Monday’s New York Times contains an op-ed written coauthored by Peter Bach, a highly respected oncologist at Memorial Sloan-Kettering Cancer Center in New York City. He and his co-author explain the hospital’s decision not to include the newly approved drug Zaltrap for treatment of patients with advanced colorectal cancer at Memorial Sloan-Kettering. The drug costs $11,063 for a month of treatment, twice as much as an already available drug, even though it is no more effective in treating patients. I applaud Memorial Sloan-Kettering’s decision not to add an unnecessary and costly drug to its medical armament. For any other facility that chooses to use this drug, the additional costs will most likely be passed on to the patient in terms of higher out-of-pocket costs, or to insurers, who then raise health insurance premiums in order to cover higher medical costs.
Physicians could take many more steps to reduce costs, if only health care managers could provide them with more information on the costs that they generate. Two years ago I gave a lecture on economic evaluation at one of the most highly respected hospitals in the country. After I finished, a resident approached me to let me know that physicians at her hospital were never informed of the costs of any of the drugs that they prescribe to patients. Some doctors may state that they don’t want costs to factor into their decision about how to treat patients. But why not let the patient and the patient’s family decide? Consider cases where clinical trials demonstrate that a drug for a patient with metastatic cancer can prolong life for a few months, but could cost tens of thousands of dollars. Many families would be willing to pay this cost and have the resources to do so. But other families may lack the financial means to pay these costs up front, and could be saddled with a deep financial burden long after their loved one has died. Surely it would be helpful for physicians to know this information beforehand, so they can discuss all the options in the best manner with their patients.
There are simpler cases where costs can be cut. I recently met with a surgeon to discuss a research project. He explained to me that he makes use of a medical device called a port to access a vein during surgery. These devices are disposable, and commonly used. He only just found out that the port that he prefers costs about $150, while another model costs $10. He didn’t necessarily prefer the $150 port for any clinical reason. Then he described another institution where the surgeons were asked to review a list of medical devices they use during surgery, along with their prices. If they were willing to cooperate as a group and choose less expensive tools for surgery, a portion of any savings achieved would go toward additional research expenses for their group. The surgery group aggressively reduced costs, with no change in quality.
We are living in a fee-for-service health care system, where hospitals and doctors are able to pass increased costs of drugs and devices on to patients, whether or not they yield any demonstrated improvement in health. Patients don’t have the necessary information to point out cases in which such waste occurs. In the long run, we need to change the financial incentives in the system to encourage doctors to eliminate waste, while maintaining high quality care for patients.
Vivian Ho is the James A. Baker III Institute Chair in Health Economics and an associate professor in the department of medicine at Baylor College of Medicine. She is also a professor in the Department of Economics at Rice University. Ho’s research examines the effects of economic incentives and regulations on the quality and costs of health care.