Cost Effectiveness of Health

Bringing the healthcare back to healthcare

March 25, 2022 4:25 pm

During a rotation in medical school, I was paired with an elderly, congenial and spritely attending who I and some other medical students were assigned to work with over a few weeks’ time. I recall his opening statement: “I feel sorry for you all. Medicine has changed to something it should not be. You will be required to shuffle through patients in a factory like manner, making quotas and maximizing billing.”

We were aghast at these disturbing words. We were medical students — altruistic, eager, about to join the ranks of our colleagues in the most humbling of vocations. And these statements didn’t fit the usual grand and socially high-grounded mantras. “What do you mean?” I asked him.

He responded: “I have practiced for almost 50 years. I only see about seven to 10 patients a day, despite the pressure that my administration puts on me to see the 30 to 40 per day who you will be required to see. However, my contract allows me to grandfather in my schedule from an earlier, better time, and the insurance companies can’t touch me. They are not happy because I do not bill as much as my colleagues. I spend about an hour with each of my patients. I know all their dreams and fears. I know their dog’s name and where their kids are in school. I know how they live and what they need. I rarely need to send them to any specialists because I have the luxury to spent time with them and can identify the subtleties of their issues and how they relate to their conditions and the management they require to lead fuller lives. And that lets me be their all-around physician.”

Current realities for patients

This was a harrowing forecast of today’s truth. Most physicians today only spent eight minutes, on average, with each patient.a Even more startling is that the physician tends to do most of the talking. One study found that when physicians interrupted patients (which was more often than not), the patients were only allowed to speak for 11 seconds on average before the physician felt compelled to interject some question or directive to the patient.b

Much of these medical gestalt changes have resulted from managed care impositions, capitations and reduced fee schedules as the insurance powers institute policies and mandate guidance, including prior authorizations, that define the revenue cycle for most institutions in the United States.c

2 steps to improving the nation’s healthcare system

The path to cost effectiveness of health starts with two essential steps:

  1. Give physicians a leading voice in setting policy around how best to practice medicine.
  2. Ensure physicians receive thorough education in the financial side of healthcare when they are in medial school.

Economics are important, but so is informed healthcare

Yes, keeping tabs on healthcare economics is critical. After all, it’s common knowledge that the United States spends the most of any nation on healthcare, so we can’t afford to see our  healthcare system go belly up economically.d But then if we scratch the surface a bit, we see that some rationales for today’s medical utilization policies have a purely economic focus despite the poor healthcare outcomes that these policies all too often promote.

For example, if a thyroid function test shows your thyroid-stimulating hormone (TSH) levels are within normal limits (WNL), then it’s likely your insurance will determine “you must be OK” and will decline to pay for any additional thyroid function tests because it will add to the cost of healthcare. Although this approach to makes a certain amount of sense, these restrictions are also bizarrely levied on those with known thyroid disease (i.e., Hashimoto’s, Grave’s), where knowing the lab values from other tests is integral to thyroid management (for example, for determining whether the patient’s thyroxin dose should be modified).

As a clinical pathologist, I see firsthand how clinical practices refuse to order a vitamin D level because the patient will be billed for the test (insurance will not cover). If they do order the tests,  patients might even leave the clinical practice because of the unwelcome additional copays. But the real problem is that the fear of insurance denials and higher patient copays can interfere with efficient patient management, increasing costs even more by necessitating multiple visits when the patient’s condition deteriorates.e

The turning point for where we are today

When did physicians begin to see their ability to practice medicine challenged and diluted? It began when managed care matured over the past few decades, with the promise of enabling care givers to focus on providing healthcare, while leaving administrative functions to others.f

This was a grave error. This change elevated the power of the administrators. But, remember, it’s the physicians who are trained to help people, not the administrators. You don’t find such an administrative infiltration in a mechanics shop, where some non-mechanic dictates when a distributor cap should be replaced. Although there are some insurance-like entities that cover some automotive costs, it’s predominantly a cash pay system. Why then is the decision-making power of physicians transferred to others when the physicians are entrusted to care for the single most important commodity — our lives?

Yes, it’s about perverse incentives under fee for service and a desire to avoid truly unnecessary healthcare expenditures. But care decision-making in the hands of physicians doesn’t mean physicians will necessarily ignore the financial ramifications of their decisions. As long as those ramifications are clear to them, they will be inclined — as the rational, scientific-minded people they are — to factor that knowledge into their decision-making,

Recommendations for achieving a new turning point

If our nation is to achieve true cost effectiveness of health, we must acknowledge the essential role physicians must play in this effort, because they are the only ones who have the necessary training to deliver the highest quality of care. I therefore propose that two actions are required.

