Which bottle of wine is higher quality: a $5 bottle from Trader Joe’s or a $150 bottle at an upscale French restaurant? For most consumer products, a higher price signals higher quality. From cars and homes to face creams and dinners out, the higher the price, the “better” the product. Look no further than the iPhone, which was on average priced $330 more than comparable Android devices from 2010-2013 to signal its premium status.
When it comes to healthcare, though, the relationship between cost and quality is notoriously unclear. Spending more does not always get you more, or “better,” care. The US spends 54% more on healthcare per person compared to most other developed countries, but lags behind on many indicators of quality, such as life expectancy at birth and health service availability. A systematic review of 61 studies found inconsistent evidence on any clear association between healthcare cost and quality.
We were curious if Amino’s cost estimates data could shed any light on whether the doctors who were the most experienced with certain procedures (i.e., the “experts”) would be more expensive for patients relative to less experienced doctors. Note that we define “experience” not as number of years practicing medicine, but rather the number of patients a doctor has recently treated with your condition (or the number of patients a doctor performs a particular procedure on), which academic researchers have found is typically a good predictor of medical outcomes.
So, we analyzed cost estimates for 9,000 doctors who perform ACL surgery and compared the cost estimates for the 10% most experienced doctors against cost estimates for all other doctors. These cost estimates are for the total amount that you and your health insurance company might pay for a procedure—aka the “network rate.” We were surprised to find no correlation between cost and experience.
Why is there no relationship between cost and experience?
In many metro areas, the most experienced doctors end up being cheaper, but in others they’re roughly the same or slightly more expensive. In general, our data shows no correlation between a doctor’s experience with ACL surgery and the median network rate of that procedure for United Healthcare patients.
When you compare the most experienced doctors against all the other doctors who perform ACL surgery, the difference between the two groups is negligible, especially when you consider the overall variability in cost for a given procedure. For example, in the L.A. metro area, the median network rate for ACL surgery ranges between $14,000 and $22,000—that’s a difference of $8,000! We ran similar analyses for hernia surgeries, cataract surgeries, knee arthroscopies, and shoulder arthroscopies; the results were the same. We didn’t see a correlation between a doctor’s experience and the median network rate for the procedure.
Variations in cost can be attributed to many factors, including the negotiations between insurers and doctors within a specific region. Given that hospital groups have a lot of power in these negotiations, an individual doctor’s experience (as defined by volume of procedures) may not have an affect on cost. Leah A. Burke, MD, and Andrew M. Ryan, PhD similarly note in the AMA Journal of Ethics that “variation in prices paid by private insurers is due largely to bargains struck with doctors, rather than quality of care.”
Another factor that drives cost variation is that providers may have different practice patterns for the related services that surround a procedure—what we call an “episode of care.” For example, in the case of ACL surgery, you might receive anesthesia and radiological services, as well as the procedure itself, as part of your “episode of care.” The costs of these related services vary from doctor to doctor, and from facility to facility.
Given that we found no clear association between cost and quality, even at the doctor level, you can and should shop for affordable options when you need to find a doctor or have a procedure done. Policy changes and payment reform could have an impact, but until every doctor’s office or insurer is able to have a menu of services with prices, let’s take matters into own own hands.
Amino can help you find cost estimates for individual doctors and compare cost estimates by region—and we can help you discover affordable doctors who have the most experience in whatever you need. Beyond “shopping” for doctors, services like GoodRx or Blink Health can help with prescription price shopping, and Policy Genius or Stride Health can help find the right health insurance.
In a survey of over 1,500 Americans we conducted this past summer, we found that 37% of had “shopped” around for healthcare over the past 12 months (another study from Advisory Board found rates closer to 56% when focusing on “shoppable procedures”). We hope that as more useful health information becomes available to consumers, we see this trend grow.
Just as you might do research on the most affordable travel options or the most affordable homes in your city, we believe that everyone should be able to find cost information about healthcare and make an informed decision about where to get treated.
Amino data analyst Sohan Murthy looked at our cost estimates for ACL surgery, comparing the cost estimates for the 10% most experienced doctors (those who performed the most ACL surgeries from 2015 to 2016) against cost estimates for all other doctors who perform ACL surgeries during the same time period. To rule out variation caused by insurance, we only looked at United Healthcare costs. We also limited the scope of our analysis to 5 of the largest US metro areas based on population, in order to account for geographic variation in prices and experience.
In total, we analyzed cost estimates for 9,000 doctors that performed ACL surgeries from 2015 to 2016. Our cost estimates are estimates of the total amount that you and your health insurance company might pay for a procedure—this is what we call the “network rate.” The median network rate is calculated by evaluating all of the patients with private insurance (in this case United Healthcare) who saw doctors in that region for an ACL surgery. Then, we estimate what these patients would have been charged, based on the doctor they saw. Over these patients, the 50th percentile becomes the median network rate, while the 10th and 90th percentile define the low and high cost estimates in the ranges. In other words, 80% of all network rate estimates in a given region fall in the bars shown above. Read our cost estimates methodology for more details.
POSTSCRIPT: We ran a linear regression to determine a relationship between a doctor’s network rate estimate for an ACL surgery and the number of ACL surgeries they performed between 2015 & 2016. The number of doctors we observed in our data and the adjusted R-squared for each metro area was as follows:
- Los Angeles – 310 doctors, adjusted R-squared: -0.002
- New York City – 598 doctors, adjusted R-squared: -0.001
- Chicago – 291 doctors, adjusted R-squared: -0.003
- Boston – 192 doctors, adjusted R-squared: 0.015
- Washington D.C. – 184 doctors, adjusted R-squared: -0.002
This piece was originally published here.
Carine Carmy is Head of Marketing at Amino, a healthcare service firm that analyzes data on nearly every doctor in America to match their experience with patient needs – allowing the individual to find a doctor, estimate costs, and book an appointment. Prior to that role, she held Director and Vice President positions with Shapeways, and served as a Board Member of Urban Word NYC. Carine is also a marketing instructor at General Assembly in San Francisco, CA. Follow Ms. Carmy on Twitter.