Statement of Ha T. Tu, Senior Health Researcher, Center for Studying Health System Change Testimony Before the Subcommittee on Health of the House Committee on Ways and Means July 18, 2006
Potential for More Effective Price Shopping for Medical Services by
Consumers
Madame Chairman, Representative Stark and members of the
Subcommittee, thank you for the invitation to testify. My name is Ha T. Tu,
and I am a senior health researcher at the Center for Studying Health System
Change (HSC). HSC is an independent, nonpartisan health policy research
organization funded principally by The Robert Wood Johnson Foundation and
affiliated with Mathematica Policy Research.
HSC’s main research tool is the Community Tracking Study,
which consists of national surveys of households and physicians in 60
nationally representatives communities across the country and intensive site
visits to 12 of these communities. We also monitor secondary data and general
health system trends. Our goal is to provide members of Congress and other
policy makers with high-quality, objective and timely research on developments
in health care markets and their impact on people. Our various research and
communication activities may be found on our Web site at www.hschange.org.
With funding from the California HealthCare Foundation, HSC
has conducted research on consumer price shopping for health services, focusing
both on self-pay services, such as LASIK, and analyzing the issue of price
transparency for medical services that tend to be insured.[1]
My testimony today will focus on three key
points:
- Consumers’ experiences with markets for self-pay services,
such as LASIK, are often held up as model for the entire health care
system. Consumer shopping in self-pay markets has been mythologized with
little investigation into how well these markets actually work for
patients. Our research findings indicate self-pay markets are unlikely to
be a workable model of effective shopping for health care services without
either a large role for insurers or regulatory oversight.
- Insurers’ buying power, or ability to negotiate
significant discounts from hospitals, physicians and other providers,
eclipses what patients can negotiate individually. And insurers
potentially can become even more effective agents as they develop more
sophisticated benefit structures and information tools to support
consumers in choosing effective treatments from higher-quality, lower-cost
providers.
- Encouraging greater consumer awareness about the costs of
health services— i.e. consumer price shopping—does have potential to help
contain costs without sacrificing quality—but some are overselling the
magnitude of this potential.
SELF-PAY MARKETS
Whether they belong to conventional health plans with rising
cost-sharing requirements or enroll in consumer-driven health plans with high
deductibles and a spending account, consumers are facing more incentives to
make cost-conscious decisions about medical services. Consumer-oriented
approaches to health care emphasize price shopping as a tool for individual
consumers to obtain better value and for the health system as a whole to curb
rising costs and improve quality through increased competition. Until
recently, most insured consumers have been sheltered from rising health care
costs and have had few incentives to shop for the best deal. The extent to
which consumers actually can become effective shoppers in the health care
marketplace remains largely unexplored.
Self-pay markets in health care—those markets in which
consumers largely pay out of pocket for services because of little or no
insurance coverage—provide insights into how markets work when consumers must pay
the total costs of services without the benefit of discounted rates negotiated
by health plans or the restrictions of a provider network chosen by insuers.
Our research examines several self-pay markets in health
care, focusing on one in particular—laser assisted in-situ keratomileusis
(LASIK), a type of vision-correction surgery. LASIK was chosen for in-depth
analysis largely because it is widely regarded as the self-pay market with the
most favorable conditions for consumer shopping: it is an elective, non-urgent,
simple procedure, giving consumers time and ability to shop; screening exams
are not required to obtain initial price quotes, keeping the dollar and time
costs of shopping reasonable; and easy entry of providers (ophthalmologists)
into the market has stimulated competition and kept prices down.
While LASIK is a good procedure to evaluate for price
shopping for these reasons, it is important to note that patients are rarely in
a position to shop for completely elective, non-time-sensitive procedures, even
if good price and quality information were available.
In addition to the in-depth look at LASIK, we’ve also
examined other self-pay markets—in vitro fertilization (IVF), cosmetic
rhinoplasty and dental crowns—to highlight how additional complexities and
barriers to price and quality transparency affect consumer shopping behavior.
