Price Transparency in Specialist Markets

Abstract

The market for non-GP specialist services in Australia is characterised by widely dispersed fees and out- of- pocket costs, creating uncertainty about the price patients will have to pay. This is primarily driven by doctor-level variation in pricing rather than patient characteristics, clinical risk or quality, which reflects a referral-based market with severe information asymmetry and weak price competition. A response to help patients navigate this system has been the promotion of fee transparency websites. While this is a welcome step to empower patients, evidence suggests such tools have limited impact and may increase prices in concentrated markets. We argue that to improve transparency tools, risk-adjusted information on expected costs and quality indicators must be provided and this information should be targeted at the referee, often the general practitioner.