PharmExec Blog

Should Doctors Shoulder Healthcare Costs?

PatientDoctorAs the debate over the rising costs of new drug R&D and brand name medications rages on, physicians are increasingly doing their part to minimize collateral damage inflicted upon the patient.

A new report from Bain & Company — The new cost-conscious doctor: changing America’s healthcare landscape — reveals that, increasingly, physicians believe that part of the burden of lowering healthcare costs rests directly on their shoulders. Surveying more than 500 physicians from across the US, including primary care physicians, surgeons and other specialists with between five and 40 years’ experience, the study revealed that “more than 80 percent of physicians ‘agree’ or ‘strongly agree’ that they consider bringing healthcare costs under control as part of their responsibility” and that physicians now “recognize a pressing need to adjust their clinical practices to accommodate healthcare cost considerations.”

The question is, why now? “I think it’s just an awareness issue,” says Chuck Farkas, senior Bain partner and lead author of the study. “Until healthcare became a front-page topic, physicians just didn’t see cost as being in their job description.’ But now “what the study says very clearly is that docs want to be part of the solution, not part of the problem.”

Part of the new shift in attitude is that a healthy skepticism has emerged among the physician population, calling into question whether new medicines are necessarily better medicines. While doctors may have focused in the past on the latest and greatest pharmaceuticals or medical devices, now “pharma companies must develop and commercialize products with a focus on proving significant differentiation … keeping a keen eye on … clear health economic value.” Indeed, the survey reveals that around 35 percent of physicians say they are less likely to try new products as soon as they become available compared with five to 10 years ago.

Pharma needs to look at innovation through a new lens, Farkas says, and ask new questions. “Pharma must consider each new drug in terms of clinical benefit and economic benefit. Does it keep people out of the hospital? Does it mean we have to do less diagnostic testing? Will it cost less?”

In addition to moving away from the “newer is better” attitude, physicians are also cutting costs by limiting the practice of defensive medicine, according to the report. Where a doctor might typically order X-rays and MRIs and other expensive procedures at the patient’s request for something like a sports injury—keeping an eye on liability— Bain says physicians are increasingly becoming more comfortable with standardization of care, which can lower cost to the patient and healthcare costs overall. This “is a defensible position from the standpoint of litigation,” Farkas says. “If the medical community agrees that there is an appropriate way to treat a particular situation, and if the doctors follow that (though the lawyers might debate this), then they have a safe harbor.”

The formation of Accountable Care Organizations (ACOs) has also played a large role in physicians’ willingness and ability to control costs to a larger extent. In fact, the Bain survey revealed that approximately one-third of physicians “expect they will participate in a medical home or ACO model” in the next two years. Farkas believes that ACO models are helping the industry “move away from a world that rewards us for activity, which is what ‘fee for service’ is, to one that looks more like the rest of the business world, which rewards for results.” In other words, giving physicians the incentive to deliver quality care on a budget helps them to focus on the bigger picture—wellness.

All of these issues taken together add up to an increasing need (and hopefully, increasing desire) for physicians to become part of the solution. The report notes that “the survey shows that physicians are not just reacting to the recession or months of recent debate on healthcare reform,” but that the findings “represent a systemic change rather than a reactive distortion.”

These changes in physician behavior “are so significant, they represent a tipping point,” the report goes on. “They will require stakeholders across the healthcare value chain to react in substantial way—perhaps, in many cases, redefining their business models. By indentifying these emerging attitudes and understanding their implications, leaders can get ahead of the changes and create new sources of value in their respective sectors.”

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