News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

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Clinical Laboratories and Pathology Groups

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What Makes US Healthcare So Expensive? It’s Price, Not Overutilization, Say Researchers at IHME and UCLA

Recent studies exploring the economics behind the high price of US healthcare independently point to the price of labor, goods, services, administrative costs, and pharmaceuticals as primary reason why the US spends almost twice as much as peer countries on healthcare

It is regularly reported that the cost of healthcare in the United States is notably more expensive that in most developed nations. Overutilization of medical services in this country is often given as a reason why this is true. But the findings of a new research study suggest that the reason healthcare in the US is expensive is not due to overutilization. Rather, it is because of the much higher prices American patients pay for services, including clinical laboratory testing.

This recent study contradicts the claims of some experts who say overutilization is to blame for the high cost of healthcare in the United States. The research was conducted by researchers at the Institute for Health Metrics and Evaluation (IHME) in Seattle and the UCLA David Geffen School of Medicine. They attribute the overarching factor in high healthcare costs not to high utilization of services—such as clinical laboratory and anatomic pathology testing—or increased rates of illness.

Instead, the researchers found that it’s simply a matter of higher prices for healthcare delivered in this nation, compared to other healthcare systems around the globe. This is what makes America’s healthcare system so expensive. And, lacking financial incentives for stakeholders to lower prices, these researchers suggest that continued high costs could negatively impact providers’ quality of care.

High Cost of Diagnostic Services, including Medical Laboratory Testing

The IHME/UCLA researchers published their findings in the Journal of the American Medical Association (JAMA), in which they argued that increases in US healthcare cost are independent of increases in:

  • Disease prevalence;
  • US population age;
  • Use of healthcare services; or,
  • Overall population size.

Joseph L. Dieleman, PhD, Assistant Professor at IHME and lead researcher on the investigation, stated, “After adjustments for price inflation, annual healthcare spending on inpatient, ambulatory, retail pharmaceutical, nursing facility, emergency department, and dental care increased by $933.5 billion between 1996 and 2013—from $1.2 trillion to $2.1 trillion.”

Data produced by the study identified one overlying factor in increased spending—increased prices. According to Dieleman, health spending in 2015 “reached $3.2 trillion and constituted 17.8% of the US economy.”

In an editorial response to Dieleman’s investigation, also published in JAMA, Patrick H. Conway, MD, MSc (above), President and CEO of Blue Cross Blue Shield of North Carolina in Durham, stated that “the United States is on an unsustainable growth path in terms of healthcare costs and must get costs under control.” He added that data from Dieleman’s study has important implications for quality of healthcare, which may include medical laboratory diagnostics. (Photo copyright: Duke University.)

Price Spirals and Artificial Price Hikes: No Real Incentive for Regulation

Pricing for medical care is notoriously opaque. Patients are often unaware of the cost of services until the bill arrives. This lack of transparency prevents patients from comparing prices between healthcare providers and medical laboratories.

To try and create some cost transparency for consumers, Conway noted that some states, such as Maryland and Vermont, have adopted multi-payer payment models or all-payer rate settings. However, there could be resistance to such reforms, according to some experts.

Health economist Austin Frakt, PhD; and Aaron E. Carroll, MD, MS, Vice Chair for Health Policy and Outcomes Research, and Director of the Center for Health Policy and Professionalism Research at Indiana University School of Medicine, co-authored a New York Times article that agrees with Conway’s assertion. In it, they state that attempts to create regulation for healthcare prices “would be met with resistance from all those who directly benefit from high prices, including physicians, hospitals, pharmaceutical companies—and pretty much every other provider of healthcare in the United States.”

No Incentive to Lower the Prices of Medical Services

An opinion piece in the Wall Street Journal, Keith Lemer, CEO, WellNet Healthcare Group, shared a similar view. He stating that insurers and preferred provider organizations (PPOs) have no “natural incentive to keep provider prices down.” Lemer looks at the Affordable Care Act and its establishment of a medical loss ratio rule, which “requires insurers covering individuals and small businesses to spend at least 80 cents of every premium dollar on medical expenses.”

