In the Journal of the American Medical Association, researchers from Castlight Health have published what they believe is the first study linking price transparency to cost savings. The study of more than 500,000 Castlight users demonstrated modest savings for lab tests, advanced imaging, and clinician office visits.
"Although it is widely perceived that greater transparency of pricing information should reduce health care costs, to our knowledge, no prior studies have shown this using private price transparency platforms," study authors wrote. "We examined the association between the availability of health service prices to patients and the total claims payments (the total amount paid by patient and insurer) for these services. We hypothesized that providing personalized price information would allow patients to identify and choose less expensive providers resulting in lower payments for medical services."
Researchers analyzed claims data from 18 employers working with Castlight and selected the 500,000 users who had made use of relevant services. They identified the users who had done a search on the same service they were receiving up to 14 days prior to the procedure. This "searcher" group had 116,000 members, while 386,000 non-searchers were identified.
They found that searchers paid 14 percent less for laboratory tests, 13 percent less for advanced imaging services, and only about 1 percent less for clinician visits. However those services differ wildly in price, so the actual cost savings for laboratory tests was an average of $3.45, imaging services was $124.74, and clinician office visits was $1.18.
"This naturally raises the question: Why did patients change behavior for seemingly modest savings per service?" the study asks. "It may be that less expensive physicians and health care services facilities were also higher quality or were more convenient; therefore, those who searched based on nonprice attributes visited lower-cost providers. Or it may be that forward-looking patients thought that savings per laboratory test would accumulate over time."
Castlight says that 70 percent of its users conduct some kind of search on the platform. Christopher Whaley, a data scientist at Castlight Health and the lead author on the JAMA paper, said the modest results reflect that the paper is just a first step in assessing the efficacy of price transparency in general and Castlight in particular.
“This study was purposefully focused," he said in a statement. "Castlight sees it as a starting point, examining common medical services for which there is demonstrably little correlation of cost with quality. The JAMA study is thought-provoking. It suggests that enterprise technology can play a major role in enabling companies to address healthcare costs while offering optimally tailored benefits to employees. We know from other research that savings per service increase when we examine employees active on the Castlight platform for longer periods of time."
Whaley added that another study is in the works, looking at the cumulative effect of price transparency tools over a longer stretch.
"Additionally, preliminary work for a separate, ongoing study finds that individuals retain information from searching and continue to visit less expensive providers, similar to an annuity that provides dividends well into the future for employees and their employers," he said. "The potential for more and lasting behavior change by employees seems truly groundbreaking.”