GE NER ATIONS – Journal of the American Society on Aging

The Physician Perspective on

Reducing Healthcare Costs
By Mark Gwynne and Zia Agha
The healthcare cost trajectory cannot continue
to rise, and providers must be actively involved
if they are to guide meaningful change.

T he United States spends more than $420 mil-

lion per hour on healthcare—an amount that is
increasing by the minute. If current trends con-
paying their medical bills, while one in four for-
goes needed care due to cost (Gallup and West
Health, 2019). Medications are a key driver of
tinue, in 2040 America’s total healthcare spending cost, and with drug companies charging higher
will top $12 trillion. Yet even as the United States and higher prices, fewer and fewer Americans
in 2017 spent $3.5 trillion on healthcare—which will be able to afford the drugs they need.
works out to $10,739 per person (Centers for Medi- For physicians, these numbers aren’t statis-
care & Medicaid Services, 2019) and constitutes tics. Instead, they represent real patients and
more than is spent in any other country—it consis- real cases managed every day. They signify the
tently ranked near the bottom of major health palpable challenges of working within a system
indices among the thirty-six nations of the Organ- that emphasizes volume of services over value.
isation for Economic Co-operation and Develop- And they indicate outcomes made worse by the
ment (OECD, 2019). Infant death rates in the effects of high healthcare costs and skyrocketing
United States rank third worst among developed drug prices.
nations, and American life expectancy is twenty-
eighth among OECD countries and falling. Physician and Provider Experiences—
According to a Harvard study released in Key to Cost Discussions
2018, the runaway cost of healthcare is driving When considering American healthcare reforms,
millions of Americans per year into poverty— the focus often is on insurance companies, drug
more than 7 million in 2014 alone (Christopher companies, and patients, all of which contribute
et al., 2018). In one national survey on health, to the current healthcare culture. However, phy-
nearly one in three Americans reports difficulty sicians and healthcare providers are an integral

abstract Working on the front lines of medicine, physicians are in a unique position to speak to the
U.S. healthcare cost crisis. The cost of healthcare impacts physicians when their patients cannot afford
the treatment they prescribe, when fee-for-service payments reward quantity over quality, and when
payor cost-cutting strategies translate to increased administrative burden. This article examines con­­­­crete
strategies for physicians to control costs in healthcare and promote quality care, because with the right
environment, tools, and incentives, physicians can significantly reduce healthcare costs. | key words:
healthcare costs, physician role, value-based care, transparency

24 | Winter 2019–20
 Older Adults and America’s Healthcare Cost Crisis

part of the healthcare system and play a critical Ultimately, important treatment plans are
role in healthcare delivery and cost. As a result, modified or disregarded, outcomes are im­­
any effort to reduce cost burden must include a pacted, and the patient is harmed. Twenty to
discussion of physicians’ experiences: How are thirty percent of all pharmaceutical prescrip-
they affected by the status quo? What can they tions in the United States go unfilled, contribut-
do to help transform healthcare delivery? And ing more than $100 billion to nearly $300 billion
what actions can the healthcare community in avoidable healthcare costs annually and un­­
take to empower physicians in this effort? necessary deaths from patients failing to ad­­here
Healthcare providers are both the affected to their prescriptions (Viswanathan et al., 2012).
party and an effective party. On one hand, phy- For a physician, a patient’s inability to ad­­here
sicians are significantly affected by the current to medication or participate in his or her own
volume-driven payment system and the rising care are significant barriers to achieving opti­­­
costs of healthcare. On the other hand, provid- mal health.
ers delivering care without the right environ- Second, fee-for-service payment models
ment and incentives contribute to rising costs. incent volume over value. They promote tests,
To make change, there must be a balancing act: diagnostics, and procedures rather than care
physicians must have the necessary tools to pro- teams and social drivers of health, and they
vide comprehensive care for patients and to help reward more expensive medicine at the cost of
comprehensive care. These models’ focus on
reimbursing procedures has contributed to driv-
‘American life expectancy is
ing physicians away from primary care—espe-
twenty-eighth among OECD cially in underserved communities where they
countries and falling.’ treat patients such as older adults, children,
and low-income individuals—and into subspe-
them navigate the complex healthcare system, cialty care. Without a solid base of comprehen-
the ability to use those tools easily and correctly, sive primary care, many patients experience
and a supportive environment in which those fragmented and uncoordinated care, leading to a
tools will be effective. downward spiral of worse health outcomes and
higher costs. Meanwhile, physicians who work
High prices and increasing costs: three impacts with underserved communities are undervalued,
on physicians underpaid, and face high burnout rates. These
The effects of high prices and increasing costs physicians are further incented to pursue more
upon physicians’ mission to improve patients’ specialized fields, leading to a shortage of physi-
lives and decrease suffering can be viewed in cians available to serve vulnerable populations.
three ways. First, high prices make it more dif- Third, as healthcare costs have risen, pay-
ficult for patients to access appropriate care and ors have resorted to known tools to reduce costs,
follow treatment plans. Physicians regularly many of which overburden physicians and de­­
see how their patients cannot afford prescribed tract from their ability to focus on improving
diagnostic studies or treatments. They see pa­­ health outcomes and addressing true barriers to
tients cut doses in half to stretch their medica- care. These tools might drive administrative bar-
tions, or make difficult choices between paying riers such as requiring prior authorization for
for food and electricity or buying their medica- chemotherapy or diagnostic tests; reduced phy-
tions. Cost becomes a barrier to accessing and sician reimbursement rates, which further con-
taking medications—a choice those patients tract physicians’ ability to build appropriate care
often will not disclose. teams; and payment models that force physicians

