Cost, quality, and your healthcare—a story about relationships

Cost and quality—they’re always related right? Well, usually. Sometimes we buy the cheaper good or service when we’re looking to save money, understanding the trade off is often quality. We might buy a hamburger at a fast food joint for $2 instead of spending $10 at the local pub. The same goes when we’re buying almost anything, whether it’s paper towels, power tools, desk chairs, or running shoes. The philosophy of “you get what you pay for” is ingrained in our culture. In fact, we often look at price as a kind of proxy for quality. When we stand in the aisle at the auto parts store and look at a shelf full of car batteries that all look the same, we naturally conclude that the more expensive battery is the better one. We’re trained as consumers to evaluate goods and services this way. And usually, this form of evaluation leads us to the correct conclusion.

But be careful when applying this same logic to your healthcare. Splurging on a burger now and then won’t likely break your wallet, but healthcare costs are no joke, and aren’t as easy to recover from. Recent studies have shown that there is no relation between cost and quality when it comes to our healthcare. And by becoming aware of this fact sooner, you are likely to save hundreds or thousands of dollars on your medical expenses each year.

Bill Clinton declared to his audience at the Healthcare Information and Management Systems Society in 2013 that, “every single year…the results have been the same. There is no correlation between what people pay and the quality of healthcare they get.” Still, there’s so many of us out there that believe price and quality are inextricably united.

If you’re not totally convinced by the words of Bill Clinton, perhaps you’ll find Peter Hussey’s comprehensive research on the subject more compelling. His team reviewed 61 different studies concerning the relationship between quality and cost in healthcare, then had his findings published in January 2013 by the Annals of Internal Medicine. The researchers found that “the association between cost and quality is small to moderate, regardless of whether the direction is positive or negative.” In layman’s terms, their research showed that there is no distinguishable relationship between the cost and quality in healthcare.

The following graph shows how the number of studies showing a positive relationship is virtually equal to the number of studies finding a negative relationship, and also roughly equal to the studies that showed no relationship at all between cost and quality.

There’s really no other industry like healthcare (a really tricky auto repair might be the next closest thing), where consumers are completely unaware of price before buying something, so it’s hard to even provide a decent example for the sake of comparison. But here’s another way to think about cost versus quality. You can buy a bottle of water at a gas station for $0.99. At a football stadium the same bottle of water sells for $4. Is there any difference in quality? Exactly. The market dictates that consumers will pay more for water at football games.

But what does the market dictate with regard to healthcare costs? Unfortunately, not a whole lot. Since we don’t really have access to any pricing beforehand, there’s really no rhyme or reason behind low or high healthcare costs. Some providers have low prices for tests and procedures, while other providers charge sky-high rates for the exact same care. And this is why Peter Hussey’s findings make a lot of sense.

So if you knew you could get the same quality healthcare at one facility for hundreds or thousands of dollars less than another facility in your area, which one would you choose?

Let’s take control of our physical and financial health by changing our perspective, becoming aware of the hidden truths related to healthcare (like the relationship of cost and quality), and by embracing new price transparency technology. By making these easy changes we can effectively become educated medical consumers, equipped with all the necessary tools to take control of our healthcare.


Download the full Planning Guide
Ensuring Compliance with the No Surprises Act and Transparency in Coverage Rule