Lemer uses the cost of a routine blood test as an example, stating that when providers raise costs of such tests, “insurers can charge higher premiums, while also boosting the value of their 20% share,” which goes “towards administrative costs and profits.”

Lemer argues that the deck is stacked against consumers, and that the medical loss ratio “encourages insurers to ignore providers” artificial price hikes,” while attracting customers “with the promise of steep discounts through their PPO plans.” The resulting affect is what Lemer calls a “price spiral” that’s difficult to escape.

Higher Costs Do Not Equate to Better Care

A special JAMA communication from Irene Papanicolas, PhD, and other members of the Department of Health Policy and Management, Harvard T. H. Chan School of Public Health, Harvard Global Health Institute, and Department of Health Policy at the London School of Economics and Political Science, reports that higher US costs do not coincide with better care.

In comparison to 10 other high-income countries the US spends “approximately twice as much,” Papanicolas noted. She added that despite the higher spending in the US, the nation “performs poorly in areas such as healthcare coverage and health outcomes.”

To illustrate the difference in average costs, Papanicolas and colleagues listed “comparison prices” on a series of healthcare services between countries in 2013. For example, the price of a single computed tomography (CT) scan varies widely:

  • $896 (US);
  • $97 (Canada);
  • $279 (Netherlands); and,
  • $500 (Australia).

The high prices of clinical laboratory (AKA, pathology laboratory in Australia) diagnostics have already caused a sharp decline in the use of important imaging utilization and are at risk of affecting other aspects of clinical pathology, such as anatomic pathology (histopathology in AU) services.

PricewaterhouseCoopers (PwC) Health Research Institute’s annual medical cost report predicts 2018 medical costs will rise by 6.5% and that “price continues to be a major driver of healthcare costs” that are outpacing the economy. PwC recommends “increasing collaboration across the industry” to address the growing issue of rising medical costs and shift the burden of cost away from patients.

Clinical Laboratories Contribute to High Costs

Although US healthcare cost is a topic of intense conversation, little change may come if there is no incentive to change. Each of the recent JAMA published articles ends on the same repeated note: a plea for active debate among policy makers, healthcare providers, patients, insurers, and politicians, with the goal of decreasing healthcare costs, without sacrificing patient care.

This is also true for clinical laboratory and anatomic pathology stakeholders, which are critical aspects of the healthcare continuum, and therefore, contribute to the overall financial burden on healthcare consumers.

Amanda Warren

Related Information:

Why the US Spends So Much More Than Other Nations on Healthcare

Healthcare Spending in the United States and Other High-Income Countries

Factors Associated with Increases in US Healthcare Spending, 1996-2013

Factors Associated with Increased US Healthcare Spending: Implications for Controlling Healthcare Costs (Editorial Response)

The Best Healthcare System in the World: Which One Would You Pick?

The Deception Behind Those In-Network Health ‘Discounts’

Medical Cost Trend: Behind the Numbers 2018

EHR Systems Continue to Cause Burnout, Physician Dissatisfaction, and Decreased Face-to-Face Patient Care

New study published in the Annals of Family Medicine (AFM) indicates that despite efforts to improve EHR usability and efficiency, primary care physicians continue to spend more than 50% of their workdays on computerized physician order entry (CPOE) and other clerical tasks instead of engaging in direct patient care

Do electronic health record (EHR) systems improve or degrade the productivity of physicians? That question has been the subject of robust debate. Now comes a new study in a peer-reviewed journal with a surprising finding: physicians spend up to 50% or more of their workday on EHR-related tasks.

In theory, EHRs offer a wealth of benefits over traditional paper-based systems. In practice, however, between interoperability concerns and implementation costs, they have proven a daunting undertaking for even the largest healthcare systems.

