Costs and consequences of unnecessary tests

I applaud Helen Walsh for her recent post about walking away from yet more invasive testing. Her post made me reflect on recent cases of medical expense from my own practice.  Patient details have been altered to protect their identities.

One patient has an annoying condition that gives him pain with some activities, related to past minor trauma.  This ailment is an inconvenience but in no way threatens his life or livelihood. After basic investigations, I sent him to the local specialist (200kms away, the taxpayer not only has now paid for the basic tests and the consult, but a travel grant as well) who said that further treatment was not necessary.  The specialist felt (as I do) that intervention would be as likely to worsen his condition as improve it.  My patient was not satisfied with this, and, being relatively well off with family in Southern Ontario, he asked me to refer him to a specialty clinic for another opinion. The clinic will not make an appointment unless he’s had an MRI.

Sending him for an MRI will cost the taxpayer thousands of dollars.  There will be hundreds more for the trip and consult in Southern Ontario, perhaps thousands more if the sub-specialist agrees to operate.

This story is repeated daily in Ontario.  Expensive tests are often a prerequisite for seeing a doctor. Some patients go for second (and third…) opinions when they don’t like the results of the first.

Another patient had pain on one side. An ultrasound did not show any abnormality on that side but showed a possible cyst on the other side.  CT scan recommended.  The CT showed that the cyst was simple and undoubtedly benign, but that there was a “hypodense” area in another area which was potentially nasty.  Consult and biopsy recommended.  That part of the body is no longer handled by local general surgeons, so the patient made the long trip to the big city. This specialist did see the patient first, but then ordered an MRI.  The MRI did not show the abnormality, so they decided to repeat the CT scan (we are now up to thousands of kilometres driven, 5 travel grants, thousands of dollars and radiation equivalent to 600 chest X-rays).  There was no longer a “hypodense” area on CT, but the radiologist wondered about some thickening in another region and suggested another, more invasive test.

This story is repeated daily in Ontario. Expensive tests reveal “incidentalomas”. Patients have to go for second (and third…) investigations when their doctors don’t like the results of the first.

Needless consultations and investigations account for a huge proportion of our health care costs and may cause harm. How can we get this under control?

The comments section is closed.

  • kathy hardill says:

    i totally agree with the ideas of investigating based on clinical practice guidelines, and of reforming tort law to to avoid the cover your butt radiologist recommendations we see pretty much every day – “suggest further characterization with multi-phase CT scan” which results in so many needless tests, not to mention travel costs and radiation and worry and follow up visits – sheesh – and once the radiologist has made such a recommendation, as one of my MD partners says “it takes a lot of nerve to ignore it” – which basically one can’t do from a medico-legal standpoint, but often should do from a resource stewardship point – thanks for this shelagh – it’s one of my pet peeves

  • Andrew Holt says:

    Mark – communication is a funny thing. I think we agree that:
    1) Electronic medical records are required to do the fundamental work in todays healthcare
    2) Ontario and institutions have made significant investments in data storage
    3) Health care delivery needs to operate in an efficient and effective ‘business like’ manner
    4) We also need to attend to the higher level ethical, social, moral and professional values associated with providing care to vulnerable people.
    5) It is important to know the costs associated with health care to make informed decisions.
    6) We don’t have enough money to do everything and need to assess (RELATIVE) value to decide were to best use our resources
    7) costing can and is done across much of health care today – often at a very detailed level
    8) What physicians (or any other group or individual) may find valuable, society may not.
    9) If you ask your local Diagnostic Imaging or Lab Director what it costs for a particular type of CT scan or Hgb they should be able to generate a rough cost estimate based on the accounting information and local costing assumptions regarding what should be included or excluded in the costing. This tends to be the level we are currently functioning at across Ontario.

    Problem is this costing is not easily comparable or consistent across settings and over time and may not be directly linked to the actual clinical activities themselves. They are the best estimates of costs at the time generated. There is a direct link between an activity, supplies, labor etc. and the associated costs in an industrial manufacturing company. The degree this is true in health care varies widely.

    My caution is that it is not a small task to revamp the current financial systems deployed across health care so they can routinely provide a similar level of high quality costing and operating data. You are right this makes informed decision making a challenge. I think we both agree that we need to we understand costs better at all levels of health care in order to make better decisions.

    I agree this is doable … but it is important to recognize this will be expensive to achieve.

    • Mark MacLeod says:

      OK OK I give! We do agree!

      It’s a strange thing that we’ve gotten to a point that we are not automatically doing this to a particular standard. It would be so helpful if every institution would have to provide the cost of their activities and then treatment protocols – and you are right that the variability exists and I think more importantly when comparisons are made, it becomes a game to see who can demonstrate lowest marginal costs (do we have to include the hydro cost, the depreciation cost, which administrative costs etc).

