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An In-Depth Analysis of Price Comparison Tools in Healthcare

Aug 27, 2020

Kelli Frias and Deidre Popovich awarded a $1.2M grant to explore healthcare affordability

Recent legislation increasing price transparency in the healthcare market becomes effective January 11, 2021. One way that many states, healthcare agencies, and healthcare providers have responded is with pricing websites that make price shopping for healthcare more consumer friendly. Sites like give consumers the opportunity to look up the cost of a procedure before they make an appointment with a particular provider. Many such websites give consumers information about the potential cost (in and out of network), the average price for that particular procedure in their area as well as price comparisons at the state, and sometimes national, level.

The goal of price transparency websites is to help define the value of healthcare services and encourage consumers to choose rationally optimal providers (i.e., lower cost, higher quality) for their healthcare procedures. Price transparency tools are intended to help consumers “shop” with the intent of lowering individual and systemwide healthcare costs. Nevertheless, many consumers do not use these websites and even when they do, it is not clear what happens. 

In recent studies, Frias and Popovich (Texas Tech U) find that consumers have little information about prices for procedures nor confidence about their own price estimates. Further, they find that the price format used on these sites, as well as the comparisons made to other prices (e.g., county v. state level price averages), can impact consumers’ perception of the procedures’ affordability and the perceived quality of the provider.

“While the findings are preliminary, this work provides a foundation for understanding how price formats and displayed comparisons can alter a prospective patient’s view of the affordability of their healthcare and the perceived quality of their local providers—even before they make a visit," explains Frias.

 Read more about Frias and Popovich's work from Texas Tech and on their website.

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