Health Care Price Transparency: how to improve early findings

Health care thought leaders are of the belief that price transparency will play a significant role in cost containment. Providing the actual cost of services, procedures and consumables to health care providers and patients - it is posited  - would help bend the cost curve. A recent Robert Wood Johnson Foundation publication (March 2016) suggests that price transparency might have the single biggest effect in informing the public about health care costs and could support a more efficient health care delivery system in the United States (http://goo.gl/2IMeMz).

Decades ago, a large metropolitan Toronto academic health science centre proposed to provide all discharged patients with an detailed "pseudo-invoice" of their stay. This would help achieve consumer awareness and alter the prevailing notion that health care was free. It did not achieve stickiness. This was revived not long ago by a hospital in Southwestern Ontario (http://goo.gl/zJQMkR) but there has been no report on any action or progress to date.

A recent JAMA study (Desai et al, https://goo.gl/7ubL52) found that offering a price transparency tool was not associated with lower health care spending. Only 10% of the 150,000 employees at two large American companies offering web-based transparency tools logged on to compare healthcare costs during the calendar year. In addition, providing workers with the ability to shop for healthcare services did not bring down employees’ average outpatient spending. Instead, employees with access to transparency tools spent slightly more than workers who could not price shop. Further, an editorial in the same edition noted that such simple transparency was not a panacea (https://goo.gl/KMYoxm).

Behavioral economists would have predicted this result. Simply providing the information without context will always achieve disappointing outcomes. Perhaps future studies will give consideration to nudging or incentivizing participants towards better decision making using the information available by adopting better choice architecture.

This has been seen internationally with organ donation (countries that have presumed consent have high organ donor rates)  or prescription drug coverage in the United States (federal Medicare subsidy for prescription drug coverage for seniors). Both examples are well-documented in Nudge: improving decisions about health, wealth and happiness by Richard Thaler and Cass Sunstein.

This is not uncommon in the health care industry - it is an understatement to say that a lot of data is collected. Unfortunately, it is not used enough to make better decisions at all levels of health system governance and operations. By inserting some behavioral science into the notion that price transparency can bend the cost curve may actually nudge this boulder in the right direction.