A Surprising Way to Cut Healthcare Costs

Assume for a moment you are in a doctor’s office observing an examination. A 70-year old male patient enters pulling an oxygen tank and wearing a baseball cap. Because the doctor has been seeing him for two years, he knows the man has congestive heart failure. He also soon realizes that the man had just gained four pounds and does not feel well. Their conversation moves onward to the man’s recent birthday celebration, the salty chips he enjoyed, and the fluids his body wound up retaining. Because the doctor took the extra time to talk and do some tests, he knew a hospitalization was unnecessary.

The doctor had the time to talk because he was participating in a study that limited his patient load to 200. But he had other obligations that more typical primary care physicians with several thousand patients did not have. He would also be responsible for overseeing his patients’ hospital care.

Where are we going? To discovering the metrics that matter.

Lowering Healthcare Costs

The increasingly impersonal trajectory of modern medicine sounds so efficient. We have the hospital-based physicians who know about acute institutional care. We have the computerized records. However, one primary care physician who is also an economist wondered if we were losing something that is even more valuable. To find out, Dr. David Meltzer is quantifying the value of the doctor/patient relationship.

Primary care physicians know the people who come to them. When their patients went to the hospital, they traditionally visited them regularly to oversee treatment. They were the generalists who interfaced with the hospital staff. Now though, it is much more likely that the hospital staff takes over entirely.

At the hospital, the hospitalist is the physician in charge of patient care. Because those doctors repeatedly manage similar situations, they reap the fruits of specialized labor. While they might not know the people they are treating, they know precisely what the symptoms require. As a result, average per person savings have been close to $800. Patients leave the hospital half a day sooner and mortality rates are slightly lower.

Still though, in the preliminary results of his Medicare funded study, Dr. Meltzer concluded that it is even more cost efficient to maintain a physician/patient relationship. If patients are treated by physicians who know them, the number of hospitalizations and expenses are significantly reduced. When doctors have a relationship with their patients, they spend more time talking, understanding their needs, knowing what will make a test successful, recognizing what they eat, and which pills they will take.

Our Bottom Line: Invisible Metrics

Dr. Meltzer’s study takes me to the bigger picture. All too often, we fail to measure what is important. And, for that reason, we pay less attention to it.

Because the GDP is a dollar yardstick of output, we focus less on a slew of variables that matter. We don’t subtract intangibles like water and air pollution. And we don’t add the free services we get from Google and Facebook.

For trade, it is easier to measure the number of factory closings and job losses rather than all of the jobs created by our exports. But it’s tough to quantify the number of employed people in an exporter’s supply chain.

So, whether looking at the GDP, at trade, or the physician/patient relationship, we should measure what is invisible.

My sources and more: Thanks to Econtalk for a podcast on healthcare spending that made yesterday’s walk a pleasure.  From there, the ideal complement was this NY Times Magazine article. However, if your interest is the problem with metrics, I recommend the “Tyranny of Metrics” from Econtalk.