While EHRs might offer easy access to patient data—including medical laboratory records and anatomic pathology reports—this information doesn’t enter itself into databases or make itself instantly accessible. That requires human interaction, which is time consuming and prone to errors.

Thus, research from the American Medical Association (AMA) and the University of Wisconsin revealing that the time it takes to enter data, address communications, and perform other clerical tasks adds up to more than 50% of a physician’s workday is of paramount importance. That’s because physician dissatisfaction and departures from medical practice have increased each year since the EHR revolution began, and reports are the situation is getting worse.

In their retrospective cohort study involving 142 family medicine physicians, published in the Annals of Family Medicine (AFM), Brian G. Arndt, MD, from the School of Medicine and Public Health, Department of Family Medicine and Community Health, University of Wisconsin, et al, reported that clinicians spend 52% of their 11.4-hour workday interacting with an EHR system. On average, nearly 1.5 hours of this EHR interaction occurred outside clinic hours during physicians’ personal time. The researchers assessed interactions using event logs from the Epic EHR system spanning from July 1, 2013, to June 30, 2016.

Researchers validated their data through direct observation of 14 nonresident family medicine physicians from May through June of 2016. This observation showed similar findings. During clinical hours, 60% of physician time related to non-EHR tasks, with 40% of time devoted to EHR tasks.

Documentation Burden Leads to Physician Burnout, Dissatisfaction

“Our family medicine physicians spent 44% of their workday (157 minutes) in the EHR doing clerical and other administrative tasks,” study authors reported. “Computerized physician order entry accounted for 12.1% of their clinic hours (43 minutes) in the EHR. The burden related to order entry has been associated with clinician burnout, dissatisfaction, and intent to leave practice.”

Researchers tracked various tasks and assigned them to categories. Of the tasks tracked, only 32.1% fell under the heading of “medical care.” Reviewing chart notes, chart medications, and problem lists topped medical care tasks.

Review of clinical laboratory results in charts ranked near the bottom, with only 2.5% of the total time spent performing medical care tasks. These tasks, however, could offer opportunities for medical laboratories to help physicians identify opportunities to optimize reporting and test-ordering processes and improve productivity for clinicians who are responsible for most of the data entry burden associated with EHRs.

One potential solution to EHR burnout involves the use of medical scribes who work with physicians during and after a patient’s visit inputting encounter data. Alan Bank, MD, cardiologist at Allina Health, and medical scribe Jaeda Roth, are shown above during a patient visit. Bank told the StarTribune  that he’s convinced scribes help doctors get more done and reduce billing errors. (Photo and caption copyright: Elizabeth Flores/StarTribune.)

Researchers also questioned the EHR’s role as a communication or telemedicine hub. “There is insufficient evidence that such asynchronous care improves health outcomes, cost, and overall healthcare use,” they noted.

However, even for intra-practice communications between healthcare professionals, EHRs may not be the most efficient approach. “Face-to-face communication is associated with increased efficiency,” the researchers noted. “Whereas more electronic communication among team members leads to greater clinician and staff dissatisfaction, as well as poorer clinical outcomes and increased healthcare use among patients with coronary artery disease.”

EHR Cost/Benefits Generate Debate

This latest study is not the first to suggest that EHRs are creating problems for clinicians. While there appear to be no trends between studies, multiple researchers have highlighted the workload created by EHR systems in recent years.

In a study published in the Annals of Internal Medicine (AIM), Christine A. Sinsky, MD, of the American Medical Association, et al, analyzed data from the observation of 57 US-based physicians in family medicine, internal medicine, cardiology, and orthopedics.

Comparing data across 430 hours of observation, researchers concluded, “For every hour physicians provide direct clinical face time to patients, nearly two additional hours are spent on EHR and desk work within the clinic day. Outside office hours, physicians spend another one to two hours of personal time each night doing additional computer and other clerical work.”