LASIK
Study Methodology. Initial
research included a review of existing literature and news stories;
informational material published by professional associations and government
regulators; and industry consultants’ market reports. In addition, researchers
reviewed online patient forums and examined LASIK providers’ Web sites and
print advertisements. Interviews included LASIK providers, industry consultants,
laser equipment manufacturers, government regulators, and professional
associations’ management and senior staffs. Respondents were asked about the
overall nature of the LASIK market—for example, to discuss price and quality
information available to consumers and to describe typical consumer shopping
behavior. Respondents also were asked specific questions based on their
expertise and position in the market—for example, industry consultants
discussed overall market trends and government regulators discussed misleading
advertising and regulatory oversight of LASIK. In addition, the industry’s
professional association and a consulting company that specializes in providing
LASIK price and volume data provided supplementary data on the LASIK market.
The Procedure. LASIK is an outpatient surgical
procedure performed by an ophthalmologist that permanently reshapes corneal
tissue to reduce light-refraction error and improve vision. A surgical blade
creates a flap in the outer layer of the cornea. After the flap is folded
back, a laser is used to reshape the underlying corneal tissue, and the flap is
replaced. The surgery takes 10–15 minutes per eye, and the only anesthetic is
an eye drop that numbs the eye’s surface. LASIK was first performed in the United
States in clinical trials in 1995.
Complications of LASIK include infection, dry eye, the flap
failing to adhere correctly after surgery, less-than-perfect vision correction,
and visual disturbances, such as seeing glare and halos, especially at night.
Experts estimate that complications occur in 5 to 7 percent of all procedures.
The complication rate has decreased over time with greater surgical experience
and technological advances. The rate of severe complications, such as those
that threaten long-term vision, is estimated to be less than .01 percent. In 5
to 18 percent of procedures, a second operation—called enhancement surgery—is
needed to correct refractive error that was either not corrected in the first
procedure or caused by the first procedure. The higher a patient’s refractive
error to start with, the greater the likelihood that enhancement surgery will
be needed.
In the past few years, two new technologies have emerged in
the LASIK industry. The first, custom wavefront-guided LASIK, uses wavefront
technology to measure precisely how each eye refracts light and then guide the
laser in customizing the corneal reshaping. Unlike conventional LASIK, custom
LASIK can treat higher-order aberrations and is more likely to produce 20/20 or
better vision and is less likely to result in visual distortions. Providers
have widely adopted custom LASIK: 80 percent of providers now offer this
technology, and the procedure accounted for nearly half of all LASIK procedures
in 2005, according to MarketScope, LLC data.
The second refinement, blade-free or all-laser LASIK,
involves the use of a laser instead of a surgical blade to create the corneal
flap and is usually referred to as IntraLase. Many surgeons believe that
IntraLase creates a more precise flap and results in fewer complications.
Compared to custom LASIK, however, IntraLase market penetration has not been
nearly as high: The technology was used in one in 10 LASIK procedures in 2005,
according to MarketScope, LLC data.
Market Structure and Pricing. Market insiders
describe the LASIK market as having three pricing tiers: discount, mid-priced
and premium-priced providers. Discounters tend to market aggressively based on
price. They typically handle a high volume of procedures, and patients often
have little or no contact with the surgeon before or after surgery.
While discount providers are almost always high volume,
experts note higher pricing does not necessarily equate to lower volume. What
all premium providers tend to have in common is that they are surgeons whose
credentials (such as research publications, affiliations with teaching
hospitals and participation in clinical trials) enable them to command top
dollar. Beyond this common trait, however, it is harder to generalize about
these practices. Many premium providers run relatively low-volume LASIK
practices that offer patients personalized care from the surgeon, both before
and after surgery. Other premium-priced providers operate on a different
business model: marketing themselves heavily, performing high volumes of LASIK
procedures, and often relying on optometrists to conduct pre- and
post-operative exams.
Many mid-priced providers are somewhat like the premium
providers but without the top-notch credentials or surgical experience to
command higher prices. Other mid-priced providers are large chains that may
have started out as discount providers but moved to the mid-price segment
through an emphasis on customer service, celebrity endorsements or other means.
