Brief Introduction to My Research Projects

Large price variation is a long-standing issue for healthcare services, especially for routine medical procedures such as MRI and CT Scan. For example, in 2018, the price for MRI scan of lower spine procedure can vary from $360 to nearly $2400 in Austin area (data from Blue Cross Blue Shield of Texas). Then, why is there such a large price variation? Several factors account for the phenomenon.

First, low transparency of provider information. In the traditional healthcare market, it is difficult for patients to access the price information of healthcare providers (i.e., clinics, hospitals, imaging facilities, etc.). Many patients go to a healthcare provider without knowing the costs in advance. Second, third-party billing. Patients only pay a fixed cost or a proportion of the costs for medical services. Therefore, it is natural that patients may not have enough incentive to choose a lower-cost provider. Third, patients' choices are highly influenced by marketing activities. The price of healthcare providers are not necessarily correlated with provider clinical outcomes in the healthcare market. It is because there are a lot of factors influencing the prices, such as providers' marketing power, marketing activities and the size of the facilities, etc. Also evidence shows that patients' selection of providers is highly influenced by those factors rather than a provider's actual clinical outcome.

All those issues lead to the huge costs for the insurers. Additionally, patients do not necessarily receive a high-value care (i.e., the high-quality care is delivered at a reasonable cost). Therefore, insurers propose various payment innovations to resolve the issues. The Benefits-Value-Advisor (BVA) Program is one of them, which is aimed at reducing the cost of self-insured employers, e.g., University of Texas at Austin, at shoppable medical procedures, such as MRI and CT Scan.

How does the BVA program work? Specifically, patients can call a Benefits-Value Advisor, which is a human consultant, to acquire the information on healthcare providers before making a choice. The consultant typically recommends a provider to the patients according to their needs. The consult can also book appointments for the patients.

The BVA system involves three stakeholders: patients, healthcare providers, and insurers. We are interested in what impact the BVA has on each stakeholder. Particularly, does the BVA program influence beneficiaries' choice behaviors? How do healthcare providers respond to such payment innovations? What are the implications for the insurers when implementing the BVA program? We employed both behavioral experiments and analytical models to investigate the above questions. The answers are contained in the following two papers.

Huang, J., Gupta, D., 2021 "How Does the Benefits-Value-Advisor Program Steer Beneficiary Choices?", under review at Manufacturing & Service Operations Management

Huang, J., Gupta, D., 2021 "The Benefits-Value-Advisor (BVA) Program for Shoppable Medical Services", to be submitted soon