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Patients Unlikely to Deliver on the Promise of Price Transparency


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I heard this on the radio this week: Mom takes her new baby to the emergency department on a weekend because she thinks her daughter might have a urinary tract infection. She's right, but regulations say the baby has to stay in the hospital for two days to ensure the infection clears. Afterwards, the mom is surprised by and concerned about a $7,000 hospital bill for the baby's care.

The reporter says that since more companies are purchasing high-deductible health plans for their employees, it's increasingly important that people can find out the price of their care so they can make better choices.

I say, "What?"

First of all, a trip to the ED is rarely carefully planned, meaning that this mom probably didn't go online or call around to see which ED would give her the best price.

Second, this woman didn't know what her baby needed. How could she know what price to look for?

Third, because she wasn't sure what the problem was or what the treatment would entail, it is unlikely she would have been able to discover those pesky hospital regulations about the conditions under which babies with UTIs are discharged from the ED.

And fourth, do you think a new mother is going to violate regulations and take her sick baby out of the hospital against medical advice because it costs too much?

The idea that knowing the price of our care will encourage us to act like wise consumers is a hugely popular topic on blogs, in editorials and in the news. But relying on access to price information to drive changes in our health care choices is full of false promises to both us and to those who think that by merely knowing the price, we will choose cheaper, better care and result in cost savings to us and to our health care institutions.

The way we actually receive health care is far from the idealized version that many "patients as health care consumers" advocates imagine – you know, the "I need a new dishwasher; I'll look at Consumer Reports to see which model has the features and quality I want at a price I can afford" approach.

Similar information about health care is simply not available, even if we have the time and wherewithal to seek it out. While it is increasingly possible to discover the price of various tests, treatments, procedures and clinicians, they are by no means posted online for every hospital and clinic in the country. I have written elsewhere about how useless it is to know the price of a service or procedure or test without being able to consider its quality relative to that of others offering the same one. These two deficits strike blows to the promise that price transparency will make for wiser decisions that cost us – and the system – less money.

Here is a third blow: Our inability to judge the relative effectiveness of various services, procedures or treatments. We always have a choice between a test/no test or treatment/no treatment and often we have a number of choices among different approaches to prevention, diagnosis, management and treatment. What we lack is information about the relative effectiveness of our choices. What are the probabilities of benefit and the risks of harm in the long- and short-term of the alternatives? Again, this information sometimes exists but mostly it does not.

We depend on our clinicians to make recommendations based on professional evidence- and experience-informed algorithms. The vast majority of us are unable to assemble arrays of evidence on our own that allow us to compare our test and treatment options. While some decision support tools exist and can be helpful in making comparisons when/if we can locate them and adapt them to our individual circumstances, their number is dwarfed by the hundreds of choices I must make, for example, about the treatment of my lung cancer for which no comparative effectiveness data or decision support tools exist.

With only scant information about the comparative effectiveness of different treatments or tests, how can we make a rational decision about the price of one versus another?

Is the expectation that the woman in the story above will calculate the risks and benefits of a two-day hospital stay for her infant versus bringing her home that night? Or will she make that determination based on price alone? Am I supposed to figure out the effectiveness of a PET-CT versus a CT scan for the progression of my cancer given my current symptoms? Or will I not bother and decide based on the relative price? Are you ready to spring for the cheapest antibiotic for your sick child without understanding that different ones may be more or less effective and have different risks of side effects?

Yes, I know there are some situations in which it is possible for us to do this. As a result of the mammography study released last week, millions of women will now be asked to judge the relative benefits of getting a mammogram this year, given their health histories. But even assuming the information about the relative value of a test or treatment exists and is available in a form that is useful to me, finding and using it requires time, tenacity, experience and/or a clinician who will take the time to interpret that information for me given my health history and then discuss how I might weigh the relative value of my choices.

The biggest and most serious blow to idea that price transparency will lead to cost reductions, however, is that we can and will dispassionately step back in the midst of our own suffering or that of our mom or our baby or our spouse. We will stop, gather information and make a rational economic calculus about whether and which test or treatment we are willing to pay for.

I am skeptical of our willingness and ability to do this. My experience as a patient and the stories I have heard over the years from those who are seeking health care – even with constrained resources – shows a remarkable impulse to focus on the steps that will reduce the suffering: Will this test give me or my clinician information about what to do next? Will this test or procedure help me get well or feel more comfortable or will it increase the pain? What are the short- and long-term consequences of taking/not taking this action? Price is a minor consideration if it enters the calculus at all.

Should the price of our health care tests and treatments be transparent? Of course. There are times when some of us will want or need that information. Should anyone expect that simply by making this information available we will make dramatically different – and better – choices? No, because without quality and effectiveness information it is useless, and because our aim is much more expansive than getting the cheapest deal on our health care. Like the mom who took her daughter to the ED, we are each doing the best we can to use the tools of medicine in the moment so that we and those we love can live as well as we can for as long as we can.

More Blog Posts by Jessie Gruman

author bio

Jessie C. Gruman, PhD, was founder and president of the Center for Advancing Health from 1992 until her death in July 2014. Her experiences as a patient — having been diagnosed with five life-threatening illnesses — informed her perspective as an author, advocate and lead contributor to the Prepared Patient Blog. Her book, AfterShock, helps patients and caregivers navigate their way through the health care system following a serious or life-threatening diagnosis. The free app, AfterShock: Facing a Serious Diagnosis, offers a pocket guide based on the book. | More about Jessie Gruman

Tags for this article:
Patient Engagement   Evidence-Based Medicine   Health Care Cost   Pay for your Health Care   Make Good Treatment Decisions   Health Care Quality   Inside Healthcare  

Comments on this post
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William Rosenberg says
February 19, 2014 at 8:01 PM

The landmark RAND health insurance study showed that a) serious illness is price inelastic (e.g., people don't shop for emergency services) and, b) responses to price as manifest via benefit plan provisions do not distinguish between needed and unneeded services. In other words, price transparency does not overcome a fundamental limitation of health care markets, namely that the consumer typically will not have access to information about what they need, what care is needed or effective, who is a "quality" provider, etc.

jim jaffe says
February 19, 2014 at 8:10 PM

transparency is usually good and posting prices can't hurt and may help. as you say, there are limits, but it is also true that a lot of expensive surgery is done on a non-emergency basis, thus giving patients time to think and weigh options. also provider behavior may change in much the same way that comparative data on outcomes hasn't influenced patient choice much, but has had an impact on the performance of providers with subpar scores

Connie Smith says
February 20, 2014 at 3:06 PM

What I want is for clinics and hospitals (especially outpatient facilities) to include the pricing in writing before the planned procedure is done, e.g. foot surgery, cataract surgery, colonoscopy, etc. Of course there will be the caveat for "complications". This at least lets me as a consumer stop and think before I ask for the service again in the future.

jane says
April 18, 2014 at 1:40 PM

An excellent essay. One point is that children or their parents often do not have the choice to test/treat or not test/treat. Had this woman tried to take her baby out AMA, there's a serious risk that the hospital would have accused her of medical neglect, hospitalized the child anyway, and had security drag her out of the building so she couldn't even provide company or independent monitoring of what was going on. Then she could have spent $7000 on legal fees trying to get the baby back.