However, in a 2015 study published in the Annals of Family Medicine (AFM), Valerie Gilchrist, MD, Chair of the Department of Family Medicine and Family Health at the School of Medicine and Public Health, University of Wisconsin, et al, found lower numbers. Observing 27 community-based family physicians across a single practice day, the researchers found that 39% of the practice day on average was devoted to office-based time. Of that time, 61% was spent on medical care related tasks.

Building a Better EHR

While medical laboratories and diagnostic specialists—such as anatomic pathologists—can work with physicians to streamline ordering and reporting processes relating to EHRs, much of the burden comes from how EHR systems are designed and used.

In a 2016 New England Journal of Medicine Catalyst Panel on EHRsTait Shanafelt, MD, Director of the Mayo Clinic Department Program on Physician Wellness, noted that one of the most contested features of EHR systems in the US, according to the AMA and Mayo Clinic, is computerized physician order entry (CPOE).

Later in the discussion, Sinsky discussed a recent trip to the UK, where she observed general practitioners (GPs) at the National Health Service (NHS). She noted that most GPs loved their EHRs. However, those EHRs were designed with GP input to best work with an NHS GP’s typical workflows and procedures. She also noted that overall usage is different in the UK, as EHRs there are not tied into billing systems.

As Dark Daily has reported, up to 70% of data stored in a patient’s electronic health record is clinical pathology laboratory related. As newer EHRs replace outdated models, it will remain critical for healthcare professionals—including clinical laboratory professionals who generate most of the data stored in EHRs—to assess, track, and report on what is working with various platforms and what is not.

Communicating this end-user data to EHR developers is essential to designing EHRs that reduce unneeded burden and clerical load on physicians, rather than increasing it.

Clinical laboratories tat wish to take proactive steps might contact physicians and other professionals in their workgroups to tailor data generation, reporting, and ordering processes to the EHRs in use at those practices.

—Jon Stone

Related Information:

Primary Care Doctors Spend More Than 50% of Workday on EHR Tasks, American Medical Association Study Finds

Tethered to the EHR: Primary Care Physician Workload Assessment Using EHR Event Log Data and Time-motion Observations

Study: EHRs Bloat Clerical Workload for Docs

Harried Doctors Hail the Rise of the Medical Scribe

Type and Click Tasks Drain Half the Primary Care Workday

Allocation of Physician Time in Ambulatory Practice: A Time and Motion Study in 4 Specialties

Doctors Wasting Over Two-Thirds of Their Time Doing Paperwork

Physician Activities During Time Out of the Examination Room

Heavy Burden of EHRs Could Contribute to Physician Burnout

Five Reasons Why Retail Clinics Are a “Game-Changing” Threat to Traditional Healthcare Providers That Could Strain Clinical Laboratories and Pathologists

Research conducted by Kalorama suggests the popularity of retail clinics represents a trend towards newer healthcare models that challenge existing models of care, and which could severely impact hospitals, clinical laboratories, and pathology groups

In recent years, pathologists and medical laboratory managers have watched as retail clinics housed in drug and grocery stores became a go-to service for healthcare customers seeking relief from minor illnesses. However, to market research company Kalorama, retail clinics also are a “game-changer” that could pose a threat to healthcare providers if their growth remains unchecked.

At risk are health systems and office-based physicians, along with the clinical laboratories and pathology groups that serve them. This would happen if patients shy away from primary care doctors in favor of cheaper, faster, medical care. However, as retail clinics expand the services they provide, they also could become an important source of orders for certain types of medical laboratory tests.

Kalorama defines retail clinics as, “healthcare centers that provide basic and preventative care in a retail setting; excluded are crisis and acute care centers; urgent care centers; emergency facilities; and wellness centers.” According to Kalorama’s data, “in 2016, total US retail clinic sales are estimated at more than $1.4 billion, an increase of 20.3% per year from $518 million in 2010.”

This increased use of retail clinics is a mixed blessing. On one hand, easy accessibility, low-wait times, and flexibility combined with lower costs for basic care is a boon for certain patients. On the other hand, this emergent healthcare model requires that traditional healthcare facilities address the impact of retail clinics on traditional practices, patient care, and regulatory standards.

