Austin Frakt recently published a fantastic article in the New York Times titled, “Shopping for Health Care Simply Doesn’t Work. So What Might?” In short, the article notes that consumers rely almost exclusively on their doctors for advice on care decisions despite the fact that:
- 40% of care is elective (“shoppable”) and varies wildly in terms of price and value; and
- there are a myriad of consumer tools such as price comparison apps designed to help consumers make more informed elective care decisions.
A few years ago, insurance companies started pushing high deductible plans on consumers. The logic was that if consumers had to pay more out of pocket for elective care, they would be more discerning with their healthcare spending, particularly with respect to elective care. For example, a common ambulatory MRI can range from $280 to $2,100. In theory, a high deductible plan, which requires the consumer to cover the majority of the cost of that MRI, should lead consumers to seek out the most cost effective MRI. Several studies show that consumers do in fact spend less on healthcare as a result of these high deductible plans. However, they spend less on both elective and necessary treatments. Forgoing necessary treatments it obviously bad for people’s health, but it also has a cost multiplier effect on the healthcare system as diseases advance, people get sicker, and treatment becomes more difficult and expensive down the road.
Consumers not only rely on their doctors for care recommendations, but they also assume their doctor is recommending the best value of care. A recent study by the National Bureau of Economic Research found that less than 1% of patients actually used a price comparison tool when receiving an MRI, despite the wide range of pricing. Moreover, on the way to their MRI, patients drove by an average of six places where the procedure could have been done more cheaply.
Acccording to Frankt, “Even if 40 percent of health care is shoppable, people are not shopping. What seems likelier to work is doing more to influence what doctors advise. For example, we could provide physicians with price, quality and distance information for the services they recommend.” If consumers will not change their behavior and continue to take their doctor’s recommendation regarding care decisions for elective treatments at face-value, then we need to empower doctors with the tools to make better and more comprehensive care and value decisions on behalf of the patient.
Vytas Kiselius, CEO of ReferWell, made the following comment on the New York Times website in response to the article: “Everyone talks about empowering the consumer to ‘take charge of their health care’ but you see where that puts us. So, we [ReferWell] are taking the approach of empowering physicians with the data they need to make better, more informed referrals so that they can guide patients to the lowest-cost/best-outcomes providers. Health decisions are complex, and patients want to get guidance from their primary doctor but when that doctor doesn’t know, they can’t “refer well” unless they get the right tools… so that’s what we’re trying to give them.”
The bottom line is that to save costs on healthcare treatments, we need to provide better decision making tools to the doctors, not the consumers.