Supplement | 25
GE NER ATIONS – Journal of the American Society on Aging

to find cost-savings, often without actionable disparities. Meanwhile, the cost of healthcare
data, effective tools, and mechanisms to ade- is complex; one hospital may charge more for
quately share those cost-savings with physicians treating a patient’s acute heart attack, but this
so they can reinvest in improving care delivery. hospital’s outcomes might be better (e.g. fewer
It is incumbent upon physicians to use high- complications), lowering the overall cost of care
cost interventions and diagnostics judiciously for that patient over time.
and to balance the cost of care with the true Before recommending a drug or procedure,
improvement in health outcomes. However, providers should be able to consider the cost to
these additional considerations can infringe the patient alongside potential side effects and
upon physicians’ sense of autonomy and ability complications. Thus, providers need sufficient
to provide efficient and effective treatment. data and analytics to make informed decisions
about where to refer patients for the highest
Strategies to Reduce Costs— value care.
and Promote Quality Care
So, what can be done to alleviate the effects of Awareness of healthcare cost burden
high costs upon providers and to reduce the total While physicians all can share stories of how
cost of care across the healthcare system? Sev- patients and families are burdened and compro-
eral approaches are possible, and all can be used mised by healthcare costs, there is a need to pop-
both individually and in concert to make a real ularize universal measures like the Affordability
and critical difference. Index. The Index, which is designed to discover
the percentage of a family’s income that is spent
Pricing transparency on health insurance, divides the mean cost of an
In order to make cost-conscious decisions, physi- employer-sponsored family health insurance pol-
cians need to know the prices of diagnostics and icy by median household income; it relates health
treatment. Physicians can work to ensure that insurance costs to household incomes over time
reliable price transparency data are available and gives understandable and personal context
to patients and families to help them prioritize and clarity to high healthcare costs (Emanuel
high-quality care; this effort can enable patients’ et al., 2017). It is possible that using a single,
access to accurate cost information so they can easy-to-understand measure of rising healthcare
better choose between two equally effective costs can help providers, patients, and policy
treatments. Policy changes also can help keep makers be more aware of overall costs and of the
physicians informed about the cost of the services effects of proposed policies.
they order. For example, it could be required that
price data for medications, laboratory tests, and Supportive tools and teams
imaging services be provided at the point of care, Developing and implementing tools and teams
and that price data be current and easy to under- to provide evidence-based, comprehensive care
stand for both patient and physician. for patients having either simple or complex
According to a West Health Policy Center conditions will allow physicians to offer the right
study, the foregoing approach could lead to an care for the right patient, at the right time, in the
estimated health spending reduction of $27 bil- right place. This might involve reimbursing care
lion over ten years (White et al., 2014). Of course, delivered via a care team that includes a social
based on historic contracts, prices vary signifi- work care manager and-or clinical pharmacist,
cantly between hospital systems and insurance or may include reimbursing virtual care to pro-
companies, and individual providers often are vide alternative access for patients with limited
unaware of the full extent of these variable cost transportation options.

