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Shopping For Price In Medical Care
Abstract
Insurers are well positioned to support their enrollees in shopping for care because of their ability to analyze complex data--reflecting both their negotiated discounts and the enrollee's benefit structure--should they decide to commit resources to this task. Government transparency initiatives can help those who are uninsured or want to use out-of-network providers with data on prices and all patients by gathering and disseminating data on quality. But clumsy requirements to disclose insurer-provider contracts could lead to higher prices. Greater price transparency might help curb rising costs, but many overstate the likely magnitude of its contribution.
... The lack of price transparency in the health market is believed to stem from structural features such as information asymmetry [11], provider monopolies [12][13][14], limited patient access to legal information and service quality [10,15], and the dominance of the Fee-forservice payment system [16][17]. ...
... As Richard S. Saver et al. [25] articulate, price transparency holds substantial potential for promoting social justice, reducing corruption, ensuring safer, more effective, and ethical healthcare services, increasing healthcare system accountability, and bolstering public trust in government healthcare oversight. Empirical evidence from numerous studies has confirmed the cost-saving effects of price transparency across various healthcare services, including radiography, dental care, nonemergency medical services [16], management of pre-diagnosed medical conditions, outpatient care [26], routine medical procedures [27], and even high-cost interventions such as cancer treatment [28]. ...
... The system facilitates the predictability of service costs, mitigates inducements for unnecessary services by healthcare providers, thereby curbing undue financial burdens on patients and health insurers. Furthermore, it allows for the systematic monitoring of both financial and therapeutic performances of healthcare providers [16]. ...
Insufficient price transparency has emerged as a pivotal contributor to patient dissatisfaction, escalating costs, and diminished productivity within Iran's health system. This study aims to delineate and elucidate a definition of price transparency, identify suitable strategies, and present the outcomes associated with establishing a health system that embraces transparent pricing while also addressing the challenges ahead. Employing a quantitative–qualitative research design, data were extracted from a semi-structured interviews with stakeholders. A purposive sampling method, encompassing sequential and snowball techniques, was employed to capture the perspectives of all stakeholders involved in the issue of price transparency in Iran. The interview data were analyzed using the grounded theory approach was classified into three categories: price transparency before, during, and after the receipt of healthcare services. Our findings reveal the causes of low price transparency, strategies to address the issue, and the consequences associated with increased levels of transparency. Ultimately, we contend that health systems can significantly enhance efficiency, patient satisfaction, and the performance of health insurance by adopting transparent pricing for health services, thus obviating the need for resource-intensive restructuring efforts.
... 8 Furthermore, theory suggests that price transparency may reduce healthcare costs by increasing comparison shopping for the most cost-effective options. 9 The US pharmaceutical market is particularly vulnerable to information asymmetry but also presents challenges for enacting price transparency because it is not clear what price to communicate to patients. While the average wholesale price (AWP), or list price set by manufacturers, and the wholesale acquisition cost (WAC), or market price paid by wholesalers, Exploratory Research in Clinical and Social Pharmacy 8 (2022) 100180 are fairly standardized, these prices rarely reflect the actual price charged to patients. ...
Background
Policies that mandate list price disclosure in direct-to-consumer pharmaceutical advertising (DTCPA) cite price transparency among the benefits. The expectation is that price transparency will lead to changes in consumer behavior that will ultimately lower healthcare costs.
Objective
The objective of this study was to assess the impact of price transparency on perceived level of information and consumer behaviors, specifically intentions to seek treatment and intentions to comparison shop.
Methods
A nine-arm randomized experiment was conducted to expose respondents to television advertisements for prescription drugs that varied by price disclosure type (no price/control, list price only, or price plus, which disclosed the list price and typical out-of-pocket cost) and indicated condition (deep vein thrombosis/pulmonary embolism [DVT/PE], diabetes, or rheumatoid arthritis [RA]). The sample was recruited from US adult members of the nationally representative Amerispeak online panel.
Results
The sample included 2138 respondents. For ads featuring prescription drugs for DVT/PE, findings provide no evidence of an impact from price disclosure on perception of sufficient information. For ads for prescription drugs for diabetes, there was no evidence of an impact from list price only, but the price plus group was more likely than the control group to report the ad provided sufficient information (OR = 2.475). For ads for RA prescription drugs, both the list price only group (OR = 3.380) and price plus group (OR = 2.720) were more likely to report sufficient information than the control. Findings provide no evidence of an impact from price disclosure on consumer behaviors (i.e., intention to seek treatment or intention to comparison shop).
Conclusions
Mandatory DTCPA list price disclosure may not be the most effective tool for improving price transparency and affecting consumer behavior.
... A hospital CDM is a comprehensive list of a hospital's charges to patients or health insurance companies for services rendered during a hospital stay. One rationale for the policy is that increased price transparency will encourage patients to shop around for competitively priced health care services, much as they would for a new car [4][5][6]. ...
