Palo Alto Medical Foundation Newsroom

A New Approach to Managing Health Care Costs

Lawrence Shapiro, M.D., a pulmonologist and Managed Care Director for the Palo Alto Medical Foundation, has worked with PAMF doctors to develop a highly successful approach to managed care that saves costs while putting patients first. Shapiro outlines the collaboration that saved $40 million in health care costs over the past four years in his new book, Quality Care, Affordable Care: How Physicians Can Reduce Variation and Lower Healthcare Costs, published by Greenbranch Publishing.

Lawrence Shapiro, M.D.

Lawrence Shapiro, M.D.

“The key to managing the cost of care is to make your doctors the experts, listen to them, and work with them to develop local standards that meet the needs of local patients,” Shapiro said. “It improves affordability and the value of the care that we provide to the patients.”

 In his book, Shapiro outlines the five pillars that successfully reduced variation in care at PAMF, and that can help any medical group trying to manage costs while improving quality. The pillars include focusing on affordability, engaging physicians and a commitment to useful data. He also shares examples from his team’s work.

“The Institute of Medicine has said for years that 30 percent of things that doctors do are of no value to the patient,” Shapiro said. “If we want to be able to afford the real medical advances of the future – new drugs and treatments – we need to get rid of the waste.”

Equally important, he says, better local standards designed for the people in each community leads to better patient care. Almost every test and procedure carries some small risk. The risk is worth it if the procedure improves health, but not if the procedure doesn’t help the patient.

Shapiro says PAMF doctors took the lead in efforts to reduce variation in medical practices when they realized it would improve the care they give to their patients. “Our doctors want to do the best for their patients.”

To learn more about Quality Care, Affordable Care, contact Greenbranch Publishing,, (800) 933-3711.