Consumers' and Providers' Responses to Public Cost Reports, and How to Raise the Likelihood of Achieving Desired Results

Published in: Health Affairs, v. 31, no. 4, Apr. 2012, p. 843-851

Posted on RAND.org on April 01, 2012

by Ateev Mehrotra, Peter S. Hussey, Arnold Milstein, Judith Hibbard

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Research Questions

  1. Can public reporting of provider costs help to lower U.S. health spending by motivating consumers to switch to lower-cost providers?
  2. Can it motivate higher-cost providers to reduce the costs to remain competitive?

There is tremendous interest in different approaches to slowing the rise in US per capita health spending. One approach is to publicly report on a provider's costs—also called efficiency, resource use, or value measures—with the hope that consumers will select lower-cost providers and providers will be encouraged to decrease spending. In this paper we explain why we believe that many current cost-profiling efforts are unlikely to have this intended effect. One of the reasons is that many consumers believe that more care is better and that higher-cost providers are higher-quality providers, so giving them information that some providers are lower cost may have the perverse effect of deterring them from accessing these providers. We suggest changes that can be made to content and design of public cost reports to increase the intended consumer and provider response.

Key Findings

  • Current initiatives to report provider costs are unlikely to drive consumers to choose lower-cost providers.
  • Providers might respond to public reports if the measures used signal wastefulness or poor quality.

Recommendation

  • Policymakers should choose which measures to report, and how to present them, depending on whether the reports are intended to motivate consumers or providers.

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