Background:
The Centers for Medicare and Medicaid Services (CMS) recently mandated that all hospitals publish their charge description masters (CDMs) online, in a machine-readable format, by January 1, 2019. In addition, CMS recommended that CDM data be made available in a manner that was consumer friendly and accessible to patients.
Objective:
This study aimed to (1) examine all hospitals across the state of Pennsylvania to understand policy compliance and (2) use established metrics to measure accessibility and consumer friendliness of posted CDM data.
Methods:
A cross-sectional analysis was conducted to quantify hospital website compliance with the recent CMS policies requiring hospitals to publish their CDM. Data were collected from all Pennsylvania hospital websites. Consumer friendliness was assessed based on searchability, number of website clicks to data, and supplemental educational materials accompanying CDMs such as videos or text.
Results:
Most hospitals (189/234, 80.1%) were compliant, but significant variation in data presentation was observed. The mean number of website clicks to the CDM was 3.7 (SD 1.3; range: 1-8). A total of 23.1% of compliant hospitals provided no supplemental educational material with their CDM.
Conclusions:
Although disclosure of charges has improved, the data may not be sufficient to meaningfully influence patient decision making.
... A recent study by the RAND Corporation found that, on average, highdeductible health plans cut spending for individuals, but they also reduce the use of preventive care ( Beeuwkes-Buntin et al. 2011 ). What effect they have on the overall quality of health care received by patients is an open question, as is the question of how effectively patients can actually shop around for cost-effective health care ( Ginsburg 2007 ). A survey of such insurance designs in several nations around the world also yielded mixed results ( Hsu 2010 ). ...
... The magnitude and variation in charges for emergency department (ED) visits, in particular, are concerning given the acute nature of most ED care, which limits a patient's ability for "shop" for lower cost or in-network providers. 10 Moreover, a disproportionate number of uninsured patients, who are directly billed for these charges, seek care in EDs. 11 However, there is little data on charges for ED visits and even fewer studies exploring the issue. ...
Study objective:
Previous studies have shown that charges for inpatient and clinic procedures vary substantially; however, there are scant data on variation in charges for emergency department (ED) visits. Outpatient ED visits are typically billed with current procedural terminology-coded levels to standardize the intensity of services received, providing an ideal element on which to evaluate charge variation. Thus, we seek to analyze the variation in charges for each level of ED visits and examine whether hospital- and market-level factors could help predict these charges.
Methods:
Using 2011 charge data provided by every nonfederal California hospital to the Office of Statewide Health Planning and Development, we analyzed the variability in charges for each level of ED visits and used linear regression to assess whether hospital and market characteristics could explain the variation in charges.
Results:
Charges for each ED visit level varied widely; for example, charges for a level 4 visit ranged from $275 to $6,662. Government hospitals charged significantly less than nonprofit hospitals, whereas hospitals that paid higher wages, served higher proportions of Medicare and Medicaid patients, and were located in areas with high costs of living charged more. Overall, our models explained only 30% to 41% of the between-hospital variation in charges for each level of ED visits.
Conclusion:
Our findings of extensive charge variation in ED visits add to the literature in demonstrating the lack of systematic charge setting in the US health care system. These widely varying charges affect the hospital bills of millions of uninsured patients and insured patients seeking care out of network and continue to play a role in many aspects of health care financing.
... A related issue of interest is the association between hospital performance measures and prices. While price transparency is intended to inject price competition overall (Ginsburg, 2007;GAO, 2011), it has been suggested that higher performing hospitals may be able to command higher prices if prices are negotiated with wellinformed insurers (Cutler and Dafny, 2011). ...
We estimate price regressions for surgical procedures used to treat colon cancer, a leading cause of cancer mortality. Using a claims database for self-insured employers, we focus on transaction prices, rather than more commonly available billing data that do not reflect actual payments made. Although the responsiveness of prices to hospital performance depends on the impact of quality on the slope of the quantity-demand of the payers, which are not known a priory, it is often assumed that higher performing hospitals are able to command higher prices. To test this hypothesis we construct performance rankings, based on hospital excess-mortality and incorporate them into our price models. We are interested in the type information available to large payers who negotiate prices on behalf of their members. To get a cancer-specific index we emulate the widely-reported risk-adjustment methodology used in the federal Hospital Compare reporting system for ranking cardiac performance. The effects were consistently negative in all models (adverse quality reduces price), though not significant. However, we observe a rational pricing structure whereby higher treatment complexity is reflected in higher price differentials, controlling for patient characteristics and market structure.
... Our finding that insurers pay, on an average, 37% of charges is supported by previous literature showing that private insurers pay, on an average, 39% of the charge for hospital inpatient services. 45 46 We estimated median payments of US$5123 for vaginal and US$9640 for caesarean section births, slightly lower than the Truven estimates of US$8519 and US$12 894, respectively. 28 The difference between the adjusted charge and discounted price estimates what could be considered 'excess charges', and in 2011 this sums to US $1.36 billion dollars for all uncomplicated vaginal and caesarean births in California (US$760.1 million for uncomplicated vaginal deliveries; US$601.1 million for uncomplicated caesarean sections). ...
