Monday, June 17, 2013

When Patients Pay Their Own Medical Bills, Competitive Forces Keep Price Increases In Check

Posted by Milton Recht:

From John Goodman's Health policy Blog, "Why Can’t The Market for Medical Care Work Like Cosmetic Surgery?" by Devon Herrick
However, when patients pay their own medical bills, they act like normal consumers ― comparing prices and looking for value. And when patients act like prudent consumers, doctors who want their patronage must respond by competing on prices, convenience and other amenities.

Consider cosmetic surgery, one of the few areas of medicine where consumers pay out of pocket. The inflation-adjusted price of cosmetic medicine actually fell over the past two decades — despite a huge increase in demand and considerable innovation [See Figure]. Since 1992:
  • The price of medical care has increased an average of 118 percent.
  • The price of physician services rose by 92 percent.
  • The inflation rate, for all goods and services, as measured increased by 64 percent.
  • Yet cosmetic surgery prices only rose only about 30 percent.
Source: John Goodman's Health Policy Blog

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