Harvard study finds consumer price shopping doesn’t lower healthcare costs

imageImagine that, health care consumers aren’t shoppers😷  Everyone knows higher health care costs equal higher quality … well actually they don’t, but everyone knows it anyway.

Nobody seems to get it because it doesn’t fit into any tidy economic model of markets or cost/benefit decisions and unlike shopping for a new HD TV, health care is emotional and very different.

If consumers could compare healthcare prices, would they choose the lower option? A recent study published in JAMA suggests not. Two national employers decided in 2011 and 2012 to offer employees an online healthcare price transparency tools to help them shop for lower prices, thinking if employees had all the information, they would choose lower cost options, ultimately lowering healthcare spending overall. The online tool offered information on out-of-pocket costs at various physician offices, hospitals and clinical sites.

Comparing the group of employees with access to the tool to a control group that did not have access, researchers found outpatient out-of-pocket spending increased for both groups between the year before the tool was offered and the year the tool launched.

After adjusting for relevant factors, those who had access to the price transparency tool had a mean increase in out-of-pocket spending of $18 year-over-year. That said, just 10 percent of the patients who had access to the tool actually used it in the first 12 months it was offered, the researchers found.

It is possible the employees felt higher prices were associated with higher quality, or that not enough used the tool to get a true sense of the market dynamics.

Source: Harvard study finds consumer price shopping doesn’t lower healthcare costs


2 replies »

  1. Dwayne has it right. If you wait until you are sick or have an urgent need, no time to price shop. He’s hit the nail on the head when he found a primary care doc.

    As for Harvard, I can easily come up with 10 real life stories of how, once the price differences were clearly identified, individuals changed their behavior to become cost conscious. You see it everyday at Krogers, in buying Rx, and lab work. Where you don’t see it is in other forms of non-urgent testing, scans, X-rays, etc.

    As I have said before, if you look at behavior once a person becomes a patient, it will be skewed by their current situation. To have them perform as a consumer, you should limit your focus to medical care and needs that can be planned in advance.

    Not too surprised academics at Harvard don’t know this. They have little practical, everyday experience to draw upon.


  2. Why does everybody assume that I get a choice to shop. My insurance company tells me what I can and cannot do.

    When I moved two years ago, it took me over a year to find a local doctor who was 1) taking new patients, 2) had opening in their schedule, 3) had to make the appointment two months in advance. I have yet to use them when I am really sick so I hope being a existing patient and not a new patient I’ll get seen a little faster. I can’t imagine changing doctors every time you feel sick just to find the lowest price.

    So when I am sick; do I go to my doctor, go to emergency room or urgent care center, or work the phone finding the lowest price for an illness that has not been diagnosed. About the only thing I can do is shop for my meds but I am dictated by my insurance company on who I must use.

    I do not believe that the highest price would provide the best care. But if you believe that market forces dictate prices, then I would really worry about the lowest price. Why is their price so low, no repeat patients? Have they updated their equipment? How are they cutting corners to keep cost so low that nobody else is doing the same thing?


What's your opinion on this post? Readers would like your point of view.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s