In 2005 the price of LASIK averaged approximately $1,680 per
eye for the conventional procedure and $2,030 for the custom procedure (see
Exhibit 1). Premium-priced providers currently charge about $2,200 per eye for
conventional LASIK and $2,700-$2,800 for the most advanced technology (custom
LASIK with IntraLase).
Although discount providers often advertise that LASIK is
available for only a few hundred dollars, market experts note that the actual
price of LASIK from a discounter averages $1,100-$1,200 per eye for the
conventional procedure and $1,500-$1,600 per eye for custom LASIK, both with a
surgical blade. (Most discounters have yet to adopt IntraLase technology.)
This substantial discrepancy between actual and advertised prices exists
largely because very few LASIK patients are medically eligible for the lowest
prices. Indeed, it has been estimated that only 3 percent of LASIK procedures
are performed for less than $1,000 per eye.[2]
In the decade that LASIK has been performed in the U.S.,
price and volume have fluctuated somewhat, but overall the average price for
conventional LASIK has declined nearly 30 percent in inflation-adjusted terms.
Two factors appear to be largely responsible for this market’s price
competitiveness: on the provider side, a large number of providers
(ophthalmologists) can enter the market relatively easily; and on the consumer
side, price quotes can be obtained at little cost and inconvenience. However,
the decline in LASIK price is much less steep than what a casual observer might
infer, given the pervasive advertisements of LASIK for only a few hundred
dollars per eye.
There is no consistent bundling of LASIK services across
providers. A high-end LASIK surgeon’s fee might include a thorough screening
exam, the procedure itself, and several post-operative exams, all conducted by
the surgeon. If enhancement surgery is needed, a premium-priced surgeon might
charge the patient nothing at all or only the procedure fee charged by the
laser manufacturer. At the other extreme, some discount providers charge
patients a nonrefundable fee for the screening exam, include little
post-operative care and require full payment for enhancement surgery.
Information Available to Consumers. Reliable
consumer information about LASIK is available from several sources, including
the Federal Trade Commission (FTC) and the American Academy of Ophthalmology
(AAO), which jointly produced a free consumer brochure, Basik Lasik.[3]
This consumer resource discusses the procedure, its risks and possible
complications; how to locate a surgeon; and what to expect before, during and
after surgery. To help consumers find a surgeon, the AAO Web site lists all
AAO members performing refractive surgery.
Basik Lasik and similar sources provide guidance to consumers
on questions to ask of surgeons, but consumers still must gather this
information from each provider. No centralized source is available for
information such as number of procedures performed, success rates or
enhancement rates for each surgeon, so consumers seeking to compare such
quality-related measures across providers must invest considerable effort to
gather this information.
Consumer Shopping Behavior. Although LASIK
consumers are a heterogeneous group, the majority shares one trait, according
to industry experts:Word-of-mouth recommendation from a previous LASIK
patient is the most common way to select a LASIK surgeon. This holds true for
all market segments, from discount to premium-priced providers. Practices that
advertise heavily do draw many new patients through marketing efforts, but
word-of-mouth still plays an important role—accounting for perhaps half of most
discount providers’ LASIK customers, according to industry observers.[4]
According to premium-priced surgeons, well over half of
their patients tend to be focused on quality considerations. These patients
are likely to ask prospective providers about LASIK technology, safety and
outcomes, and a subset of these patients has done extensive research before
contacting a provider. Among discount practices, not surprisingly, price tends
to be the most important priority, and patients are much less inclined to focus
on quality or to have done research. Industry experts estimate that perhaps
one in five LASIK consumers overall—and a much larger proportion of discount
providers’ customers—tend to shop intensively for the lowest price (often by
telephone) and base their purchasing decision solely on price.
In the LASIK market—in contrast to other self-pay markets—it
is possible for a consumer to obtain telephone price quotes if they have their
vision prescription.[5]
An in-person exam is still needed, however, before the provider can assess the
patient’s eligibility for surgery, the likelihood of complications and the
potential benefits of custom LASIK over conventional LASIK.
