Price transparency alone won’t solve our health system’s ills

His right testicle had jumped into his abdomen after he lost control of his motorcycle on the highway.   My 43-year-old patient, whom I’ll call Richard, in otherwise healthy condition, was brought to the ER with severe pain.  Fortunately, his testicle was still intact and only needed to be put in the proper place.

I am an attending physician in the emergency department and trauma center at San Francisco General Hospital.  I see patients who encounter unexpected medical situations and seek care during desperate times.  As someone with a bird’s-eye view of the health care system — the ER is the only place where all patients are seen regardless of their ability to pay — every day I see huge gaps in our health care system.

One of the biggest gaps is actually the way our health care system is structured. We have a fundamental market-driven approach to health care in the United States which is very American in nature — we hope the market can provide all of our needs, and we hope we can be empowered as consumers to shop for care and make decisions that force the market to respond to our needs.  One of the most touted measures has been increased price transparency as a potential solution to the current opacity and inefficiency in the health care system.  I believe this is crucial in having our health care system “own up” to our failure in providing society reasonable, cost-effective care.

At the same time, price transparency alone will not be able to solve many of our market’s ills.  Let’s take Richard’s case as an example. The root cause of the inability for the market to work in health care is because of information asymmetry, or when all parties involved in a transaction do not have relevant knowledge.

First, Richard had no idea where his testicle went. In fact, even the radiologist couldn’t identify the “unidentified heterogeneous structure in the right lower quadrant of the abdominal cavity.”

Second, Richard had no way of predicting he would be in need of medical services that day and, in fact, would not even know how to shop for this service even if he had been able to predict it beforehand.  More than that, even if he had been able to diagnose himself and knew the name of this procedure he required — “manual closed reduction of unilateral testicular dislocation” — it would have been impossible for him to “shop around” for either price or quality of the procedure to be performed. Try Googling the procedure along with the word “price” and you will not find a match for any documents. On the entire Web.

And finally, even if he were able to determine the best person to put his testicle back into place at the best price, he did not have any information on whether or not that procedure was absolutely critical to life or could be delayed or would resolve on its own.

Now let’s think about something markets do work well for — take, a laptop computer, for example.  For a particular model, I can find out what specifications it has, how much it costs, and where to buy it.  I know or can find enough information about the quality and shop around. And, perhaps most importantly, I know a critical reproductive organ is not at risk if I choose not to buy it now.

What are the options then?  To be sure, the simple existence of market failure does not mean that government will succeed.  But the contrapositive is also true: government failure does not imply markets will succeed.

Given that the United States health care system is built heavily on market principles, there is a great deal of room for the government to use its tools of regulation, financing, and even production to ensure more equitable and efficient delivery of health care services.

Debates in health care are inevitably emotionally charged and, in fact, should be, since health care is a deeply personal issue. (For those curious about Richard, we maneuvered his testicle back into his scrotum, and he — and the testicle — are now fine.)

We all agree that care should be provided — now we need to focus on the how.  Market failures mean that we have the opportunity to improve both efficiency and equity.  If we can’t get support for this level of reform, then we have much to lose as individuals and as a society.

The ball, as one might say, is in our court.

Renee Y. Hsia is an emergency physician.


This post originally appeared on the Costs of Care Blog. Costs of Care is a 501c3 nonprofit that is transforming American health care delivery by empowering patients and their caregivers to deflate medical bills. Follow us on Twitter @costsofcare.

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