26 | Winter 2019–20
 Older Adults and America’s Healthcare Cost Crisis

Home-based care for complex, chronically value-based payments to invest in systemic care
ill patients is an increasingly high-value care redesign, such as enhanced primary care with
option outside of hospitals, and should attract embedded care teams of care managers, behav-
investment. Initiatives like the ABIM Founda- ioral health specialists, and pharmacists, as well
tion’s Choosing Wisely program (tinyurl.com/ as to redesign acute care for key conditions and
y2njcqv4) provide prioritized initiatives, tool procedures. As a result, the system is able to
invest in and build the right data and analytics
platforms to provide meaningful and actionable
Roughly 30 percent of all
insights to physicians; to identify high- and low-
pharmaceutical prescriptions in value practice patterns to find best practices and
America go unfilled. opportunities for change; to recognize popula-
tion-wide key drivers of cost and utilization that
kits, and implementation guides that offer prac- can guide interventions and investments; and to
tical examples of how health systems and physi- improve access to care.
cians can address unnecessary costs. Embedding These models can help healthcare systems to
such best practices into daily workflow facil- invest in proven interventions like community-
itates physicians’ ability to provide the most and home-based care, which includes offerings
effective treatments in the most efficient way, such as community paramedicine and home-
keeping costs down in the process. based medication adherence programs. These ini-
tiatives allow physicians to provide patient-centric
Value-based payment systems care that meets patients’ health goals while sup-
It is necessary to aggressively pursue payment porting a lower-cost system. When an environ-
models that reward value over volume, align ment exists in which the highest value service is
incentives between physicians and healthcare the easiest service for a provider to adopt, success
systems, and reduce the administrative burden will have been achieved.
on physicians. It is also vital to promote care- The ACO is not the only approach to cost-
delivery models that change the environment conscious, value-based care that has shown
in which physicians operate and that align with promise. A study published in 2016 in the Jour-
their intrinsic professional motivation to provide nal of Hospital Medicine took on inappropriate
patient care. laboratory testing as a driver of healthcare costs.
Accountable Care Organizations (ACO), for This study found that a multifaceted approach
example, are effective vehicles to administer to laboratory use reduction—including educa-
value-based payment models or alternative pay- tion on a hospitalist service, process change,
ment models. ACOs bring together doctors, hos- cost feedback, and aligned financial incentives—
pitals, and other healthcare providers to give resulted in a significant reduction in laboratory
comprehensive, coordinated patient care. When costs per day and per visit, as well as common
physicians successfully deliver high-quality tests per day (Yarbrough et al., 2016).
care, while spending healthcare dollars more Another approach, which examined chang-
wisely, the ACO effectively shares in the gener- ing payment structures for cancer care, revealed
ated savings. that modifying the fee-for-service payment sys-
The University of North Carolina’s (UNC) tem with feedback data and financial incentives
ACO manages more than 170,000 patients in to reward outcomes and cost-efficiencies helped
its Next Generation ACO and in its statewide to reduce costs overall (Newcomer et al., 2014).
Blue Premier ACO model with Blue Cross Blue Through these models, there are shared incen-
Shield of North Carolina. UNC uses the ACO and tives between providers and payors to reduce the