Consumer Satisfaction. Satisfaction rates among
LASIK patients are high—about 90 percent industry-wide. Among premium-priced
practices, especially those that emphasize careful screening and patient
preparation, satisfaction rates can reach the high 90s. Even among high-volume
discounters, some of which have received negative publicity for questionable
business practices and some bad outcomes, satisfaction rates still appear to
range in the 80s.
Issues Facing LASIK Consumers
Lack of Consistent Bundling. Because the package of
services that are included in LASIK procedure fees varies across providers,
consumers shopping in this market are confronted with “apples vs. oranges”
comparisons. One critical factor when comparing providers’ fees is to consider
whether the provider includes the cost of enhancement surgery in the quote. A
price quote that appears to be the best deal but does not cover follow-up
operations may end up being the highest-cost option if enhancement surgery is
needed. Whether thorough screening exams are included and how much
post-operative care is included in the procedure fee also varies.
Misleading Advertising. Misleading advertisements
have been a recurring problem with some LASIK providers, most notably
discounters; federal and state regulators have taken action against some
providers—and investigated many more—for making claims about price and quality
that were found to be unwarranted.
In 2003, for instance, the FTC issued a consent order
against LASIK Vision Institute (LVI) after finding that the national chain
falsely claimed that consumers would receive a free consultation to determine
their LASIK eligibility. Instead, consumers, after an initial meeting with a
salesperson, were required to pay a $300 deposit before they could meet with an
optometrist to be told of risks, possible complications and medical
eligibility. If the consumer decided not to proceed with surgery, the entire
deposit was nonrefundable. If the consumer chose to undergo surgery but was
rejected for medical reasons, only a portion of the deposit was refunded.
Although LVI signed an FTC consent decree, the practice of advertising but not
providing a free screening has persisted in some markets. In November 2005,
the Illinois Attorney General took action against LVI for this same violation,
along with other misleading practices.
Advertisements run by discount providers touting very low
LASIK prices are another important source of consumer misinformation. LVI, for
example, runs advertisements promising “LASIK for $299.” On LVI’s Web site,
the fine print states the offer is for surgery on one eye and applies only to
those with no astigmatism and very low myopia, conditions that apply to a small
portion of the LASIK patient base. Similar problems have occurred with print
advertisements, leading at least two state attorneys general, in Illinois and
Florida, to take action against LVI in 2005.
Consumers can be misled on quality issues as well by some advertisements.
The 2003 FTC consent decree against LVI cited the provider for making
unsubstantiated claims that LASIK would eliminate the need for glasses and
contact lenses for life. Another national provider, LasikPlus, also was cited
for making this claim, as well as additional unfounded claims that the
procedure posed less risk to patients’ eyes health than wearing glasses or
contacts and that the procedure carried no risk of side effects.
In many cases questionable practices have persisted despite
the settlements. And, regulators note that for the FTC to take official
enforcement action against a provider, a practice must be “egregious” and
“widespread;” they concede that consumers can also be misled by many
questionable practices that fall short of these criteria. For example, local
LASIK providers engaging in some of the same advertising practices as LVI would
not be targets of FTC action, since their practices are not national in scope.
Policing such providers generally would be left to state and local regulators,
which vary greatly in the extent to which they enforce consumer protection.
Quality Issues. Many industry observers express
concern that LASIK is regarded as a commodity by some consumers—leading them to
shop only on price—when provider quality, in their opinion, varies
considerably. Quality differences may be obscured by the fact that LASIK is
relatively simple surgery with low complication rates, but for patients whose
eyes have certain “problem” characteristics (e.g., abnormal topography, large
pupils, thin corneas), quality differences may be critical.
Screening is the first step where provider quality
differences matter: Industry insiders note that some providers—especially
high-volume discount providers—may not adequately screen out patients who are
not good LASIK candidates. When such patients are accepted for surgery,
whether through revenue pressures or less-experienced or skilled screening
staff, they suffer serious complications at much higher rates than average.