Here are five reasons why retail clinics could threaten traditional healthcare models:

Retail Clinics Disrupt the Normal Healthcare Delivery Environment

Retail clinics are designed for immediate treatment of symptoms and vaccinations, not in-depth examination or long-term healthcare relationships between physician and patient. However, because retail clinics are a convenient low-cost option for patients, they become direct competition for full-service. Why visit a primary care physician (PCP) when you can receive off-hour care at lower prices and with faster wait times?

Based on data from peer-reviewed journal Mayo Clinic Proceedings, the graph above illustrates the huge growth of retail clinics over just the past 10 years, which is expected to continue. (Image copyright: Accenture Consulting.)

There is a rising fear among PCPs that the quick fix of retail clinic services will translate into poorer overall health for patients who fail to establish permanent long-term healthcare connections. This fear is validated by an American Medical Association (AMA) report that states, “only 39% of retail clinic users report having an established relationship with a primary care physician, which contrasts to about 80% of the general population reporting such a relationship.”

Retail Clinics Increase Competition for Primary Care Practices

Rather than competing with emergency departments, retail clinics directly compete with primary care clinics, according to Kalorama and the AMA. Staffed primarily by nurse practitioners and physician assistants, retail clinics treat symptoms of acute and easily identifiable health issues. There is growing concern that this limits opportunity for patients to receive more comprehensive healthcare that includes identification and treatment of chronic diseases.

And though competition in the healthcare market is good, physicians worry that retail clinics may push smaller stand-alone clinics out of business. The Kalorama report explains that “ultimately, medical practices are businesses that rely upon a steady flow of [patients] for their success.” When primary care facilities close due to loss of patients, it can create immediate healthcare gaps in communities.

Retail Clinics Could Increase Strain on Medical Laboratories and Pathology Groups

Kalorama’s data shows that retail clinics could place strain on medical laboratories and pathology practices. The study notes, “retail clinics are becoming relatively large users of point-of-care (POC) tests, clinical chemistry, and immunoassay laboratory tests and vaccines.” Kalorama’s report states, “the combined sales of these three types of products to retail clinics reached $240 million” in 2015, reflecting a 26% per year growth in testing since 2010. Projections from Kalorama suggest further increases in retail clinic test ordering in years to come.

The Clinical Laboratory Improvement Amendments (CLIA) advisory boards, the US Food and Drug Administration (FDA), and the Commission on Office Laboratory Accreditation (COLA) all have expressed concerns about the rise of retail clinic testing. COLA’s 2017 Spring Newsletter states that the increased use of retail clinics could lead to unnecessary testing, and increasing use of “non-laboratory personnel for laboratory testing.”

The COLA newsletter also warns that pathologists and clinical laboratory managers “should expect to see, over time, a steady increase in the menu of diagnostic testing offered by retail clinics.” COLA suggests that pathologists and laboratory scientists will experience increased demand from retail clinics for their services and expertise, but that because retail clinics often require high-volume, fast-paced testing without the benefit of full clinical laboratories (both in terms of staff and equipment) there is potential for retail clinic testing to fall short of industry standards.

Retail Clinics Fragment Health Records

According to an article in AMA Wire, the AMA House of Delegates (HOD) established guidelines for retail clinics that focus on continuity of medical records and the safeguarding of patient care. The guidelines state that retail clinics “must produce patient visit summaries that are transferred to the appropriate physicians and other healthcare providers in a meaningful format that prominently highlights salient patient information.” The fear, according to the AMA, is that the fragmenting of medical records may bring harm to patients via miscommunication that undermines patient-physician relationships and complicates oversight in treatment plans.

The Kalorama report echoes this sentiment. It states that physicians often take a negative view of retail clinics because of the lack of communication between retail clinics and primary care practices, citing a lack of cooperation or “unwillingness or inability on the part of convenience clinics to share medical information about patients with primary care providers.”