Supplement | 27
GE NER ATIONS – Journal of the American Society on Aging

overall costs of healthcare while continuously oped and implemented that can create and sustain
improving patient outcomes. environments in which reducing the total cost of
care is a part of the healthcare equation.
The influences of physician education and training Studies and individual experiences have
The notion of “imprinting” suggests that prac- shown that these approaches can work. Posi­­
tice patterns from physicians’ places of train- tive outcomes are possible, as is moving the
ing significantly influence them throughout U.S. healthcare system in the right direction.
their careers (Ryskina et al., 2015). A systematic Given the proper environment, tools, and incen-
review of randomized trials highlights that tives, physicians can significantly reduce health-
educational initiatives in medical training
addressing care costs could influence physicians ‘Given the right environment, tools,
for decades, elevating an important awareness
wherever they practice (Stammen et al., 2015). and incentives, physicians can
Medical school and residency education should significantly reduce healthcare costs.’
include more information and training on the
dramatic effects healthcare costs have had on care costs. However, to be most effective, change
access to care and the benefits of value-based needs to affect both individual physicians and the
care delivery. Many medical schools and allied systems in which they operate. Every physician
health schools now are addressing healthcare can make a difference in her or his daily practice,
costs throughout their curriculum and, while and the healthcare system can structure envi-
the curriculum often is too limited, it offers a ronmental incentives to align with a physician’s
roadmap for further action. intrinsic motivation to improve patients’ lives and
to provide the highest value care while lowering
Conclusion cost. The cost trajectory of healthcare must be
The above examples suggest that if the way care altered and, if providers are to guide such change,
is delivered changes from volume-based to value- they must be actively involved if they want a seat
based; if payors engage in meaningful payment at the table.
models that align incentives; if the right tools and Going forward, change will be up to us all—
support are offered to providers; if phy­sicians providers, payors, patients, and policy mak-
are educated, trained, and incented to make ers—to design an approach that takes all of these
cost-effective decisions for their patients; and if elements into account and offers a more sustain-
physicians engage with patients to change their able future for healthcare in America.
expectations and behaviors, these approaches
could meaningfully improve the healthcare Mark Gwynne, D.O., is an associate professor at the
experience in America by creating more value for Uni­versity of North Carolina (UNC) School of Medicine,
lower costs. The system continues to explore mod- and president, UNC Health Alliance, in Chapel Hill. Zia
els, and there will be no one-size-fits-all answer, Agha, M.D., is chief medical officer and executive vice
but recent results and experiences provide the president of Clinical Research, Medical Informatics, and
motivation to keep trying. Systems must be devel- Telehealth at West Health, La Jolla, California.

28 | Winter 2019–20
 Older Adults and America’s Healthcare Cost Crisis

References
Centers for Medicare & Medicaid Newcomer, L. N., et al. 2014. Viswanathan, M., et al. 2012.
Services. 2019. “National Health “Changing Physician Incentives for “Interventions to Improve Adher-
Expenditure Data.” tinyurl.com/ Affordable, Quality Cancer Care: ence to Self-administered Med-
cm5jfk4. Retrieved September Results of an Episode Payment ications for Chronic Diseases in
7, 2019. Model.” Journal of Oncology Prac- the United States: A Systematic
tice 10(5): 322–6. Review.” Annals of Internal
Christopher, A. S., et al. 2018.
“The Effects of Household Medical Medicine 157(11): 785–95.
Organisation for Economic Co-
Expenditures on Income Inequal- operation and Development White, C., et al. 2014. Healthcare
ity in the United States.” Ameri- (OECD). 2019. “Health Status—Key Price Transparency: Policy
can Journal of Public Health 108(3): Indicators.” tinyurl.com/yxwv Approaches and Estimated Impacts
351–4. d2rc. Retrieved September 11, 2019. on Spending. West Health Policy
Emanuel, E. J., et al. 2017. “Mea- Center. tinyurl.com/y6bz3b22.
Ryskina, K. L., et al. 2015. “The
suring the Burden of Health Care Retrieved September 9, 2019.
Role of Training Environment
Costs on U.S. Families.” JAMA Care Intensity in U.S. Physician Yarbrough, P. M., et al. 2016. “Mul-
318(19): 1863–4. Cost Consciousness.” Mayo Clinic tifaceted Intervention Including
Proceedings 90(3): 313–20. Education, Rounding Checklist
Gallup and West Health. 2019.
“The U.S. Healthcare Cost Crisis.” Implementation, Cost Feedback,
Stammen, L. A., et al. 2015. “Train-
tinyurl.com/y44eb4gs. Retrieved and Financial Incentives Reduces
ing Physicians to Provide High-
September 9, 2019. Inpatient Laboratory Costs.”
value, Cost-conscious Care: A
Journal of Hospital Medicine 11(5):
Systematic Review.” JAMA
348–54.
314(22): 2384–400.

Supplement | 29
Copyright of Generations is the property of American Society on Aging and its content may
not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's
express written permission. However, users may print, download, or email articles for
individual use.