To examine the between-hospital variation of charges and discounted prices for uncomplicated vaginal and caesarean section deliveries, and to determine the institutional and market-level characteristics that influence adjusted charges.
Using data from the California Office of Statewide Health Planning and Development (OSHPD), we conducted a cross-sectional study of all privately insured patients admitted to California hospitals in 2011 for uncomplicated vaginal delivery (diagnosis-related group (DRG) 775) or uncomplicated caesarean section (DRG 766).
Hospital charges and discounted prices adjusted for each patient's clinical and demographic characteristics.
We analysed 76 766 vaginal deliveries and 32 660 caesarean sections in California in 2011. After adjusting for patient demographic and clinical characteristics, we found that the average California woman could be charged as little as US$3296 or as much as US$37 227 for a vaginal delivery, and US$8312-US$70 908 for a caesarean section depending on which hospital she was admitted to. The discounted prices were, on an average, 37% of the charges. We found that hospitals in markets with middling competition had significantly lower adjusted charges for vaginal deliveries, while hospitals with higher wage indices and casemixes, as well as for-profit hospitals, had higher adjusted charges. Hospitals in markets with higher uninsurance rates charged significantly less for caesarean sections, while for-profit hospitals and hospitals with higher wage indices charged more. However, the institutional and market-level factors included in our models explained only 35-36% of the between-hospital variation in charges.
These results indicate that charges and discounted prices for two common, relatively homogeneous diagnosis groups-uncomplicated vaginal delivery and caesarean section-vary widely between hospitals and are not well explained by observable patient or hospital characteristics.
... However, the ability of the patients to engage in such comparison shopping is extremely limited in the current private insurance context. As Ginsburg (2007) describes, effective comparison of services on price occur only in the context of nonemergency care, services that are not complex, bundled prices for services, consistent quality across providers, and only after an appropriate diagnosis has been made. Situations that meet such criteria eliminate a great deal of the medical care within the system. ...
... As Ginsburg describes, effective comparison of services on price occur only in the context of non-emergency care, services that are not complex, and services that have consistent quality across providers. 22 Also, when providers do not bundle the same services together for pricing purposes, it is difficult for patients to compare prices. Moreover, effective comparison shopping can only be done after an appropriate diagnosis has been made. ...
... Other surgeries and procedures subject to these policies include cataract removal, bariatric surgery and colonoscopy. Obstetric care has proven to be an attractive candidate for bundled payment policies with pre and post-natal care already subject to such payment policies [40,41]. The use of bundled payments is particularly appealing for chronic diseases (e.g., asthma, diabetes), where routine components of repetitive therapy can be combined into a single payment. ...
Episode-based payment, commonly referred to as bundled payment, has emerged as a key component of U.S. health care payment reform. Bundled payments are appealing as they share the financial risk of treating patients between payers and providers, encouraging the delivery of cost-effective care. A closely watched example is the U.S. End Stage Renal Disease (ESRD) Prospective Payment System, known as the 'expanded ESRD bundle.' In this paper we consider the expanded ESRD bundle 2 years after its implementation. First, we discuss emerging lessons, including how implementation has changed dialysis care with respect to the use of erythropoietin stimulating agents, how implementation has led to an increase in the use of home-based peritoneal dialysis, and how it may have contributed to the market consolidation of dialysis providers. Second, we use the expanded ESRD bundle to illustrate the importance of accounting for stakeholder input and staging policy implementation. Third, we highlight the need to consider system-wide consequences of implementing bundled payment policies. Fourth, we suggest how bundled payments may create research opportunities. Bundled payment policies offer opportunities and challenges. Their success will be determined not only by impacts on cost containment, but also to the extent they encourage high quality care.
... Even with less generous insurance, price competition would arguably remain weak as consumers (currently) have little ability to compare provider prices(Paul B. Ginsburg, 2007) and because prices in the Medicare market are administratively determined.2 The new payment models for ACOs have a variety of labels: "episode payments", "comprehensive care payments", and "comprehensive care global payments". ...
Economists seeking to improve the efficiency of health care delivery frequently emphasize two issues: the fragmented structure of physician practices and poorly designed physician incentives. This paper analyzes these issues from the perspective of organizational economics. We begin with a brief overview of the structure of physician practices and observe that the long anticipated triumph of integrated care delivery has largely gone unrealized. We then analyze the special problems that fragmentation poses for the design of physician incentives. Organizational economics suggests some promising incentive strategies for this setting, but implementing these strategies is complicated by norms of autonomy in the medical profession and by other factors that inhibit effective integration between hospitals and physicians. Compounding these problems are patterns of medical specialization that complicate coordination among physicians. We conclude by considering the policy implications of our analysis - paying particular attention to proposed Accountable Care Organizations.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
... One study calculated that physicians charge 79% more than they receive from insurers. 35 Thirty years ago, before aggressive managed care discounts, markups over Medicare and private insurance were roughly 25-50%. 36 Differentials vary. ...
