The opinions expressed in this piece are solely the author’s and do not necessarily reflect the views of Carolina Journal or its publisher.
The North Carolina State Health Plan is running out of money, with a projected $500 million deficit in 2026. This is a theme across the country reflecting rising health-care costs, an aging (and sicker) population, and the dominance of fee-for-service payment models. Physicians and hospitals can innovate to control these costs, but payers and insurance companies can do more to realize cost savings.
Not too long ago, working with hospital leadership, we developed a hysterectomy “bundle,” charging one price covering this procedure from admission to discharge while saving more than $10,000 relative to what private insurance plans were already paying the hospital for this procedure. To our surprise, the insurance companies were not interested. Saving the employer-sponsors of a health insurance plan does not make any money for the insurance company administering it. Furthermore, the insurer would have to spend more money in administrative costs to oversee this bundle. Nothing is simple with our health-care delivery system.
Technological innovation in health care can be a double-edged sword, adding cost without making patients healthier or care safer. The concept of value seeks to balance the cost of technology with outcomes of its use. Optimizing value is an obvious priority to controlling our expanding health-care costs, and in the context of hysterectomy, more technology does not necessarily improve care outcomes. Like that double-edged sword, where robotics has improved surgical outcomes for prostate disease, in the context of hysterectomy, one recent nationwide study concluded, “it is unlikely that the robotic-assisted approach provides an appreciable improvement in perioperative outcomes.” While not improving clinical outcomes for hysterectomy, robotics adds a lot to the surgery costs.
Eighty cents of every dollar spent in health care is determined by the physician. Correspondingly, our research shows that the physician is the single most important determinant of hysterectomy costs, accounting for differences between patients or hospitals. In another related study, we found surgeon preference was the most important determinant of the surgical method used to perform a hysterectomy. This is likely true across a variety of clinical settings, and it means physicians must have prompt feedback on the costs of the care they deliver, helping them pick the highest-value treatments. Hospitals, too, can be incentivized to pursue high value. Hospitals can directly or indirectly encourage physicians to use equipment or treatments that optimize clinical outcomes and cost.
There are roughly 1.3 million women in North Carolina receiving state-supported coverage, through NC Medicaid or the State Health Plan. Based on national data, 22% of women will have had a hysterectomy by age 65, meaning that state-supported insurance plans will pay for about 285,000 hysterectomies. The average cash price for this procedure in North Carolina is $11,000, which can be reduced to less than $6,000 using high-value approaches. This represents a potential $1.4 billion in savings across this population without compromising patient care.
Some of these procedures (about 15%) may be for cancer, and some (about 30%) will require hospitalization, which could limit the number of cases that can be done using a high-value approach. These savings could be multiplied many times over as physicians and hospitals work together to find the highest-value ways to deliver other kinds of health services in other settings. The lever to find these savings is among the physicians, hospitals, and payers (employer or government).
How can physicians be incentivized to pursue high value in health care? One approach is to pay physicians for achieving high value, but this approach does not address the costs of procedures that are borne by the hospital. Another approach is to incentivize patients to seek high-value care, by reducing their co-pays when they see physicians who deliver high-value care. In addition, when medical education emphasizes high-value care, such as traditional surgical approaches less dependent on technology, it helps keep surgeons working in smaller hospitals with fewer resources, such as those that commonly serve rural communities that struggle with physician recruiting.
Finding the right mix of education, feedback, and incentives will not be easy, but it is essential for the sustainability of every health plan, especially one that struggling.
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