New Study Questions Whether High Quality Follows High Prices 

By Max Friedman 

19942-FX-8-0-1-2-0-0.jpgIn recent years, the health care industry has seen a push for greater transparency — making prices more accessible to everyone. But how should we use that information? Do higher prices mean better quality?

Price is relatively easy to measure, at least after the fact (it is often difficult for a patient to determine how much a procedure will cost in advance, leading many to face surprise medical bills).

However, quality of care is more difficult for a patient to determine. Many default to looking at price as a proxy for quality, as they would for regular consumer goods. But is this a proper method?

The Health Care Cost Institute (HCCI) looked at quality of care measures with the same claims data used to estimate the average prices for common health services. These measures are reported at the local, state, and national levels.

The study found that health care quality is largely unrelated to health care price.

Examining five quality measures (asthma evaluation, diabetes evaluation, Hemoglobin A1C test, hypertension evaluation and Creatinine test), the authors found that four of the five had correlation coefficients between -0.45 and 0.00, suggesting either negative or no relationships between price and quality, while one would expect positive relationships if higher prices signaled higher quality of care.

Only the hemoglobin A1C test had a slight positive correlation of 0.18, a fairly weak relationship. A positive correlation implies that higher quality occur where prices are also higher, and vice versa for negative correlations. A correlation of 1.00 would suggest that for every one unit increase in price, quality increases proportionally. A coefficient of 0.00 implies no relationship between the two variables.

The researchers also looked at whether high quality measures for one service were related to similar quality for others, and found mixed results, even for services related to the same underlying condition. However, higher price levels for one service were correlated with high prices for other services. This analysis was done at the state level, and may differ at the provider level.

More research is continually being done on the costs and quality of health care, as this issue becomes more prevalent.


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