When patients pay for care out-of-pocket, physicians must balance their professional obligations to serve with the commercial demands of medical practice. Consumer-directed health care makes this problem newly pressing, but law and ethics have thought for millennia about how doctors should bill patients.
At various points in European history, the law restricted doctors' ability to bill for their services, but this legal aversion to commercializing medicine did not take root in the American colonies. Rather, US law has always treated selling medical services the way it treats other sales. Yet doctors acted differently in a crucial way. Driven by the economics of medical practice before the spread of health insurance, doctors charged patients according to what they thought each patient could afford. The use of sliding fee scales persisted until widespread health insurance drove a standardization of fees. CURRENT PRACTICE: Today, encouraged by Medicare rules and managed care discounts, providers use a perverse form of a sliding scale that charges the most to patients who can afford the least. Primary care physicians typically charge uninsured patients one third to one half more than they receive from insurers for basic office or hospital visits, and markups are substantially higher (2 to 2.5 times) for high-tech tests and specialists' invasive procedures.
Ethical and professional principles might require providers to return to discounting fees for patients in straitened circumstances, but imposing such a duty formally (by law or by ethical code) on doctors would be harder both in principle and in practice than to impose such a duty on hospitals. Still, professional ethics should encourage physicians to give patients in economic trouble at least the benefit of the lowest rate they accept from an established payer.
Background and objectives:
A lack of price transparency may contribute to high healthcare costs. US hospitals were mandated to post their charge masters online in 2019. To compare changes in charge master prices of 3 common tests (complete blood count, complete metabolic panel, and chest radiograph) at US children's hospitals between 2019 and 2021.
Methods:
Online search for charge master was conducted from July to December 2019 and October to December 2021. Descriptive statistics were reported for each test. Prices between years were adjusted for inflation and compared with paired t test. City-level variation was evaluated by comparing the coefficient of variation in 6 metropolitan areas: Baltimore, California Bay Area, Chicago, Dallas-Fort Worth, Los Angeles, and New York City.
Results:
Of 847 hospitals, charge masters were found in 747 (88%) in 2021 and 728 (86%) in 2019. Complete blood count prices ranged from $5 to $1037 in 2019 and $5 to $1085 in 2021, with no difference between the 2 years (P = .17). Complete metabolic panel prices ranged from $10 to $2440 in 2019 and $6 to $2746 in 2021, with no difference in prices (P = .75). Chest radiograph prices ranged from $20 to $1900 in 2019 compared with $30 to $5800 in 2021. Prices were higher compared with 2019 ($392 vs. $365, P < .0006). City-level changes in the coefficient of variation showed only 2 cities with reduced coefficients of variation in all 3 tests.
Conclusions:
Two years after mandating hospitals post charge masters online, there continues to be tremendous variability in prices of common tests across US children's hospitals.
Price transparency initiatives have recently emerged as a solution to the lack of health care price information available to consumers. This paper uses the staggered and nationwide diffusion of a leading internet-based price transparency platform to estimate the effects of price transparency on provider prices. I find a 1-4% reduction in provider prices for homogenous services, laboratory tests, but find no price response for differentiated services, office visits. Price responses are driven by active consumer use of price information. This paper demonstrates how reducing consumer search costs can spur limited firm price competition in health care markets.
Background: The Internet is one tool commonly used by patients to seek out healthcare information, including for orthopaedics. Our goal was to determine and compare the availability (“findability”) of cost, quality, and patient experience information related to orthopaedic services with and without a geographic identifier.
Methods: A list of 21 common search terms was compiled a priori. Using Google, each term was searched with and without a geographic identifier; the top 15 results were recorded. Findability, source of information, website ownership, information available (cost, quality, and/or patient experience), and frequency of website updates were noted. Bivariate analysis was used to compare results.
Results: The prevalence of provider websites was significantly higher using the geographic identifier (47% vs. 0%, P=0.023). There was a significantly higher prevalence of patient experience information when using the location-specific search terms (59% vs. 11%, 0.036). However, there was no difference in the prevalence of sites offering cost (0% vs. 0%, P=0.99) or quality (59% vs. 33%, P=0.41) information between the two groups. No website in either search provided cost information. Ownership did not differ between the two search groups: government (0% vs. 11%, P=0.35); non-profit (41% vs. 11%, P=0.19); and for-profit (59% vs. 78%, P=0.42).
Conclusions: The Internet can be a rich source of quality and patient experience information for orthopaedic patients. However, the use of search engine optimization and other marketing techniques may limit the ability of patients to receive unbiased and complete information.
