To Save on Healthcare, Change What the Doctor Orders

Bloomberg
August 8, 2018

A new study confirms that patients aren’t likely to think like consumers and shop around.

Health care costs too much for what we get in return. Is it more reasonable to hope that doctors will curb unnecessary spending, or consumers? I have long believed that while both are useful, our primary focus should be on influencing what doctors recommend.

Recent evidence shows that should indeed be where we put most of the emphasis. Consumer-driven health care may have some benefits, but it doesn’t come close to a doctor-driven approach.

The motivation for focusing on doctors is that most health care is, in the end, what the doctor orders. As I argued seven years ago, “in high-cost and chronic cases, which account for the bulk of overall costs, the patient typically agrees to the care recommended by the provider — so that the provider’s recommendation is most often the care that winds up being delivered. In the end, therefore, fundamentally reducing health-care costs requires that providers alter their recommendations.” At the time, that view was quite controversial and hopes were high for a consumer-driven alternative, in which patients would seek out higher-value care.

A fascinating new study suggests the limits of such consumerism in health care. Economists Michael Chernew of Harvard Medical School, Zack Cooper of Yale University, Eugene Larsen-Hallock of Columbia University and Fiona Scott Morton of Yale study the market for lower-limb magnetic resonance imaging (MRI) scans. Such scans are often used to examine fractures, arthritis and other problems affecting the hip, knee, leg or foot.