Investments in technology are another area where providers
differ: The lower the price charged by providers, the less likely they are to
use state-of-the-art technology that may provide better results. According to
experts, the very low prices quoted by discount providers assume the use of
older, less expensive laser technology that may produce an acceptable result
(for example, 20/40 vision with visual aberrations) when a newer, more
expensive technology might have produced a better outcome (better than 20/20
vision with no aberrations).
Poor quality outcomes, including severe
pain, loss of best-corrected vision, or persistent double vision have been well
documented in media accounts, online health forums and other sources. Such
outcomes can result not only from poor screening but also from inadequate skill
or experience from the surgeon, providing further evidence that LASIK is not a
commodity and that quality differences can be substantial across providers.
Other Self-Pay Markets
While I have focused on the LASIK market, as I mentioned
earlier, we also looked at self-pay markets for in vitro fertilization (IVF),
cosmetic rhinoplasty and dental crowns. Consumers engage in little price
shopping for IVF, rhinoplasty and dental crown services, according to experts
in these markets. For IVF and rhinoplasty, most consumers choose providers
based on previous patients’ recommendations or physician referrals. For dental
crowns, virtually all patients choose to stay with their regular dentist rather
than shop around.
One important reason why shopping takes place so
infrequently for these procedures is that accurate price quotes can only be
obtained after undergoing in-person screening exams, since costs vary according
to patient characteristics and medical needs as assessed by each provider. In
some markets (cosmetic surgery) it is customary for some providers to offer
free screenings, while in other markets (IVF and dental procedures), providers
always charge for the exam. In the latter case, any potential benefit of
identifying a low-cost provider would likely be negated by the costs of
obtaining price quotes. But even when screenings are provided free of charge,
consumers must still invest considerable effort in gathering price quotes.
Urgency is another factor precluding some consumers from
shopping for IVF and dental crown services. Since one of the indications for a
crown is that a portion of a tooth is missing, some patients may be in pain
while shopping. Although IVF treatment may not qualify as medically urgent,
industry experts note that consumers’ sense of urgency about starting the
procedure makes them unlikely to spend time price-shopping.
In the dental crown market, there are also important
psychological barriers to shopping around. Surveys suggest that a large
majority of consumers trust their own dentists, but at the same time, many
express some fear or anxiety about major dental procedures. Thus, most
consumers, when faced with the prospect of undergoing a major dental procedure,
would be highly unlikely to switch from a regular provider they already know
and trust to an unknown dentist solely to save on costs.
Implications for Price Shopping
Consumer-oriented approaches to health care sometimes focus
on price shopping, without giving adequate priority to comparing quality across
providers. Yet, widespread reliance on word-of-mouth recommendation in
self-pay markets suggests that many consumers place a high priority on quality
but may be using referrals from physicians or previous patients as a proxy for
quality, given the absence of or shortcomings in concrete quality measures.
Concerns about quality disparities across providers appear
to be warranted: Even for the relatively simple LASIK procedure—sometimes
considered a commodity—quality differences across providers can be marked and
can prove critical, particularly for the significant minority of consumers who
have “problem” characteristics that put them at greater risk for complications
or unsatisfactory outcomes. Consumers who consider only price when shopping
for LASIK may end up with providers they would not have chosen if they had been
aware of quality disparity issues. These consumers may not receive the best
value for their money, even if they obtained the lowest price.
For consumers who do take quality into account when
shopping, comparing quality across providers can be challenging. For LASIK,
consumers must gather data on success and re-operation rates from individual
providers. Along with a need for centralized quality information, there is also
a need to adjust outcomes data for patient mix—something not yet available in
any of the self-pay markets we examined.
Educating consumers—providing information such as what
credentials to look for in providers, how to compare prices and quality across
providers, and what misleading claims to look out for—is essential if consumers
are to act as their own agents in the marketplace. Government and professional
associations can jointly take on consumer education, as they have done in the
LASIK market. Monitoring of and enforcement against providers who engage in
misleading advertising are also key elements of consumer protection. As the
number and complexity of health care markets in which consumers are expected to
shop on their own behalf expand, resources devoted to consumer protection will
need to be increased substantially.
