Cost of Care

Healthcare News of Note: Healthcare expenditures decrease seen with shared patient-clinician decision-making and racial or ethnic concordance  

July 28, 2023 2:15 pm
  • Shared decision-making plays an imperative role in reducing health expenditures by more closely aligning treatment decisions with patient preferences and values.
  • Extreme heat events could be responsible for $1 billion in healthcare costs each summer in the United States, according to a Virginia Commonwealth University study.
  • The American Hospital Association urged the Senate HELP Committee to at least double the proposed $385 million in funding for the Hospital Preparedness Program for fiscal years 2024 through 2029.

Over the past few weeks, I have found these industry news stories that should be of interest to healthcare finance professionals.    

1. Healthcare expenditures decrease 10% with shared decision-making between patients and clinicians, says study

“A 3% increase in high-quality, shared decision-making (SDM) is associated with a 10% reduction in health care expenditures,” according to a study published and partially funded by the National Institute for Healthcare Management (NIHCM) Foundation.

SDM “plays an imperative role in reducing health expenditures by more closely aligning treatment decisions with patient preferences and values,” wrote the authors (see the link above for a downloadable version of the study). “It may also lead to improved clinician engagement, the initiation of superior treatment, and better health outcomes.”

They added, “Racially and ethnically concordant patient-clinician relationships increase the reduction [in expenditures], especially among Black patients seen by Black clinicians.”

Key findings

Additional study findings include:

  • Racial concordance was found to reduce annual outpatient expenditures for both Black patients seen by Black clinicians and Hispanic patients seen by Hispanic clinicians.
  • No significant effects were reported for Asian and Pacific Islander patients and clinicians.
  • SDM was not found to impact drug expenditures, inpatient care utilization or patient physical or mental health.

“The findings may inform policies intended to address disparities in health care and reduce the risk of health care overutilization, without compromising quality of care,” wrote the authors.

Study author insight

In a Q&A with NIHCM, chief researcher Timothy T. Brown, PhD, an associate adjunct professor of health economics with the University of California, Berkeley, said: “These findings present a win-win situation in healthcare: patients receive care they prefer and health plans save money. The findings also present one element of a strong policy and business case for training more Black and Hispanic clinicians.”

HFMA resources

HFMA offers a variety of content with insight on the topic of diversity, equity and inclusion in healthcare:

  • The May 26 Healthcare News of Note blog post included information on a report that the survival rates of Black patients improve when there are more Black primary care physicians in the workforce. The findings were based on a study published in JAMA Network Open on April 14.
  • HFMA’s Healthcare 2030 series includes “Reimagining The Patient-Caregiver Relationship,” in which healthcare leaders and industry experts said the patient-caregiver relationship must become more holistic, seamless and personalized.
  • The February 2023 hfm magazine cover story was titled “Norton Healthcare and other health systems are making big moves to reduce health inequities.”

2. About $1 billion in healthcare costs each summer can be expected from extreme heat events, says study

Amid reports that July 2023 has been the hottest month on record globally, an article published by the Center for American Progress reported on the statewide impact in Virginia of heat event days, as measured in a Virginia Commonwealth University study. According to the findings, the annual toll on the U.S healthcare system from heat-related or heat-adjacent illnesses would be:

  • Approximately $1 billion in healthcare costs each summer, with approximately $177.3 million in emergency department visits and almost $834.9 million in hospital admissions
  • Nearly 235,000 emergency department visits
  • More than 56,000 hospital admissions

The nationwide data was realized by applying Virginia data to all census tracts in the contiguous United States, according to the article. The authors did note that climactic differences from one state to the next, among other factors, could affect a nationwide estimate.

In a July 17 VCU news story, Steven Woolf, MD, a professor in the Department of Family Medicine and Population Health at the VCU School of Medicine and a co-author of the report, said: “One of the key goals of this report is to help the public understand the implications of extreme heat on health. Unless we take action to mitigate the effects of climate change, heat events are projected to keep increasing in frequency, resulting in an even greater blow to public health.”

3. AHA responds to the Senate HELP Committee’s PAHPA reauthorization draft

The American Hospital Association (AHA) urged strengthening the Hospital Preparedness Program (HPP) and mitigating and preventing drug and device shortages in its response to the proposed reauthorization of the Pandemic and All-Hazards Preparedness Act (PAHPA) by the Senate Health, Education, Labor and Pensions Committee.

Comments on strengthening the HPP

“The discussion draft includes level funding of $385 million for the HPP, the only federal funding mechanism for health care system emergency preparedness and response,” the letter states.

“As such, we urge that the program’s authorization be at least doubled for fiscal years (FY) 2024 through 2029. This investment would help prepare and equip our nationwide health care system in advance of the growing number and scope of future disasters and public health emergencies (PHEs).”

The AHA noted that “authorized funding levels and annual appropriations for the HPP have significantly declined since the program began.” The letter further states, “Additional and sustained funding will be necessary to not only restore HPP to its original capacity, but also to strengthen the program to address increasing threats to public health.”

Comments on drug and device shortages

“The discussion draft does not include any enhanced or new authorities for the Food and Drug Administration (FDA) to mitigate and prevent drug and medical device shortages,” states the letter.

“… According to the American Society of Health-System Pharmacists, the U.S. health care system currently is experiencing the most drug shortages since 2014. … Of particular concern to hospitals are the cascading impact of drug shortages on patients and the heightened stress on scarce hospital resources. Shortages can adversely affect patient care by causing delays in treatment, increasing the risk of medication errors and requiring the use of less effective alternative treatments.”

Additional recommendations       

Among other recommendations in the letter is the need to improve the federal organizational structure for all types of emergencies, in part by making critical updates to the U.S. Department of Health and Human Services’ emergency preparedness playbook.

HFMA bonus content

  • Read HFMA’s fact sheet describing CMS’s proposed rule on remedies to be paid to hospitals for 340B-acquired drug costs.
  • Check out HFMA’s Spring Thought Leadership Retreat event report, “10 Vital Responses to Healthcare Disruption,” by Nick Hut, senior editor.
  • Read the July 24 article “A projected Medicare physician payment decrease spurs more calls to reform the system,” by Nick Hut, senior editor.


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