Despite widespread interest in price transparency, it has not fulfilled its promise of encouraging price shopping. Among the barriers, possibly the most important are that high deductibles are a poor form of incentive for encouraging price shopping and that patients are reluctant to disrupt their provider relationships. Increasing evidence suggests that other benefit designs, such as reference pricing and tiered provider networks, are more effective in encouraging patients to switch to lower-priced providers and thereby have greater potential to fulfill the promise of decreasing health care spending.
Objectives:
Policy makers have growing interest in price transparency and in the kinds of tools available to consumers. Health plans have implemented price estimator tools that make provider pricing information available to members; however, systematic data on prevalence and characteristics of such tools are limited. The purpose of this study was to describe the characteristics of price estimator tools offered by health plans to their members and to identify potential trends, challenges, and opportunities for advancing the utility of these tools.
Study design:
National Web-based survey.
Methods:
Between 2014 and 2015, we conducted a national Web-based survey of health plans with commercial enrollment (100 plans, 43% response rate). Descriptive analyses were conducted using survey data.
Results:
Health plan members have access to a variety of price estimator tool capabilities for commonly used procedures. These tools take into account member characteristics, including member zip code and benefit design. Despite outreach to members, however, challenges remain with respect to member uptake of such tools.
Conclusions:
Our study found that health plans share price and provider performance data with their members.
Our excess health care spending in the United States is driven largely by our high health care prices. Our prices are so high because they are undisciplined by market forces, in a health care system rife with market failures, which include information asymmetries, noncompetitive levels of provider market concentration, moral hazard created by health insurance, multiple principal-agent relationships with misaligned incentives, and externalities from unwarranted price variation and discrimination. These health care market failures invite a regulatory solution. An array of legal and policy solutions are typically advanced to control our health care prices and spending, including: (1) market solutions that focus on transparency and consumerism to discipline health care prices; (2) antitrust enforcement to promote competition in the provider market; (3) consumer protections that protect individual uninsured or underinsured patients from unfair prices; (4) health care payment and delivery reforms that alter financial incentives of health care providers to reduce overutilization and improve efficiency; and (5) regulation of provider payment rates. The literature on these health care policy approaches reflects the fragmentation of the U.S. health care system, typically considering each approach in isolation, and it is difficult to make sense of an a la carte menu of approaches. This Article sets forth an analytic framework to simultaneously and comprehensively evaluate all the policy solutions to discipline health care prices by measuring each solution for its ability to address the health care market failures. Applying this policy-against-market-failure analysis leads to the following conclusion: only one solution-rate regulation-is capable of addressing the widespread and growing provider monopoly problem. More politically popular market approaches such as price transparency and payment and delivery reforms can correct the market failures from information asymmetries and principal-agent problems, but because they do not address the market power of providers, they will be ineffective to control health care prices and spending without accompanying rate regulation. It is time to resurrect rate regulation and place it squarely in the center of any policy strategy to control health care prices and spending.
For patients to be engaged, they will need meaningful and comparable information about the quality and cost of health care. We conducted a literature review and key-informant interviews, reviewed selected online reporting tools, and found that quality and cost reporting fell into two categories. One emphasizes public reporting of information, supported by philanthropic or government institutions that aim to improve provider quality and efficiency. The other is characterized by proprietary websites that aim to provide personalized, integrated information on cost and quality to support consumers' decision making on providers and services. What consumers seem to want is quality data at the physician level and cost data that reflect their personal out-of-pocket exposure. These needs will be acute under the coverage expansions inherent in the Affordable Care Act. State and federal policy thus should support all-payer claims databases, standards for electronic health records to facilitate sharing of quality data, and a unified approach to presenting information that prioritizes consumers' needs.
A central challenge for all health care reform proposals currently being discussed is finding the means to effectively channel market forces given many deeply embedded features of our system and the peculiar economics of health care delivery and financing. This essay traces the path of competition law in health care and explains its chicken-and-egg relationship with provider organizational arrangements. It explores a central puzzle for future health care policy: why have market forces failed to counteract organizational fragmentation? Answering this question requires an understanding of why competition policy is inexorably linked to the organizational structures of health care providers and payers and how that the fragmentation that bedevils those arrangements has undermined its success. The article concludes with a negative assessment of recent “consumer directed” approaches, finding them likely to increase fragmentation and incapable of delivering the benefits of competition.
The Accreditation Council for Graduate Medical Education mandates pediatric emergency medicine (PEM) fellowships to incorporate medical care cost teaching into the curriculum; however, there are no studies evaluating cost awareness of PEM fellows. Our objectives were to evaluate cost education during fellowship and assess fellows' knowledge and attitudes regarding costs.
We conducted an anonymous electronic survey of US PEM fellows in April-June 2009.