Retail Clinics Are Expanding Their Reach

Despite the fact that the AMA Council on Medical Services 2017 report on delivery reform recommends that retail clinics limit the scope of their care, expansion of retail clinic services has gone unchecked in many areas according to the Kalorama report. AMA policy states that retail clinics must have a “well-defined and limited scope of clinical services,” and the AMA’s 2017 guidelines state that “retail health clinics should neither expand their scope of services beyond minor acute illnesses … nor expand their scope of services to include infusions or injections.”

As retail clinics open around the country and expand their offerings there is a call for increased regulation of retail clinics to check that growth. COLA states that retail clinics are positioning themselves to play a major role in the delivery of primary care services. And the Kalorama report suggests that the trend towards retail clinic use will continue to rise, creating both challenges and opportunities for providers, clinical laboratories, pathologists, and healthcare policy makers who will be required to address the disruption to their businesses.

-Amanda Warren

Related Information:

Retail Clinics 2017: The Game-Changer in Healthcare

Report 7 of The Council on Medical Service: Retail Health Clinics

COLA’s Insights Spring 2017: The Rise of Retail Medicine

The Advance of the Retail Health Clinic Market: The Liability Risk Physicians May Potentially Face When Supervising or Collaborating with Other Professionals

Primary Care Practice Response to Retail Clinics

Retail Clinics are Poised to Offer More Health Services, Participate in ACOS, and Offer Expanded Menu of Clinical Pathology Laboratory Tests

Retail Clinics Continue to Shape Local Healthcare Markets

More Medical Laboratory Testing Expected as Retail Clinics Change Delivery of Routine Healthcare Services

Top-5 Diagnostics Trends Identified by Kalorama Will Impact In Vitro Diagnostics Manufacturers, Medical Laboratories in 2017

UnitedHealth’s Plans to Build More MedExpress Urgent Care Centers Is a Sign of Strong Consumer Demand and Could Be an Opportunity for Clinical Laboratories

Bundled Payments for Joint Replacements Cuts Costs for Medicare; Hospitals Held Accountable for Quality of Care

Clinical laboratories must stay informed about the success of bundled-payment initiatives because they will need to negotiate a share of these payments where medical laboratory testing is involved

Research published this year concluded that bundled payments for joint replacement services performed on Medicare patients reduce Medicare’s costs without negatively affecting patient outcomes. Because these types of surgeries do not generally utilize many lab tests, the question is still out as to whether bundled payments allow clinical laboratories to be adequately reimbursed for their services.

The study of the bundled payment program was published in the Journal of the American Medical Association (JAMA). The researchers sought to determine the cause of the reduction in Medicare payments and hospital savings when bundled payment models for joint replacement surgeries were used.

The research was performed by staff at the Perelman School of Medicine at the University of Pennsylvania (UPenn). They examined hospital costs and Medicare claims for patients requiring hip and knee replacements at the 5-hospital Baptist Health System (BHS) in San Antonio.  (more…)

Federal Judges Block Anthem-Cigna and Aetna-Humana Deals to Protect Market Competition and Healthcare Consumers

Mergers that would have reshaped the nation’s largest insurance companies would directly affect the provider networks independent medical laboratories rely on

For pathology groups and medical laboratories, the news about two thwarted deals involving mega insurance companies might be seen as a positive development.

The proposed deals—Anthem’s $48-billion bid to buy Cigna, and a proposed $37-billion AetnaHumana merger—would have reshaped the US health insurance industry had they not been blocked by federal judges who cited possible harm to market competition, Bloomberg reported.

For now, all four health insurance companies will continue to use their existing provider networks, which is good news for clinical laboratories. Experts had expected the bigger players in each deal—Anthem and Aetna—to possibly prune the provider networks of Cigna and Humana, respectively, which could have financially burdened thousands of healthcare organizations and independent medical laboratories. (more…)

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