A study by the National Bureau of Economic Research looked at how individuals with private health insurance choose providers for lower-limb MRI scans. Lower-limb MRI scans are a fairly undifferentiated service and providers’ prices routinely vary by a factor of five or more across providers within hospital referral regions. Researchers observed that despite significant out-of-pocket cost exposure, patients often received care in high-priced locations when lower priced options were available. Fewer than 1 percent of individuals used a price transparency tool to search for the price of their services in advance of care. The choice of provider is such that, on average, individuals bypassed 6 lower-priced providers between their home and the location where they received their scan. Referring physicians heavily influence where their patients receive care. The influence of referring physicians is dramatically greater than the effect of patient cost-sharing. The researchers concluded that in order to lower out-of-pocket costs and reduce total MRI spending, patients must diverge from the established referral pathways of their referring physicians. They also observed that patients with vertically integrated (i.e. hospital-owned) referring physicians are more likely to have hospital-based (and more costly) MRI scans.
- Are Health Care Services Shoppable? Evidence from the Consumption of Lower-Limb MRI Scans. NBER Working Paper No. 24869. July 2018