We received 161 (63%) of 253 responses. Respondents represented all 3 years of training and all regions of the United States. Asked if the Accreditation Council for Graduate Medical Education requires cost education, 35% responded no, and 44% were uncertain. More than 80% of fellows reported no formal cost education. More than 65% believed physicians should receive cost education during fellowship, and 75% felt the current amount of education is insufficient. Pediatric emergency medicine fellows showed low accuracy and considerable variability when estimating costs of tests and medications. Median fellows' estimate for a complete blood count was $50 (interquartile range, $55), where actual cost is $32. Only 23% were within 25% of the true cost. Similarly, the proportions of fellows estimating within 25% of actual cost were small for electrolytes (10%), blood culture (12%), and erythrocyte sedimentation rate (22%). The same held true for the following medications: trimethoprim-sulfamethoxazole (28%), Cefdinir (31%), and cefixime (10%). Ability to predict costs did not improve with year of training.
Pediatric emergency medicine fellows report little formal teaching on cost issues, and their ability to estimate costs is poor. However, they are receptive to more education on this important issue.
Consumer-driven health care has emerged as a new paradigm in allowing patients to have a stronger say in how their health care dollars are spent.1 Patients are encouraged to consider medical care a commodity that can be bought and sold. Yet health care is a unique industry in which many traditional market principles fail. Consumers of health care do not always have good information about their condition and rely on the advice of professionals. Moreover, studies have shown that total costs and charges at different health care facilities vary substantially for what should be similar services.2
In this study, we analyzed charges for an unpredictable and emergent condition: acute appendicitis. We anticipated that charges would vary significantly in an unpredictable and nonobvious way.
BACKGROUND
There are growing reports of United States (US) residents traveling overseas for medical care, but empirical data about medical tourism are limited.
OBJECTIVE
To characterize the businesses and business practices of entities promoting medical tourism and the types and costs of procedures being offered.
DESIGN, PARTICIPANTS, AND OUTCOMES
Between June and August 2008, we conducted a telephone survey of all businesses engaged in facilitating overseas medical travel for US residents. We collected information from each company including: the number of employees; number of patients referred overseas; medical records security processes; destinations to which patients were referred; treatments offered; treatment costs; and whether patient outcomes were collected.
RESULTS
We identified 63 medical tourism companies and 45 completed our survey (71%). Companies had a mean of 9.8 employees and had referred an average of 285 patients overseas (a total of approximately 13,500 patients). 35 (79%) companies reported requiring accreditation of foreign providers, 22 (50%) collected patient outcome data, but only 17 (39%) described formal medical records security policies. The most common destinations were India (23 companies, 55%), Costa Rica (14, 33%), and Thailand (12, 29%). The most common types of care included orthopedics (32 companies, 73%), cardiac care (23, 52%), and cosmetic surgery (29, 66%). 20 companies (44%) offered treatments not approved for use in the US – most commonly stem cell therapy. Average costs for common procedures, CABG ($18,600) and knee arthroplasty ($10,800), were similar to previous reports.
CONCLUSIONS
The number of Americans traveling overseas for medical care with assistance from medical tourism companies is relatively small. Attention to medical records security and patient outcomes is variable and cost-savings are dependent on US prices. That said, overseas medical care can be a reasonable alternative for price sensitive patients in need of relatively common, elective medical procedures.
The Swiss health care system is facing the implementation of lump compensation in the form of diagnosis related groups from 2010 on. In addition there is an increasing discussion about the quality of health care in the media. We have analyzed current remuneration in Swiss health care and their steering effects on providers in order to deduct future developments in Swiss health care remuneration.
Based on the remuneration contracts and tariff regularities at the Basel University Hospital we conducted an internet and literature search. The identified Swiss remuneration systems were classified after remuneration scales and remuneration item using a typology of performance-related remuneration systems. The steering effects of the remuneration systems on the providers were deducted.
Remuneration scales can be classified in , or . Remuneration items can be classified in , or . Remuneration systems can lead to increased or decreased services or to patient selection. In the Swiss health care system we find a trend away from traditional to remuneration systems. In that context diagnosis related groups are identified as an intermediate step in the development of remuneration systems.
Future developments of medical remuneration in terms of a consideration of quality of medical performance and negotiated costs seem likely in Switzerland in the long term. Both, economics and quality should be considered adequately in a health care remuneration system.
