Monday, September 29, 2014

Look what happens when the facts are presented

A reader writes:

I thought you would appreciate this overview of a study from the University of Utah on patient decision making when health care costs and outcomes are transparent. 
The authors studied the decisions made with regards to laparoscopic versus open appendectomy on pediatric patients when both cost (obviously higher w/ lap) and outcomes (similar w/ peds) were discussed upfront with the parents prior to surgery. Families chose open procedures almost twice as much as compared to the lap approach. 

This would become an even more interesting study to also include a third arm and similar transparent cost/outcomes discussions with da Vinci…that is, if only some hospital would be willing to participate. 

Indeed!  Here are excerpts from the article.

Consumer price comparison is almost nonexistent in the U.S. health care system, but a new study shows that when given the choice between a less costly “open” operation or a pricier laparoscopy for their children’s appendicitis, parents were almost twice as likely to choose the less expensive procedure – when they were aware of the cost difference. The study, published in the September issue of Annals of Surgery online, shows that providing pricing information upfront can influence patient choice of surgical procedures and potentially lead to cost savings in health care, a sector of the economy that accounts for more than 17 percent of the U.S. Gross Domestic Product, says Eric R. Scaife, M.D., senior author, associate professor of surgery and chief of pediatric surgery at the University of Utah (U of U) School of Medicine.

“Unlike other areas of the U.S. economy where it’s typical for people to compare prices before purchasing, health care consumers seldom know what they’ll pay for a procedure, meaning they have no basis for comparing costs,” Scaife says. “But our research found that when they have the information, consumers want to be in on health care decisions and that cost can influence what they choose when procedures are equally effective and have similar outcomes.”

Reasons for choosing the open operation varied among patients who received pricing information, including incision size, number of incisions, past experience and influence from a medical provider outside the surgical team. The most common reason, however, was cost: 31 percent of respondents said price was the primary influence on their choice of procedure.

“Cost-saving measures are important to me when it doesn’t impact the safety of the patient,” one respondent said.

The vast majority of respondents, 90 percent, said they liked having a choice in their health care, while only 3 percent would have preferred not to be given a choice. Lower median-income families were more likely to choose the open procedure than those of higher median incomes, but after accounting for the income difference, patients and parents exposed to the cost information still were 1.7 times more likely to choose the open procedure. Health insurance status appeared to play no role in the procedure choice.


Barry Carol said...

Usually, patients need a financial incentive that benefits them personally in the form of a lower copayment to choose a lower cost provider or medical approach. We keep hearing that many patients think more care is better care and more expensive care is better care when often it isn’t.

I also don’t see what incentive the hospital would have to inform patients of the difference in cost here unless it were paid the same amount regardless of which surgical alternative patients chose.

I would like to see a study like this replicated outside of Utah. The large Mormon population in that state may create a different set of values and expectations at it relates to healthcare than it would be typical in other states but I have no idea whether or not that’s true.

Paul Levy said...

Barry, I'm not sure there is support for your first proposition, i.e., that people need a financial incentive.

As for the hospital, there are costs of the different procedures, in terms of time spent in the OR.

Anonymous said...

I think the university of Utah has usually been on the annual list [a few times] of list of low cost, high quality academic medical centers from the

University Health System Consortium.

I forget but I think they were in the top 5 a few years ago.

So it could be if a hospital has a price advantage in it's market it could benefit them to compare prices as long a quality doesn't suffer.

Hospitals like Tufts Medical Center, Beth Israel Deaconess and Lahey Hospital could potentially all benefit from comparisons to Mass General, Brigham & Womens and Boston Medical Center.

See below for cost per patient discharge in 2012 adjusted for case mix [Note first number is case mix.]

TMC 1.51 (CM) - $ 9.0K
MGH 1.50 (CM) - $12.3K
Lahey 1.47 (CM) - $ 8.5K
B&W 1.39 (CM) - $13.6K
BID 1.27 (CM) - $9.5K
BMC 1.15 (CM) - $12.0K

Barry Carol said...

I don’t know Paul. There seems to be a lot of people in Boston who prefer to go to PHS owned hospitals even when they know those hospitals are being paid significantly more than their competitors even for routine care and despite no difference in the quality of care provided. I don’t think transparency alone would change that much unless the patient paid enough less out of pocket to matter in exchange for going to a more cost-effective provider. Patients too often perceive that more expensive care is better care even when it isn’t and the PHS hospitals presumably offer a lot of non-outcomes related amenities that patients like as well. I think the bottom line is that financial incentives matter, at least most of the time.

Paul Levy said...


The PHS patients are not presented with the kind of information offered in this study.

Also, PHS patients actually don't know, for the most part, that their insurers are paying more.

Barry Carol said...


If PHS patients generally don’t know that those hospitals are being paid considerably more than competing hospitals for similar work and if the Utah study is a fair indication of how rationally patients respond to meaningful price and quality data when it’s made available to them, it implies that there is a significant opportunity to reduce healthcare costs by disclosing contract reimbursement rates. If that’s the case, what are the regulators in MA and the other states waiting for? Is it the hospitals and doctors or the insurers that are pushing hardest to sustain the confidentiality agreements or are both sides equally complicit?

Separately, isn’t there a new law that takes effect tomorrow in MA that requires hospitals to provide patients with a BINDING estimate of their out-of-pocket costs for care that can be scheduled in advance? As more people have high deductible and/or tiered network insurance plans, differences among hospitals in out-of-pocket costs should start to matter more than in the past.