Study at Johns Hopkins Shows Price Transparency Works: Physicians Order Fewer Clinical Pathology Laboratory Tests When They Know the Cost
Giving physicians Information on the price of medical laboratory tests at the time of order decreased overall use of such tests by about 9%, researchers said.
Physicians order fewer clinical laboratory tests when they know how much they cost, according to a recent study at the Johns Hopkins University School of Medicine.Those findings are good news for hospital-based pathologists who must often respond to physicians who order expensive esoteric tests that are inappropriate for the patient’s condition or lack documentation as to clinical utility.
The study results show another dimension to the power of transparent pricing in healthcare because it demonstrates that physicians are willing to take cost into consideration when deciding what clinical laboratory tests they should order. Some experts believe that publishing price information on the costs of care empowers consumers to shop for the best price, thus helping to reduce the overall cost of healthcare.
Reduction in use of Medical Laboratory Tests was 9%
Researchers at Johns Hopkins in Baltimore, Maryland, found that giving physicians information on the price of medical laboratory tests decreased overall use of tests by about 9%. Hospitals typically do not disclose the cost of medical services to patients or physicians, a practice that contributes to the rising cost of care, the researchers said.
If hospitals showed physicians the price of diagnostic laboratory tests at the time such tests are ordered, doctors would order fewer tests or search for lower-priced alternatives, the researchers suggested. JAMA Internal Medicine published this research in an article, “Impact of Providing Fee Data on Laboratory Test Ordering. A Controlled Clinical Trial.” The article was published online on April 15.
Hospitals Not in the Habit of Sharing Lab Test Costs with Doctors
Hospitals do not usually display the price of clinical laboratory tests to doctors, commented Leonard S. Feldman, M.D., one of the researchers.
He said “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. ”
Feldman is an Assistant Professor of Medicine at the Johns Hopkins University School of Medicine. “There’s a lot of waste in medicine because we don’t have a sense of the costs of much of what we do,” he added.
In the study, researchers analyzed the test-ordering of all clinicians, including physicians and non-physicians, who ordered clinical laboratory tests through the computerized order entry system at The Johns Hopkins Hospital . The clinicians were divided into two groups. One was an “active” group of clinicians and one was a “control” group.
For the active group, the researchers displayed the fees of 61 randomly assigned diagnostic laboratory tests. For the control group, no fees were displayed. The researchers also recorded the clinicians’ ordering behavior during a six-month baseline period (November 2008 to May 2009) when no fees were displayed for any clinicians.
They compared that behavior with that of clinicians during a six-month intervention period a year later (November 2009 to May 2010) when the active group could see the Medicare allowable fees for the 61 tests.
Cost of Medical Laboratory Testing Dropped $400,000 over Six Months
In the active group, rates of test ordering dropped from 3.72 tests per patient-day in the baseline period to 3.40 tests per patient-day in the intervention period, a decrease of 8.59%, the researchers reported. The decrease in test ordering resulted in a net charge reduction of more than $400,000 over six months, they said.
In the control group, ordering increased from 1.15 tests per patient-day during the baseline period to 1.22 tests per patient-day in the intervention period. This was an increase of 5.64%.
Feldman attributed much of the change in behavior to comparison shopping. The price of a comprehensive metabolic panel (a blood test used to evaluate fluid and electrolyte status, kidney and liver function, blood sugar levels, and response to various medications) was listed as $15.44.
For comparison, a basic metabolic panel used to check many of the same metrics but not liver function, costs $12.36, the researchers said.
Better Utilization of Clinical Laboratory Tests Saved $27,000
When the prices were displayed, the number of comprehensive metabolic panels ordered fell by roughly 8,900 over six months, while the number of basic metabolic panels ordered rose by about the same number. The savings totaled more than $27,000 over six months, they said.
Researchers also saw a drop in the number of medical laboratory tests for a complete blood count (CBC). CBCs are typically ordered every day a patient is hospitalized and cost $9.37 versus a CBC with differential for the white blood count at $11.35. The number of CBCs with differential dropped, but the number of CBCs did not rise proportionally, the researchers said.
Just seeing the prices may have convinced doctors that ordering the test less frequently would be sufficient, Feldman said.
“Our study offers evidence that presenting providers with associated test fees as they order is a simple and unobtrusive way to alter behavior,” Feldman concluded.
Cost Information Can Improve Utilization of Lab Tests
Basing medical decisions on cost is challenging because critics say it could lead to charges of rationing care or compromising appropriate care, said the lead author of the study, Daniel J. Brotman, M.D., Associate Professor of Medicine at the Johns Hopkins University School of Medicine. But making decisions without considering cost has contributed to wasteful spending, he added.
Most hospital-based pathologists and clinical laboratory directors would agree with Brotman’s statement. When ordering clinical laboratory tests—particularly those molecular diagnostic assays that can cost thousands of dollars—physicians are unable to assess whether such tests will deliver appropriate clinical benefit relative to the cost of those tests, if they cannot see the cost of the test at the time the order is placed.
—By Joseph Burns