The ultimate aim of health care policy is good care at good prices. Managed care failed to achieve this goal through influencing providers, so health policy has turned to the only market-based option left: treating patients like consumers. Health insurance and tax policy now pressure patients to spend their own money when they select health plans, providers, and treatments. Expecting patients to choose what they need at the price they want, consumerists believe that market competition will constrain costs while optimizing quality. This classic form of consumerism is today's health policy watchword. This article evaluates consumerism and the regulatory mechanism of which it is essentially an example -- legally mandated disclosure of information. We do so by assessing the crucial assumptions about human nature on which consumerism and mandated disclosure depend. Consumerism operates in a variety of contexts in a variety of ways with a variety of aims. To assess so protean a thing, we ask what a patient's life would really be like in a consumerist world. The literature abounds in theories about how medical consumers should behave. We look for empirical evidence about how real people actually buy health plans, choose providers, and select treatments. We conclude that consumerism, and thus mandated disclosure generally, are unlikely to accomplish the goals imagined for them. Consumerism's prerequisites are too many and too demanding. First, consumers must have choices that include the coverage, care-takers, and care they want. Second, reliable information about those choices must be available. Third, information must be put before consumers, especially by doctors. Fourth, consumers must receive the information. Fifth, the information must be complete and comprehensible enough for consumers to use it. Sixth, consumers must understand what they are told. Seventh, consumers must be willing to analyze the information. Eighth, consumers must actually analyze the information and do so well enough to make good choices. Our review of the empirical evidence concludes that these prerequisites cannot be met reliably most of the time. At every stage people encounter daunting hurdles. Like so many other dreams of controlling costs and giving patients control, consumerism is doomed to disappoint. This does not mean that consumerist tools should never be used. It means they should not be used unadvisedly or lightly, but discreetly, advisedly, soberly, and in the fear of error.
Proposed legislation seeks to impose price transparency in the heath care industry as a remedy for increasing medical device prices. This paper analyzes previous attempts to mandate similar price-disclosure rules in a variety of industries. We identify the economic conditions under which mandatory price disclosure is likely to generate substantial benefits and costs. Applying these conditions, we conclude that mandatory price disclosure for implantable devices is unlikely to pass a benefit-cost test.
This paper assesses the evolving "facilitated consumerism" model of health care at the community level using data from the Community Tracking Study (CTS). We find that in a relatively short time, large employers and health plans have made notable progress in putting the building blocks in place to support their vision of consumerism. However, developments in the CTS communities suggest that the consumerism strategy evolving in local markets is more nuanced than implied by some descriptions of health care consumerism.
The persistent riddle of health-care policy is how to control the costs while improving the quality of care. The riddle's once promising answer--managed care--has been politically ravaged, and consumerist solutions are now winning favor. This Article examines the legal condition of the patient-as-consumer in today's health-care market. It finds that insurers bargain with some success for rates for the people they insure. The uninsured, however, must contract to pay whatever a provider charges and then are regularly charged prices that are several times insurers' prices and providers' actual costs. Perhaps because they do not understand the healthcare market, courts generally enforce these contracts. This Article proposes legal solutions to the plight of the patient-as-consumer and asks what that plight tells us about market solutions to the health-care quandary.
There are two major aims of this commentary on "The Economics of Specialty Hospitals" by Schneider and colleagues (this issue). The first aim is to identify and discuss the policy, market, and organizational context in which physician-owned specialty hospitals have emerged and now exist in the United States. This context is critical for understanding aspects of the economic model and the potential advantages and disadvantages of physician-owned specialty (or limited-service) hospitals relative to general (or full-service) hospitals now and over time. The second aim is to discuss the six specific elements of the model (i.e., consumer demand, procedural operating margins, clinical efficiencies, procedural economies of scale, economies or diseconomies of scope, and competencies and learning). Specifically, to raise some key questions and to point to other ideas and empirical evidence that suggest that in practice, physician-owned specialty hospitals may not have all the advantages that the economic theory described seems to imply.
To make informed choices and navigate within a complex health care system, consumers must have easily available, accurate, and timely information, and they must use it. Contrary to the consumer-driven approach, however, the evidence demonstrates that having an abundance of information does not always translate into its being used to inform choices. The challenge is not merely to communicate accurate information to consumers, but to understand how to present and target that information so that it is actually used in decision-making. This paper reviews what is known from studies of human judgment and decision-making and discusses their implications for supporting informed consumer choice. We delineate the types of decisions that consumers and patients are making, the barriers to using information effectively in choice, and draw upon the evidence for the efficacy of different presentation strategies to propose an initial framework for evaluating and choosing comparative information presentation approaches.
Although health savings accounts (HSAs) and managed care are often seen as antithetical, they can be integrated in fruitful ways. Moreover, combining these approaches would serve policy objectives by clarifying the payment responsibilities of patients, health plans, and premium payers, thus altering important perceptions about health care decision making. The availability in HSAs of funds that patients can use to pay for services not covered under insurance contracts should help to relegitimize the predetermination of benefits and enable the public and the legal system to take a more benign view of corporate health plans as agents of their subscribers.
The future of market-oriented health policy and practice lies in "managed consumerism," a blend of the patient-centric focus of consumer-driven health care and the provider-centric focus of managed competition. The optimal locus of incentives will vary among health services according to the nature of the illness, the clinical technology, and the extent of discretion in utilization. A competitive market will manifest a variety of comprehensive and limited benefit designs, broad and narrow contractual networks, and single-and multispecialty provider organizations.
