American College of Physicians: Internal Medicine — Doctors for Adults ®


Teaching residents to control the costs of health care

Housestaff can learn to balance the bottom line without sacrificing quality when providing care

By Christine Kuehn Kelly

Three resources to help you practice cost-effective medicine

When Eugene F. Moore, ACP-ASIM Associate, sees a new patient in the continuity clinic, he tries to factor cost into the patient care equation. He automatically reviews all of the patient's medications and looks for better, less expensive choices. The third-year internal medicine resident at the University of Vermont's Fletcher Allen Healthcare also carefully chooses diagnostic tests that he thinks will be most cost-effective and still provide all the information he needs for treatment.

Dr. Moore has no utilization review board breathing down his neck and no capitation risk pool affecting his pay, but he is nonetheless determined to learn to practice cost-effective medicine while still in training. He is part of a growing number of residents who are preparing for a practice environment in which health plans have a wide range of tools to monitor costs and influence physician behavior.

While medical inflation slowed somewhat in the late '90s, costs are once again on the rise, pressuring physicians to keep a lid on expenses. Drug costs have received most of the attention lately, but the growing use of services like diagnostic tests also is attracting the attention of many health plans.

Some training programs are leading the charge in teaching residents to practice cost-effective medicine. The University of Vermont's primary care internal medicine division, for example, has developed a drug-detailing program that uses case studies to show residents and physicians statewide how they can improve patient care while stabilizing costs.

The program examined the hypothetical case of one patient who had been taking a variety of antihypertensive, lipid control and acid reflux medications. Educators used the case study to show how switching the patient to equally effective but lower cost drugs could save $1,000 a year and work better for the patient.

Preliminary data show that practicing physicians changed their prescribing practices after attending the sessions, explained assistant professor of medicine Dominic A. Jaeger, ACP-ASIM Member, who helped develop the program.

Other training programs have residents work directly with health plans. In Boston, Tufts Managed Care Institute, a collaborative venture of Tufts University School of Medicine and Tufts Health Plan, provides an elective program that includes a rotation at a health plan and a community practice with managed care experience. Residents learn about quality improvement, contracts, disease management and other tools and techniques that will help them in later practice.

And in New York, third-year internal medicine residents at Weill Medical College of Cornell University New York-Presbyterian Hospital must complete a managed care rotation developed jointly with Empire Blue Cross Blue Shield.

Medical schools are also getting involved. Boston University School of Medicine provides workshops on managed care, and Thomas Jefferson University in Philadelphia teaches first- and second-year medical students about cost-effective drug prescribing.

While some critics complain that health plans too often use cost effectiveness as an excuse to put money ahead of patient care, educators say that real cost effectiveness means much more than simply propping up an HMO's bottom line. True cost-effective practice is usually part of an organized system that focuses on quality assessment and outcomes.

Here are some ways that you can incorporate the tenets of cost-conscious medicine into your training:

  • Think before you act. "It's easy to quickly order a CT scan or MRI when a patient has a headache," said Dr. Jaeger from the University of Vermont. "But we won't need as many MRIs if we listen to our patients."

    Do you automatically order brand name medications, or do you consider generics? Are you aware of the costs of tests and medications?

  • Choose diagnostic tests carefully. As the costs of diagnostic tests rise, experts predict that many health plans and insurers will begin watching these costs more closely. What can you do?

    First, you should learn the most common diagnoses of any given disease based on history and physical presentation, along with the studies that can confirm or reject them. You should also learn about the sensitivity, specificity and positive predictive value of tests, according to Mark Prashker, MD, chairman of the health services department at Boston University's School of Public Health and director of the Center for Health Quality, Outcomes and Economic research in the Veteran's Administration. Knowing these values will help you determine the most appropriate tests for patients. (Dr. Prashker pointed out that the internal medicine boards test residents on their knowledge of these values.)

    Unfortunately, he said, attendings tend to reward residents who come up with more, not fewer, test possibilities. Dr. Prashker suggested the following argument: I thought of tests X, Y and Z, but I found from my pretest literature search that they probably wouldn't change my treatment. "Ask yourself what are you going to get from the test that is going to change your way of managing the patient," he said. He also acknowledged that factors like how fast you need an answer and how dangerous the patient's condition is will play a key role in your decision-making.

