Comparison shopping for healthcare procedures online does work. Consumers save money and so does the healthcare system, says new research from the University of Michigan.
But so far, healthcare price transparency and web tools that let consumers research how much a typical procedure may cost, aren’t very widespread, says University of Michigan assistant professor of economics Zach Brown.
It has been estimated that up to 40% percent of spending on medical services is for procedures that can be shopped around and price transparency may be able to impact pricing on these procedures as well, Brown says.
“If healthcare is to be left to market forces, then I believe that those markets should be transparent and competitive,” he says. “Reining in healthcare costs will require bold solutions that lift the veil on prices.”
But price transparency tools also are unlikely to have an effect on other procedures, such as complicated surgeries with prices that are determined on a case-by-case basis.
Still, using web tools to comparison-shop medical services can yield savings. For example, the average price of an MRI scan is $1,200 in the U.S., compared with $569 in other developed countries. The average price of a CT scan is $228 in the U.S. and $98 in other developed countries.
But in New Hampshire, which first rolled out NHHealthCost.org, a healthcare costs comparison site 12 years ago, a multiyear study of comparison shopping MRIs reveals a significant savings over time, Brown says.
The University of Michigan research showed that, over five years, New Hampshire consumers that used the website reduced the cost of medical imaging procedures by 5% for patients and 4% for insurers. That translates into $7.9 million in consumer savings while insurers saved $36 million on X-ray, CT scans and MRI scans over the five-year period, Brown says.
By the fifth year, out-of-pocket prices were 11% lower for patients. “Without transparency on prices, healthcare providers aren’t as competitive and that leads to higher prices,” Brown says.
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