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Cover Story November 12, 2009, 5:00PM EST

10 Ways to Cut Health-Care Costs Right Now

(page 3 of 3)

Program participants were twice as likely as average patients to choose hospice care. Costs came down 20%, yet surveys showed that both patients and their families were more satisfied than those not in the program. Such counseling efforts "are not about 'death panels,'" says Dr. Elliott S. Fisher, a professor at Dartmouth Medical School. "This is about better care, aligned with what patients want."

8. USE INSURANCE TO MANAGE CHRONIC DISEASE

In 2009, UnitedHealthcare (UNH) introduced the Diabetes Health Plan, a new type of benefit that offers financial rewards to patients who manage their disease properly. Three companies, including General Electric (GE), are testing the plan, and 15 more workplaces signed on to roll it out in 2010. Employees who participate in the UnitedHealthcare plan must adhere to specific treatment guidelines and agree to be tracked by the insurer to make certain they are sticking with the program. In return, co-pays on their diabetes drugs are waived, along with other fees related to managing their disease.

The United plan is part of a larger trend in managed care called "value-based insurance design." The idea is to contain costs by giving financial incentives to patients based on their particular health issues rather than offering one-size-fits-all plans. "One issue in the health-reform debate is that we're paying an awful lot for health care and yet we don't have the healthiest outcomes," says Dr. Edmund J. Pezalla, national medical director for pharmacy management at Aetna (AET), which is also experimenting with value-based insurance design. "There are things providers and patients can do together to achieve better outcomes."

The impact of tailoring plans to employees with specific diseases could be significant. United estimates that diabetes costs the health-care system $174 billion a year.

9. LET WELL-INFORMED PATIENTS DECIDE

When Floyd "Jack" Fowler Jr. holds focus groups of heart patients, he's amazed at their misplaced faith in the benefits of medical procedures. "They all think they'll die if they don't have bypass surgery or angioplasty," says Fowler—even though studies show that both procedures extend lives or prevent heart attacks in only a tiny minority of especially sick patients. But hardly anyone knows this, he says.

Fowler's nonprofit Foundation for Informed Medical Decision Making has sought for years to give patients both that knowledge—and a choice. The idea is to explain thoroughly to people the benefits and risks of medical procedures they may be facing. At the Spine Center at Dartmouth-Hitchcock Medical Center, for example, patients with back problems are shown a video that walks them through various procedures and provides data showing that outcomes are similar whether or not they have surgery. Once the program started, spinal surgery rates dropped 30%.

So far, shared decision-making efforts reach only a small number of patients. But given that as much as 37% of health spending is wasted on unnecessary care, the idea is catching on. Washington State passed the nation's first law two years ago encouraging informed decision-making, and other states are expected to follow, says Dr. Lance Lang, senior medical director at Health Dialog.

10. APOLOGIZE TO THE PATIENT

Doctors regularly complain that fear of malpractice suits forces them to order far more tests and procedures than necessary. Although President Obama has said he is open to legislation that would limit malpractice awards, there may be a simpler solution. Sometimes all it takes is an apology.

The Sorry Works! Coalition, founded in 2005, is persuading hospitals to disclose mistakes to patients and their families. Under the policy, as soon as a hospital discovers an error, the patient is informed, the cause is investigated, and changes in procedure are recommended. If the provider is at fault, the patient is offered a settlement.

The University of Michigan Health System adopted the policy in 2001 and reports that malpractice claims fell from 121 a year to 61 in 2006. The honesty "takes away some of the anger of patients and the 'gotcha' of plaintiff lawyers," says Douglas B. Wojcieszak, who founded Sorry Works! after losing his brother to a medical error. "You don't need any legislation, judge, or politician to do this—it's simply customer service." The University of Illinois Medical Center in Chicago started a formal apology program in 2006 and says the number of claims has since declined 40%, despite a 20% increase in clinical activity.

With Esmé E. Deprez, John Carey, and Arlene Weintraub

Arnst is a senior writer for BusinessWeek based in New York.

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