On a recent shift in the Emergency Department, a resident boasted to me that she had convinced a patient to have an MRI done after discharge, rather than in the hospital. She was proud of this achievement because MRIs cost much more in the hospital than they do elsewhere – sometimes thousands of dollars more. To advocates of “cost-conscious care,” a new movement in medical education that aims to instill in young doctors a sense of responsibility for the financial consequences of their decisions, this story seems to belong in the ‘win’ column.
But this story also raises troubling questions: Why wasn’t the resident more concerned about how the hospital’s charging practices were leading her to delay care for her patient? What about the prolonged anxiety the patient would suffer? What about the extra day of work she would have to miss? And most importantly, why does an MRI cost thousands of dollars more in the hospital than it does across the street?
Like many doctors, she had fallen into the ‘transparency trap.’ This phenomenon is an unintended consequence of price transparency efforts that have come in response to patients and doctors being kept in the dark for decades about the prices of common services. Unfortunately, as the CEO of one large hospital put it, “the vast majority of [prices] have no relation to anything, and certainly not to cost.” In fact, studies have shown that in a functional market, MRIs would cost somewhere around $250, and we wouldn’t be nearly as concerned about doing too many of them.
When we forget how arbitrary today’s prices are, and start anchoring our medical decisions to the prices we see, we risk reflexively ordering fewer ‘expensive tests’ for patients who would otherwise get them. We start believing that MRIs really are that expensive, rather than recognizing that they just seem so expensive because of the dysfunction of the health care market. That’s the transparency trap.
To be sure, price transparency is mostly a good thing – it helps patients avoid sticker shock, and may give providers a reason to make their prices competitive. Without question, doctors also have a responsibility to reduce wasteful spending and to consider the “financial side effects” of care, especially when patients bear much of the cost directly.
But not every MRI is unnecessary or wasteful. And patients shouldn’t be penalized for the dysfunction of the health care system. Instead, doctors should focus on advocating for an end to price gouging in health care. At the very least, we need to change the questions we ask, and alongside “cost-conscious care,” we need to teach medical students and residents to take today’s prices with a hefty grain of salt.
As more and more hospitals agree to make their prices publicly available, we risk more doctors falling into the ‘transparency trap.’ When we see that a hospital charges some sky-high amount for a test, let’s not just think: “Wow, that’s an expensive test! I should order less of those,” — but start asking: “How on earth do we let them get away with charging so much?”