If all the tools discussed here were implemented, many
consumers would benefit from improved price and quality transparency, but the
benefits would not accrue to all consumers equally. Previous research has
found that consumers with more education are much more inclined to seek health
information on their own behalf,[6]
so they are the most likely to benefit directly from any measures that improve
price and quality transparency.
In applying lessons learned from self-pay markets to
services covered by health insurance, it should be noted that many covered
services are more urgent and more complex than the procedures we have
analyzed—factors that would greatly reduce consumer inclination and ability to
comparison shop. In addition, the fact that insurance will cover part of the
cost reduces the financial incentive for the consumer to shop vigorously.
Given that consumer shopping is not prevalent or active in most self-pay
markets, we would expect the extent of shopping to be even more limited for
many insured services.
ROLE OF INSURERS IN PRICE TRANSPARENCY
Moving from self-pay markets where consumers are responsible
for paying the total bill to covered health care services, where consumers have
less of a financial stake in care decisions, it’s important to keep in mind the
role of insurers. Much of the policy discussion about price transparency has
neglected the important role that insurers play as agents for consumers and
purchasers of health insurance in obtaining favorable prices from providers, as
HSC President Paul B. Ginsburg, Ph.D., testified earlier this year before
Congress.[7]
Even though insurers have lost some clout in negotiating with providers in recent
years, they still obtain sharply discounted prices from contracted providers.
Insurers are in a strong position to further support their
enrollees who have significant financial incentives, especially those in
consumer-driven products. Insurers have the ability to analyze complex data
and present it to consumers as simple choices. For example, they can analyze
data on costs and quality of care in a specialty and then offer their enrollees
an incentive to choose providers in the high-performance network. Insurers
also have the potential to innovate in benefit design to further support
effective shopping by consumers, such as increasing cost sharing for services
that are more discretionary and reducing cost sharing for services that
research shows are highly effective.
Insurers certainly are motivated to support effective price
shopping by their enrollees. Employers who are moving cautiously to offer
consumer-driven plans want to choose products that offer useful tools to inform
enrollees about provider price and quality. When enrollees become more
sensitive to price differences among providers, this increases health plan
bargaining power with providers. Negotiating lower rates further improves a
health plan’s competitive position. One thing that insurers could do that they
are not doing today is to assist enrollees in making choices between network
providers and those outside of the network by providing data on likely
out-of-pocket costs for using non-network providers.
PRICE TRANSPARENCY CAN LEAD TO HIGHER PRICES IN SOME CASES
The Administration has recently been pushing hospitals and
physicians to provide more information on prices to the public. If this is
limited to prices paid by those who are not insured or those who are insured
but are opting to use a non-network provider, additional price information for
the public is may be a positive. But if hospitals and insurers are precluded
from continuing their current practice of keeping their contracts confidential,
this could damage the interests of those who pay for services, especially
hospital care.
Antitrust authorities throughout the world have recognized
that posting of contracted prices tends to lead to higher prices. In highly
concentrated markets, posting of prices facilitates collusion. Even in the
absence of collusion, posting would mean that a hospital offering an extra
discount to an insurer would gain less market share because their competitors
would seek to match it. Of course, this works on both the buying and selling side
of the market, but if hospitals tend to be more concentrated than insurers,
disclosure will raise rather than lower prices.
The experience in Denmark, where the government, in a
misguided attempt to foster more competition in a concentrated market, posted
contracted prices in the ready-mix concrete industry is instructive. Within
six months of this policy change, prices increased by 15-20 percent, despite
falling input prices.[8]
POTENTIAL FOR MORE EFFECTIVE PRICE SHOPPING
Unfortunately, much of the recent policy discussion about
price transparency downplays the complexity of decisions about medical care and
the dependence of consumers on physicians for guidance about what services are
appropriate. It also ignores the role of health insurers as agents for
consumers and purchasers in shopping for lower prices. Well-intentioned but
ill-conceived policies to force extensive disclosure of contracts between
managed care plans and providers may backfire by leading to higher prices.
