A recent study has determined that common medical procedures are, on average, more costly in geographic areas where large doctor groups are prevalent.
This insight was discovered by the recently released Health Affairs study that took a look at the average prices paid by preferred provider insurance companies in the year 2010. Narrowing down on just fifteen common, but costly procedures across a wide array of specialties. These include colonoscopy, nasal septum repair, cataract removal, knee replacement, laparoscopic appendectomy and several more.
The average prices for these procedures varied from $570 for a vasectomy to more than $2300 for knee replacement according to the study. The team behind the study utilized an index that determined competition amongst doctor groups per county based on the size and quantity of practices. Using this index, they went on to investigate the correlation between the concentration of doctors in bigger practices with procedure costs.
Analysis showed that prices were eight to twenty-six percent higher in counties with the highest physician concentration relative to the counties with the lowest physician concentration. This relationship was found to be true in twelve of the fifteen procedures that the researchers examined. Shoulder arthroscopy, intensity modulated radiation therapy, and kidney stone fragmentation represent the three procedures that did not show this statistically significant association.
These findings corroborate the existing research showcasing how a number of factors, including geographic location, is responsible for a wide pricing variation for procedures. Bigger practices tend to have the available resources to benefit patients through access to new technology and better care coordination, amongst other factors. However, their market power affords them the ability to charge higher prices relative to their smaller counterparts.
Laurence Baker, co-author of the study and chair of the department of health research policy at Stanford University, noted how American consumers, who face deductibles upwards of $1000, are price sensitive when shopping for medical procedures. He went on to point out that exploring various options can end up saving a consumer thousands of dollars depending on the situation and location.