      I think my comments stem more from frustration than anything else – the frustration that comes from a sense that we are all collectively responsible – providers, institutions, equipment companies, patients alike – and despite knowing that we should we in many ways are powerless – like grasping water with a sieve.

      • Andrew Holt says:

        Hello Mark
        Recently I toured the Martin Guitar factory to understand how they have consistently built arguably the gold stand of acoustic guitars since the 1880s – highly recommend the one hour tour.

        The characteristics of the Martin production process is a very useful one to consider for health care as it blends high precise custom work, high quality materials with minimal tolerance for error (quality controls at each of over 350 steps), fine hand craftsmanship across over 350 steps, the strategic use of technology (laser, robotics buffers) when it makes sense to streamline the mass production of routine but high quality lower cost instruments.

        Use of technology at strategic points in the production process enabled much higher throughput as well as world leading quality output at a scale that allowed the company to actually survive in a highly competitive market. Thought it could be a production model that you may be interested in exploring.

  • Andrew Holt says:

    I agree having this information could be very useful for more informed decision making at all levels of health care – patient through to Ministry funding policy levels. However, I caution to do this accurately is more complex than It may appear.

    First, the prerequisite electronic systems for routinely collecting, storing and analyzing the detailed operating and costing data are required wherever such information is required.

    Second, although health care delivery needs to operate in an efficient and effective ‘business like’ manner we also need to attend to the higher level ethical, social, moral and professional values associated with providing care to vulnerable people…irrespective of their ability to pay for health services. In a limited way we have long estimated the direct costs of many supporting services, equipment and supplies used by the health care providers based on there costs negotiated at purchase plus an estimate for the cost of labour and overheads if a rough total cost is required.

    However, this is not the same as creating the type of industrial grade costing systems associated with a company like Honda. Such an undertaking and applying it to health care is a much more significant undertaking.

    Some basic facts may help illustrate the challenge.

    There are about 16,795 types of diseases identified in the International Classification of Diseases ICD-10-CA (Canadian version 2003) codes used for abstracting the hospital based services. Specific test and procedure level data is not captured at this high level of abstraction. The volume of patients in each ICD service are varies widely by code and health care organization.

    In terms of costing, the Ontario the Ministry of Health and Long Term Care spent over $47 billion dollars in 2011-12 to provide health services required by the 14 million people living in Ontario through clinical decisions made in over 150 hospitals, thousands of community based locations, over 27,000 doctors practices, and over 157,000 licensed nurses .. etc. The degree of standardized financial tracking and reporting across this vast network was not designed to collect and report cost data typically used by Honda.

    From their web page I found that Honda Canada makes an investment of $2.6 billion per year to produce 4 product lines (the Honda Civic , CR-V, Acura MDX sport utility and Acura ZDX vehicles). A total of 390,000 units are manufactured by approximately 4,000 Associates for sale in Canada and United States. In summary, 2 sites, 4 products, in an mass production setting using highly advanced robotics and other operating systems that automatically feed very specific operating information in a standard manner into a centralized financial system for cost accounting and other financial reporting. These systems were completely designed, build and maintained by a team that includes industrial engineers and cost accountants and intended to ensure proper quality, logistics and management controls are in place so they are able to maximize the profits for shareholders.

    Honda is a world leader in what they do and should be proud of the consistently high quality of workmanship and many highly paid jobs they create in Canada. Health care organizations have much to learn from companies such as Honda for improving PARTS of the health care delivery system. However, it is not a good comparison to equate the mass production of 4 lines of car/SUV at 2 large industrial locations to many areas of health care …

    Currently, there is no simple and inexpensive way for health care to obtain the accurate, system wide, detailed costing of the elements of care that is equivalent to the specificity and accuracy used in a modern industrial mass production setting such as Honda.

    However, as the electronic processing of clinical and health care operating (including cost) data becomes more established and readily available in health care this could emerge as a key element for improving the quality, accessibility, accuracy and cost effectiveness of clinical services.

    Our challenge will lay in retaining the humanitarian compassion embedded in health care for both those who receive care and those who work in health care professions …

    This will only happen by design and through the sustained and effective implementation of enabling electronic health record systems, the application of standards when collecting and processing the data generated by these systems and the wider adoption and training of more effective reporting systems that support evidence based decision making at the time of care delivery all the way through to policy level decision makers.

    I am sure it can and will be done … over time.

    • Mark MacLeod says:

      Hmmm. Andrew I fundamentally disagree with almost everything you’ve said. Other than that we don’t have the electronic medical record required to do the fundamental work. And how much have we invested in data storage systems in this province – both province wide and at the institutional level?

