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Should we shop for health care prices?

March 2, 2021

Topics: Quote of the Day

Re: Chernew M, Cooper Z, Larsen Hallock E, and Scott Morton F. “Physician Agency, Consumerism, and the Consumption of Lower-Limb MRI Scans.” Journal of Health Economics. (2021).
National Institute for Health Care Management (NIHCM), March 2021

What This Study Found

  • Patients often received their MRIs from higher-priced providers even when lower-priced options were available closer to home. On average, patients bypassed six lower-priced providers on their way to the higher-priced location.
  • If patients spent no additional time traveling but selected the lowest-priced provider available, total MRI spending would be 36 percent lower. If patients extended their travel time to one hour to reach the lowest-priced provider they could cut overall MRI spending by 55 percent.
  • Despite significant price variation and high cost sharing for MRIs, out-of-pocket costs had little influence on patient decisions about where to receive care. Fewer than one percent of patients used the price transparency tool to investigate MRI prices and compute their out-of-pocket costs for different providers.
  • Referring physicians are the key arbiter of where patients receive care. Physicians tend to refer their patients to a very small set of imaging providers regardless of prices charged. As a result, to access lower cost providers patients must diverge from physicians’ established referral patterns.

What These Findings Mean

This analysis highlights the influence that referring physicians have over where patients receive care. Rather than price shopping for lower-limb MRI scans, patients appear to receive care at the usual locations to which their physician traditionally refers patients.

https://nihcm.org…

Journal of Health Economics: Chernew et al
https://www.sciencedirect.com…


Comment:

By Don McCanne, M.D.

This reference is being used by NIHCM to support consumer-directed health care – having the consumer help to control health care spending by shopping for health care prices.

In this case it is shown that the patient will travel a further distance for a higher priced MRI if the physician has made the specific referral, when price shopping could save time and money.

But should price shopping really be the primary determinant in health care spending? Wouldn’t it be preferable to rely on the advice of your physician who is presumably making the referral based on quality, service, and the existence of an established, functional referral relationship?

In fact, this week I am scheduled for an MRI, and I will not be going to the closest facility, nor will I know the price that is being charged. Rather I have relied on my physician to make the right choice based on what he believes to be optimal management of my medical condition. I have no urge to price shop and then use that to override my physician’s recommendation.

If we had a single payer Medicare for All system, price would not be a consideration since it would automatically be determined by our public stewards and be set to be fair based on legitimate costs and an appropriate margin. I think the government can do a much better job of determining how we can get the best value for our $4 trillion national health expenditures than I could as a health care price shopper.

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About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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