I was on a call recently with a startup lab company that has a new technology it asserts will save money. The startup doesn't have any modeling or data yet, but was making the general argument that better diagnostics save money.
Do diagnostics save money? Well, sometimes yes, for sure, but not necessarily. I put together some citations and I'm logging them here.
Do Preventive Services Save Money?
On the topic of preventive services saving money, much has been written. In general, preventive services that are widely adoptive are at least cost effective (the cost in dollars per each life year saved), but not literally cost-saving. See a New England Journal article from 2008 here. See a 2012 Congressional Budget Office report (discussed in NEJM) here. See a 2018 Aaron Carroll article here.
For one example, when smoking prevention avoids a lung cancer death, that person lives on to die of something else - a stroke, colon cancer, Alzheimer's disease, and so on.
A CMS-funded study in 2019 seemed to show that 7 different colorectal cancer prevention strategies all saved money (at least a bit, a bit better than cost-neutral) against no-screening, but some of the more expensive methods were less effective (per this study) and ;ess cost-effective than less-expensive methods. So just because a method is more accurate and more expensive, it is not necessarily more cost-saving or more cost-effective. (I think this publication has had rebuttals; take it as a for-example).
Do Diagnostic Tests Save Money?
Sure, some do. See Pimentale 2016 for cost savings with better diagnosis of irritable bowel syndrome (here). See Pliakos 2018 on saving money with more rapid diagnosis of blood stream infections (here.)
But is that the big picture? If we want a general answer, we should probably turn to a comprehensive review. Fang, Neumann et al at Tufts did a 2011 comprehensive systematic review of diagnostic test cost effectiveness (here). Reviewing 141 studies, about 15% reported results that were literally cost-saving; others were "cost-effective." See figure, in which the left-most column is the number of the tests reported as "cost-saving:"
|Fang et al. 2011 Fig 3|
In J Clin Oncol in 2018, Wang et al. looked at numerous cost effectiveness studies of a 21-gene breast cancer recurrence test (here). They reported that they found a range of cost effectiveness values, critiqued the methodology of some reports, and reported that the two studies with the "worst" cost effectiveness (>$50,000 per life year), were "not" industry-funded. A few studies, but only a few out of 20 or so, reported "cost savings" per se.
Most recently, writing in Value in Health in 2021, Koldehoff et al. looking at the cost-effectiveness of genetic testing for breast and ovarian cancer risk (e.g. BRCA testing) - here. BRCA testing could run from being cost-saving to have a cost of $22,000 per life-year (QALY). In other settings, multi-gene testing ran from $15,000/QALY to $70,000/QALY, depending on scenarios and health care costs in selected countries.
Are diagnostic tests cost-saving? "It depends," and if you are depending on an insurer like BCBS to pay you a lot more, "because you are saving the payer billions in costs," they'll probably require some convincing.