      Secondly and based on, ” health care delivery needs to operate in an efficient and effective ‘business like’ manner we also need to attend to the higher level ethical, social, moral and professional values associated with providing care to vulnerable people” – it’s imperative that we know what things cost. We don’t have enough money to do what we need to do, so understanding cost should be the first step in any system with insufficient resources. If price is unknown, then there is no value.

      Third I made no reference to ICD – it doesn’t matter. What does matter is the cost of a Hgb, a CT scan, or one type of cather relative to anoher one . It’s another matter entirely to move to what does it cost to treat condition X – and at that point, society needs to be involved t o tell us how they want resources to be used. What we as physicians find valuable,. society may not. Society will have difficult choices to make and they can’t do so with out knowlege.

      Lastly, having worked in an envirnnment where cost was known down to the dollar – and global costs at that, It is doable. It is the ethical thing to do in our environment just as it was the business imperative in that model.

      ‘Saying it’s complicated now is only an excuse. If we don’t have the right people or systems to do this work, then let’s change. If managers can’t at the first part of planning understand cost, then they can’t manage. If strategic planning isn’t built first on cost, then it can’t be strategic. If we don’t know cost then we can’t be system responnsible.

  • Mark MacLeod says:

    People want to make case costing seem like a mountain when it isn’t. It isn’t when you have people who are used to doing it, actually doing it and when you have an electronic record system that does the vast majority of the work. Do we really think that Honda doesn’t know the cost (material, labour, overhead, capitalization) of putting a hood on a Honda Accord at the Alliston plant compared to any other plant. No, of course they do. Why – because they run it like a business. We have treated health care as if it’s free and then we are surprised when everyone else does too.

  • Mark MacLeod says:

    Three changes would help.

    The first is to have every treatment and test accompanied by the full cost of providing that test.

    The second is to establish clear clinical practice guidelines for investigation and forcefully discourage the interpreter of one test from suggesting or recommending another test (the dreaded self referral, particularly when that recommendation results in financial benefit for the recommender).

    The third is to reform torte law such that if the clinical practice guideline has been followed and a bad result occurs, then no liability results. Too much of medicine is being practiced defensively – ordering another test just in case.

    My own worst case is an elderly person with a fall absolutely characteristic for a quads tendon tear who instead of having a 2 second examination had 1500 worth of tests (ultrasound, x-ray, ct, mri). Ouch

  • Andrew Holt says:

    Information costs money. The degree of detailed cost accounting across the tens oft thousands of tests and procedures provided would require a significant investment across the health sector as well as create more uniform methods of allocating overhead and general costs (heat, hydro, insurance, admin …) not directly attributable to any particular procedure or test. Simple in theory and doable … but at what cost and will this really provide the necessary cost savings to warrant these additional costs? On balance the system has tended to use more general cost allocations and assumptions to determine approximate gross costs of higher cost procedures and tests when budgeting. This is far from a true cost accounting system which was attempted in the late 1980s and early 1990’s through the Case Costing Initiatives. In the 1990’s much of this work was discarded in order reduce the costs of back office and preserve as much funding as possible for direct care delivery. In times of austerity is this the best use of scarce health care resources? Like most things I guess it is a question of determining the right balance between the costs and utility of
    generating information relative to other uses of these resources.

  • In Health Care says:

    First, I like the idea of being able to see real costs. An informed patient in more than health issues isn’t a bad idea. The piece that concerns me is that there is a lot of legitimate second opinion consultation out there. Not all of it – the writer is correct, some second and third opinion shoppers are out there, wanting a diagnosis that agrees with them. However, we’re not perfect and we, and our colleagues, miss things. I would REALLY not want people to not get second opinions because they see the cost. The shoppers will keep doing it regardless. The idea that someone with doubts but more concerned about the system would not consider a second opinion concerns me greatly. How do we inform but not intimidate?

  • Deb Neill says:

    I often wonder why hospitals, clinics etc don’t post what things cost and would be interested to hear the author as well as reader views on this. Many patients really have no idea what health care costs – how much would a preliminary consultation cost, for example? How much for a follow-up? How much exactly does an MRI cost, and why? Would patients really demand third opinions if they knew how much they cost? Probably… but awareness is never a bad thing, and it is a first step in giving people a concrete sense of where their money, and other taxpayer’s money, is going. Another thought is, especially for rural areas, if there is a possibility of investing more in telehealth so that the patient doesn’t have to travel for a consultation. I would be curious to hear views on this as well. Given the increasingly important role in imaging in diagnosis, many of these consults might be effectively performed by telehealth, at least for some conditions.


Shelagh McRae


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