Consumers will price shop for some medical services, and won’t for others. And the times they are most likely to shop are when services are after a diagnosis has been made, the services sought are relatively simple and elective, and the consumer’s insurance plan motivates shopping.
Those are the key points in Paul Ginsburg’s MarketWatch piece in Health Affairs‘ most recent Web edition. (full access requires a subscription to HA)
Here’s the breakdown of factors influencing price-shopping behavior.
Complexity – services such as pharmacy, imaging, and preventive services including mammography are more likely to be price-shopped than other, more complex services.
Urgency – Almost no one is gong to price shop for emergent services. And, these services do not lend themselves to price shopping because the patient does not know what services will berequired.
Pre- or post-diagnosis – until the patient knows what’s wrong, it’s just not feasible to price shop. Ginsburg uses the example of low back pain, which could be due to myriad factors, and thus could require a wide range of services such as medication, therapy, imaging, surgery, acupuncture, and/or rest.
Bundled services – anyone who has been treated in a hospital knows that they are going to get bills from the facility, each physician who came near tham and some that did not. As medical treatment comes from a variety of independent suppliers, it is not possible to price shop each and every one.
Benefit design – the structure and amount of patient cost-sharing has a significant impact on their price sensitivity. One of the points I have repeatedly made is that for the relatively small number of consumers who consume the majority of health care services, a large deductible is meaningless as it is exceeded early in the year. And after that deductible is exceeded, there is very little to no price sensitivity on the part of the consumer.
Paul’s article is a carefully considered and thoughtful piece – anyone interested in consumerism and price/quality shopping should read it.
Joe,
I think price and quality transparency could be most valuable if DOCTORS had the information at their fingertips in an easily accessible, user friendly format. For example, if a primary care doc needs to refer a patient to a cardiologist, it would be enormously helpful if he or she could key in a zip code and a specialty and get a list of specialists within a specified radius, along with their scores for cost-effectiveness, board certification information and other appropriate data. Same for imaging. Which of the five nearby imaging centers will do the job for the lowest (contract) reimbursement rate? Same for hospitals. If there are several hospitals within the area that could provide approximately comparable care, which one charges the least for the full episode of care? Doctors have a network of other doctors to whom they prefer to refer patients when necessary, but they probably know nothing about how these doctors compare to best practices on cost-effectiveness. If they did, the more cost-effective doctors, hospitals, imaging centers, labs, etc. would be rewarded with more patients while the less cost-effective would lose share or go out of business if they couldn’t improve. This is where the power of information could work its magic and the sooner the better.