  • Talk to patients about their drugs. It's important to let patients know that just because a medication is heavily advertised, it isn't necessarily the best choice. Explain the price difference between brand name and generic or lower-cost medications and why you believe the therapeutic benefits are comparable.

    Ask patients to bring all their medications with them at the next visit and check for errors such as two prescriptions in the same therapeutic class. When patients call for refills, take the opportunity to switch them to an equally efficacious—but less expensive—medication.

    "Our practice's recipe for cost containment is to educate folks about their choices and to help them make those choices," said Peter D. Eisenberg, FACP, a hematologist/oncologist and scientific investigator who is director of Marin Oncology Associates in Greenbrae, Calif.

    Patients often ration their own care, he said. Those with advanced pancreatic cancer, for example, may chose a full course of chemotherapy, some chemotherapy or no care at all. "We don't push them to think they should desire something without full disclosure of how it will affect them."

  • Explain decisions to switch drugs. Because patients sometimes suspect that changes in their medications benefit their insurers and not necessarily their health, you need to form a partnership with your patients, said Mark Mengel, MD, chairman of the department of community and family medicine at St. Louis University.

    Be sure to tell patients that the new medications you prescribe are as efficacious as the prior ones. Also check to ensure that the medications you prescribe are on your patients' health plan's formulary.

    Physicians increasingly receive information to help them compare different drug formularies. In Massachusetts, for example, the state medical society gives practicing doctors a compendium that includes formulary information from all the state's insurers.

    Unfortunately, it's often difficult to keep up with changes in formularies. Drugs can go on and off formulary, depending on the arrangements an insurer makes with the pharmaceutical company, and many plans provide graduated levels of drug coverage that vary within the same plan. When drugs are very expensive, it may be worth asking patients about their coverage.

    If you rely on attendings to clue you in on drug prices, think again. One study showed that attendings were far less knowledgeable about prices than ward clerks.

  • Get help from computers. Appointment scheduling software and online formularies can produce savings where you practice. "We use a Web-based formulary resource in the continuity clinic," said Furman S. McDonald, ACP-ASIM Associate, chief internal medicine resident at the Mayo Clinic in Rochester, Minn. The resource allows residents to take cost into consideration when comparing two equally efficacious drugs. "It doesn't stop residents from ordering what is appropriate," Dr. McDonald said, "but it can change our prescribing behavior."

  • Follow practice guidelines. Evidence-based medicine integrates individual clinical expertise with the best available external clinical evidence from systematic research. Practice guidelines, which are widely available for most major conditions, help control practice variations and often take cost effectiveness into consideration.

  • Find a mentor. Many residents say that cost consciousness is one area in which they can learn a lot from attendings. Find senior physicians who make an effort to practice cost-effectively. You may also want to get involved in research they do in this area.

    How do you know who is serious about controlling costs? These are the physicians who give "cost-effectiveness" lectures, and who may accept capitated reimbursement in their private practices.

  • Don't underutilize tests and procedures. Insurers profile service utilization and may penalize doctors with capitated patients in withhold pools for what they consider overutilization of tests, procedures or referrals. If you hold back services, however, patients may not only have less favorable outcomes but may view you as putting profit ahead of their care.

    Cost-conscious residents may be reluctant to order expensive tests, but in some cases a more costly test or procedure is appropriate. "You want to get the patient diagnosed as quickly as possible," said St. Louis's Dr. Mengel. Remember that sometimes, more expensive tests not only help the patient but may preclude additional tests, procedures and even hospitalization.

Christine Kuehn Kelly is a Philadelphia-based freelance writer specializing in health care.

Three resources to help you practice cost-effective medicine

  1. ACP-ASIM's Clinical Problem-Solving Cases include average costs of diagnostic procedures. Subscribers to the series receive two cases a month for two years and can access earlier cases. More information is available on ACP-ASIM Online at
  2. The Tufts Health Care Institute offers online learning modules related to managed care and cost effectiveness. It also produces a CD-ROM, "Understanding Managed Care: Learning the Essentials Through Case Presentations." More information about both products is available on the institute's Web site at
  3. The George Washington University Medical Center and Partnerships for Quality Education have joined forces to offer The Managed Care Education Clearinghouse, which provides resources for those learning about managed care. You can access clearinghouse materials at


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