Understanding the roller-coaster experience with the use of market forces in health care over the past ten years provides important context for discussions of likely future developments in the nature of competition. The period began with acceptance of managed care transforming the organization of medical care delivery and proceeded to a period in which many of the changes were reversed. The vision of integrated delivery has now been replaced with a vision of a more active role for consumers. But the greatest potential for a larger role for consumers lies in mechanisms that apply competitive pressure on providers to improve the quality of care that they provide and reduce their costs.
Despite widespread acceptance of the competitive market model in the U.S. health care system, debate continues regarding the optimal form of competition and the patient-professional relationship. The managed care model envisions organizations that act as the consumer's agent, addressing the challenges that consumers face in the market for health care services. The consumer-directed health plan model envisions autonomous, well-informed, price-conscious consumers shopping among providers unconstrained by organizational affiliations. Although advocates of these two approaches stress their philosophical differences, the realities of the market suggest that both models, as well as hybrids, might be valued by consumers.
As consumers face more incentives to make cost-conscious medical care decisions, some policymakers cite self-pay markets as models for consumer shopping. An analysis of the LASIK market revealed limited shopping overall, despite the fact that patients pay the full cost. For other self-pay procedures, consumers shop even less, for reasons ranging from urgency, to costs of obtaining price quotes, to quality concerns that prompt many consumers to rely on word-of-mouth recommendations. Given that consumer shopping is not prevalent in most self-pay markets, we expect the extent of shopping to be even more limited for many services covered by insurance.
In this paper, I present empirical evidence for …ve European countries (Germany, France, UK, Spain and Italy) and the Euro-zone on whether monetary policy shocks produce di¤erent e¤ects on real output growth depending on the phase of the business cycle that the economy is undergoing (the socalled ‘state’ asymmetry). To do so, I apply a multivariate extension of the Hamilton(1989)’s Markov switching methodology. I …nd evidence in favour of ‘state’ asymmetries at the aggregate level in all the countries whereby interest-rate shocks have larger e¤ects in recessions than in expansions. I also carry out the analysis at the sectorial level and observe that this asymmetric effect seems to be di¤erent in the analysed countries when I focus on a sectorial analysis.
Economic literature often offers conflicting views on the likely efficiency effects of information exchanges, communication between firms, and market transparency. On the one hand, it is argued that increased information dissemination improves firm planning to the benefit of society (including buyers) and allows potential buyers to make correct decisions given their preferences. On the other hand, economic literature also shows that increased information dissemination can raise prices through tacit or explicit collusion to the benefit of firms but at the expense of society at large. This chapter provides a general analytical framework to reconcile these views and presents some basic conclusions for antitrust practice. In addition, the chapter reviews cases from both sides of the Atlantic where informational issues have played a significant role.
Managed Consumerism in Health Care Reviving Managed Care with Health Savings Accounts Coordinated Agency versus Autonomous Consumers in Health Services Markets Competition in Health Care: Its Evolution over the Past Decade
- See
- J C Example
- M A Robinson
- C C Hall
- B E Havighurst
- Dowd
The notion of different ways of melding consumerism with managed care appeared in a recent
thematic issue of Health Affairs. See, for example,
J.C. Robinson, " Managed Consumerism in
Health Care, " Health Affairs 24, no. 6 (2005): 1478–
1489; M.A. Hall and C.C. Havighurst, " Reviving
Managed Care with Health Savings Accounts, "
Health Affairs 24, no. 6 (2005): 1490–1500; B.E.
Dowd, " Coordinated Agency versus Autonomous Consumers in Health Services Markets, "
Health Affairs 24, no. 6 (2005): 1501–1511; and P.B.
Ginsburg, " Competition in Health Care: Its Evolution over the Past Decade, " Health Affairs 24, no.
6 (2005): 1512–1522.
The ER: Core Business of the Community Hospital
- P T Breslin
P.T. Breslin, " The ER: Core Business of the Community Hospital, " Bristol Review, October 2003,
http://www.mitretek.org/MitretekHealthcare/
ERPart02_Oct03.pdf (accessed 9 January 2007),
estimates that 40 percent of hospital admissions
come through the emergency department.
- P T Breslin
P.T. Breslin, "The ER: Core Business of the Community Hospital," Bristol Review, October 2003,
http://www.mitretek.org/MitretekHealthcare/
ERPart02_Oct03.pdf (accessed 9 January 2007),
estimates that 40 percent of hospital admissions
come through the emergency department.
The notion of different ways of melding consumerism with managed care appeared in a recent thematic issue of Health Affairs. See, for example
- J C Robinson
The notion of different ways of melding consumerism with managed care appeared in a recent
thematic issue of Health Affairs. See, for example,
J.C. Robinson, "Managed Consumerism in
Health Care," Health Affairs 24, no. 6 (2005): 1478-1489;
Blue Cross of California
- Jeffrey Kamil
- Director
Jeffrey Kamil, medical director, Blue Cross of California, personal communication, 8 November
2006.