1 Ensure all physicians are thoroughly educated in the economics of healthcare. All medical schools should be encouraged — even required — to introduce mandatory financial literacy courses into their curriculum so that physicians learn to speak the language of healthcare economics.

To this end, HFMA provides a Business of Health Care course for those who wish to introduce healthcare-centric economic literacy into their healthcare practice toolkit.g I offer the HFMA course to my students and residents, so they enter the clinical practice world with the language they need to practice medicine appropriately, ensuring their revenue cycle vocabulary is on par with their diagnostic prowess.

Such literacy is critical in a current healthcare system that is increasing its stake in our nation’s gross domestic product year over year.h 

U.S. projected national health expenditures (NHE) and per capita personal income: calendar years 2019-2028












NHE (total amount in billions)











Gross Domestic Product (total amount in billions)











NHE as an approximate percentage of GDP











NHE (per capita)











Personal Income (per capita)











NHE per capita as an approximate percentage of personal income per capita











Source: CMS, National healthcare projections, 2019-2028, Table 1, Page accessed March 22, 2022.

The axiom “no margin, no mission” has been echoed and embraced by all types of healthcare entities. As a result, it is universally understood that being mindful of the economics of your enterprise is the only way to ensure it will survive and thrive to the extent that it can fulfill its mission. Most physicians who maintain a successful practice have heard that clarion call. But having that call be part of their education will ensure it is a universal mindset among them.

2 Ensure physicians have a leading voice in designing healthcare practice and policy. There are other dismaying issues that often make one cling to any driftwood in the current healthcare tempest. These include having to keep on top of ever-changing billing practices or to jump thorough administrative hoops to justify utilization justification, among other things. It’s critical that physicians maintain their voices in the creation and dissemination of such policies. Why? I maintain it would be hard to find an administrator with an MBA who has stayed up at night with a patient who is at death’s door or cried with a family that received a terminal diagnosis for their child. This is what physicians do. Physicians diagnose. Physicians manage their patients. They treat the sick and infirm.

Administrators and insurance companies should see their role as being to assist this most human of vocations, not lead it. Administrators and insurance companies should help physicians navigate the healthcare landscape in an advisory capacity.

There’s no better way to remedy the physician-administrator adversarial mindset (both in hospitals and insurance companies). Insurance companies should embrace wellness-focused, reward-driven, evidenced-based approaches, however they manifest, rather than restrict, limited algorithms.

The path to cost effectiveness of health

These are critical first steps for our nation toward achieving cost effectiveness of health. Other steps include:

  • Transitioning to value-based payment
  • Addressing healthcare access issues
  • Advocating new policies around health equity and social determinants of health
  • Building stakeholder partnerships
  • Engaging in community and social outreach
  • Embracing alternative and sometimes disruptive approaches to healthcare that expand our current thinking and provide opportunities toward improved healthcare

Quality of life, the human condition, family, dreams — these are what makes us human. In our society, the idea of healthcare has become limited to tritely connote illness, sick care, disease labeling and cost centers. I invite you to journey with me to reframe healthcare to what it can and should be, while maintaining its cost effectiveness.


a. Chen, P.W., “For new doctors, 98 minutes per patient,” Well, The New York Times, May 30, 2013.

b. Lee, B.Y., “11 seconds: How long your doctor listens before interrupting you,” Forbes, July 22, 2018.

c. Robeznieks, A., “How insurance companies’ red tape can delay patient care,” AMA, March 30, 2018.

d. Florimon, H., “Why the US spends more on health care than other countries, but doesn’t fare better: Study,” ABC News, Sept. 12, 2019.

e. Ginsberg, S., “5 ways insurance companies meddle in your health care,” U.S. News & World Report, July 13, 2017.

f. Ross, H., “The great healthcare bloat: 10 administrators for every 1 U.S, doctor,” Healthline, Jan. 30, 2019; Adler, K., “Practice management challenges: unpaid bills, inefficiency, and rules,” Family Practice Management, April-March 2015; and Cantlupe, J., “Expert Forum: The rise (and rise) of the healthcare administrator,” athenahealth, Nov. 7, 2017.

g. HFMA, Business of Health Care®,

h. CMS, “National Health Expenditure Projections 2018-2027,” Page accessed March 22, 2022.




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