Examining the effect of publishing of bill sizes to reduce information asymmetry on healthcare costs

Abstract

Introduction: Information asymmetry has been offered as a reason for unnecessarily high costs in certain industries where significant information asymmetry traditionally exists between providers and consumers, such as healthcare. The purpose of this paper is to examine the impact of the introduction of publishing of bill size as a means to reduce healthcare costs. Specifically, we aim to examine if this initiative to decrease information asymmetry on healthcare prices between healthcare providers and patients, and between healthcare providers themselves, will lead to lower prices for patients.

Methods: Bill size data of 29 commonly occurring diagnosis-related groups (DRGs) for two ward classes (B2 and C) over a 16- month period were studied. Each ward class was studied separately, i.e. involving 58 DRG data sets. The mean bill size data as well as that of 50th and 90th percentile bill sizes were examined. The study involved some 46,000 inpatient episodes which occurred in the five public sector acute general hospitals of Singapore.

Results: Mean prices dropped by 4.14 percent and 9.64 percent for B2 and C classes, respectively. 50 out of 58 DRG data sets showed a drop in prices. Bill sizes at the 50th percentile dropped by 7.95 percent and 10.12 percent for B2 and C classes, respectively; while at the 90th percentile, the corresponding figures were decreases of 8.01 percent and 11.4 percent for the two ward classes.

Conclusion: The act of publishing bill sizes has led to less information asymmetry among providers, thereby facilitating more competitive behaviour among hospitals and lower bill sizes.