We need to be realistic about the magnitudes of potential
gains from more effective shopping by consumers. For one thing, a large
portion of medical care may be beyond the reach of patient financial
incentives. Most patients who are hospitalized will not be subject to the financial
incentives of either a consumer-driven health plan or a more traditional plan
with extensive patient cost sharing. They will have exceeded their annual
deductible and often their maximum on out-of-pocket spending. Recall that in
any year, 10 percent of people account for 70 percent of health spending.
When services are covered by health insurance, the value
of price information to consumers depends a great deal on the type of benefit
structure. For example, if the consumer has to pay $15 for a physician visit
or $100 per day in the hospital, then information on the price for these
services is not relevant. If the consumer pays 20 percent of the bill, price
information is more relevant, but still the consumer gets only 20 percent of
any savings from using lower-priced providers. And the savings to the consumer
end once limits on out-of-pocket spending are reached.
In addition to those with the largest expenses not being
subject to financial incentives, much care does not lend itself to effective shopping.
Many patients’ health care needs are too urgent to price shop. Some illnesses
are so complex that significant diagnostic resources are needed before
determining treatment alternatives. By this time, the patient is unlikely to
consider shopping for a different provider.
Some of these constraints could be addressed by consumers’
committing themselves, either formally or informally, to providers. Many
consumers have chosen a primary care physician as their initial point of
contact for medical problems that may arise, and choice of physician often
drives choice of hospitals. Patients served by a multi-specialty group
practice informally commit themselves to this group of specialists—and the
hospitals that they practice in—as well. So shopping has been done in advance
and can be applied to new medical problems that require urgent care. This is a
key concept behind the high-performance networks that are being developed by
some large insurers.
CONCLUSION
The need for consumers to compare prices of providers and
treatment alternatives is increasing and has the potential to improve the value
equation in health care. But we need to be realistic about the magnitude of
the potential for improvement if consumers become more effective shoppers for
health care.
[1]
Two working papers from this project, “Shopping for Price in Medical Care, ” by
Paul B. Ginsburg, and “How Consumers Shop for Health Care When They Pay Out of
Pocket: Evidence From Selected Self-Pay Markets,” by Ha Tu and Jessica H. May,
are available by request by contacting HSC.
[2]
David Harmon, MarketScope president, as quoted in: K. Garloch, “LASIK: Reward
of Clear Vision Not Without Risk,” The Charlotte Observer, January 18,
2004.
[3]
Other reliable Web sources of information about LASIK include
www.lasikinstitute.org (sponsored by the Eye Surgery Education Council, an
initiative of the American Society for Cataract and Refractive Surgery) and
www.usaeyes.org (sponsored by the Council for Refractive Surgery Quality
Assurance).
[4]
The different ways that consumers have of choosing LASIK providers are not
mutually exclusive. For example, a consumer considering LASIK may see an
advertisement promoting low prices, then talk to someone who had satisfactory
surgery with that provider—which would reinforce that consumer’s inclination to
choose that provider.
[5]
A prescription may not even be necessary to obtain a price quote, if the
provider does not use tiered pricing based on strength of prescription.
[6]
L. Baker et al., “Use of the Internet and E-Mail for Health Care Information:
Results From a National Survey,” Journal of the American Medical Association,
Vol. 289, No. 18 (May 14, 2003). H.T. Tu and J.L. Hargraves, Seeking Health
Care Information: Consumers Still on the Sidelines, Issue Brief No. 61,
Center for Studying Health System Change, Washington, D.C. (March 2003).
[7] Statement of Paul B. Ginsburg, Ph.D., president,
Center for Studying Health System Change, Consumer Price Shopping in Health
Care, Before the U.S. House of Representatives, Committee on Energy and
Commerce, Subcommittee on Health, Washington, D.C. (March 15, 2006).
[8]Albaek, Svend, Peter Mollgaard, and Per B
Overgaard, "Government-Assisted Oligopoly Coordination? A Concrete
Case," Journal of Industrial Economics, Vol. 45 (1997): 429-43.
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