insurance plans;
  • Use palliative care whenever appropriate; and
  • Adhere to transitional-care standards.

On the macro level, HM has “always been the specialty invited to champion the important discussion relating to resource utilization, and the evidence-based medicine driving that resource utilization,” says Christopher Frost, MD, FHM, medical director of hospital medicine at the Hospital Corporation of America (HCA) in Nashville, Tenn. He points to SHM’s leadership with Project BOOST (www.hospitalmedicine.org/boost) as one example of addressing the utilization of resources in caring for older adults (see “Resources for Improving Transitions in Care,”).

What else can hospitalists do? Going forward, says Dan Fuller, president and co-founder of IN Compass Health in Alpharetta, Ga., it might be a good idea for the SHM Practice Analysis Committee, of which he’s a member, to look at its possible role in the issue.

We need the time to make these calls [to PCPs], to sit down with families. This adds value to our health system and to society at large.

—Dr. Frederickson

Embrace Reality

Whatever the downstream developments around the Affordable Care Act, Dr. Ginsburg is “confident” that Medicare policies will continue in a direction of reduced reimbursements. Thomas Frederickson, MD, FACP, FHM, MBA, medical director of the hospital medicine service at Alegent Health in Omaha, Neb., agrees with such an assessment. He also believes that hospitalists are in a prime position to improve care delivery at less cost. To do so, though, requires deliberate partnership-building with outpatient providers to better bridge the transitions of care.

At his institution, Dr. Frederickson says, hospitalists invite themselves to primary-care physicians’ (PCP) meetings. This facilitates rapport so that calls to PCPs at discharge not only communicate essential clinical information, but also build confidence in the hospitalists’ care of their patients. As hospitalists demonstrate value, they must intentionally put metrics in place so that administrators appreciate the need to keep the census at a certain level, Dr. Frederickson says.

“We need the time to make these calls, to sit down with families,” he says. “This adds value to our health system and to society at large.”

SHM does a good job, says Dr. Frost, of being part of the conversation as the hospital C-suite focuses more on episodes of care.

“The intensity of that discussion is getting dialed up and will be driven more by government and the payors,” he adds. The challenge going forward will be to bridge those arenas just outside the acute episode of care, where hospitalists have ownership of processes, to those where they do not have as much control. If payors apply broader definitions to the episode of care, Dr. Frost says, hospitalists might be “invited to play an increasing role, that of ‘transitionist.’”

And in that context, he says, hospitalists need to look at length of stay with a new lens.

Partnership-building will become more important as the definition of “episode of care” expands beyond the hospital stay to the post-acute setting.

“Including post-acute care in the episode of care is a core aspect of the whole” value-based purchasing approach, Dr. Ginsburg says. “Hospitals [and hospitalists] will be wise to opt for the model with the greatest potential to reduce costs, particularly costs incurred by other providers.”

Gretchen Henkel is a freelance writer in California.


  1. Centers for Medicare & Medicaid Services. National health expenditures 2011 highlights. Centers for Medicare & Medicaid Services website. Available at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/highlights.pdf. Accessed May 6, 2013. costs how much? Consumer Reports website. Available at: http://www.consumerreports.org/cro/magazine/ 2012/07/that-ct-scan-costs-how-much/index.htm. Accessed Aug. 2, 2012.
  2. White C, Ginsburg PB. Slower growth in Medicare spending—is this the new normal? N Engl J Med. 2012;366(12):1073-1075.
  3. Auerbach DI, Kellermann AL. A decade of health care cost growth has wiped out real income gains for an average US family. Health Aff (Millwood). 2011;30(9):1630-1636.
  4. Milliman Inc. 2012 Milliman Medical Index. Milliman Inc. website. Available at: http://publications.milliman.com/periodicals/mmi/pdfs/milliman-medical-index-2012.pdf. Accessed Aug. 1, 2012.
  5. Kolata G. Knotty challenges in health care costs. The New York Times website. Available at: http://www.nytimes.com/2012/03/06/health/policy/an-interview-with-victor-fuchs-on-health-care-costs.html. Accessed March 8, 2012.
  6. Consumer Reports. That CT scan costs how much? Consumer Reports website. Available at: http://www.consumerreports.org/cro/magazine/ 2012/07/that-ct-scan-costs-how-much/index.htm.

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