Are Clinical Faculty Prepared to Manage Costs?

By Joanne Conroy, MD

One of my good friends, Sean Stitham, is a primary care physician who has been practicing for more than 30 years; he now works at Group Health. In a guest post for the Seattle Times blog last year, Sean wrote, “All parties knowing the actual cost of the health care being dispensed is a vital missing ingredient in our national effort to rein in medical expenses.” He went on to admit that he didn’t know the cost of many of the tests he orders, and that he might order fewer if he did know the cost.

Perverse incentives, the previously booming economy, and the isolation of clinicians from the total cost of care result in clinicians who are unprepared to manage the cost of care. The physician culture doesn’t applaud colleagues for the careful use of resources, and patients seem to regard the quality of care as directly proportional to the number of tests we order.

To change this culture will take more than rules to balance utilization. We must strike a balance between physician autonomy and incentives to reward physicians for managing care effectively.  Some say that teaching hospitals face greater challenges than our non-teaching counterparts, because they require a high degree of collaboration among the leaders of clinical departments. But if we implement case management and utilization management with physician leadership, we can create sustainable change.

Two factors are key to this change: real-time reports on utilization and cost that are provider-, patient-, and population-specific; and the reorientation of primary care physicians as case managers. Many academic medical centers are leading the way.

For example, the University of Colorado has changed significantly its institutional attitude toward managing the cost and quality of care, largely through strategic partnerships and infrastructure investment. For the past 15 years, the university has developed an institutional awareness of the importance of managing costs. Through the creation of a Voluntary Employee Beneficiary Association, among other changes, the university lowered year-over-year cost growth from 15 percent to 5.7 percent; a shift to a hospital outpatient pharmacy resulted in savings of nearly $4 million for a single year.

“Our clinical faculty adheres to the evidence-based model of care. This has become part of the culture among faculty. They discuss evidence-based care with patients, outline clearly the steps to diagnosis, and talk honestly about the fact that efforts to jump ahead in the evaluation process will be denied unless supported by evidence. They do not blame the insurance provider because they are the insurance plan,” says Jane Schumaker.

Acting as case managers establishes primary care physicians as the point of control, empowering them to consider all aspects of a patient’s care and encouraging them to make more informed and cost-effective decisions. While many health care systems divested from primary care after the demise of capitation systems, Duke University invested in expanding primary care. Through strategic investment, community engagement, and information technology, Duke has built a primary care system that is increasingly coordinated and integrated—throughout the health care system and the community.

Duke has put its money where its mouth is. Although a number of factors have contributed to recent success, one notable aspect is Duke’s commitment to invest in primary care education and expand the number of primary care clinicians. A new four-year program in primary care leadership provides scholarships of $10,000 per year to students who sign letters of intent to pursue a career in primary care.

AAMC’s Readiness for Reform initiative collects success stories like these to facilitate the sharing of best practices among all academic medical centers and teaching hospitals. Detailed case studies of the programs at Colorado and Duke, plus many more, are available online.

To be “ready for reform” means being prepared — with the people, resources, experience, and relationships — to be a leader in a changing environment, characterized by a strong government and commercial market imperatives to improve the quality, safety, and efficiency of health care. The assets of academic medical centers include intellectual curiosity, depth of expertise, sophistication of method, and a capital infrastructure generally without equal in the region.  Aligning these assets can create an enterprise agenda for change.  

Our true potential is in bringing together capabilities across the enterprise: leveraging research into practice; enhancing the community with well-trained medical professionals; changing patient behaviors through a community engagement program — in short, introducing the new approach to health care management by leveraging all three missions.

—Joanne Conroy, MD, is Chief Health Care Officer at the Association of American Medical Colleges. She can be reached at Follow her on Twitter @joanneconroymd.