Monday, July 23, 2012

Are doctors who charge more better than those who charge less ?

There is a lot of variation in how much doctors charge for a consultation ; for doing surgery ; and for giving anesthesia during an operation . One question all patients ask is - Why is there so much variation ? The general perception in a free-market economy is that anything which costs more must be better ! This is why luxury goods cost more than ordinary goods ; why brand names charge a premium ; and why a Mercedes costs much more than a Maruti. People are willing to extrapolate this , and come to the conclusion that if a doctor charges more , he must be better than one who charges less ! This is a useful rule of thumb, which works reasonably well in real life . If  a doctor charges more than someone else and is still busy , this means he can get away with charging a premium - and the general perception mus be that he is worth the additional premium he charges.

Unfortunately , this is an imperfect market , and there are a number of exceptions. For example , there are still some doctors who will not charge more than what they consider is a reasonable fee , simply because they feel there is no need for them to enrich themselves at the expense of their patients . They are simple people , with a frugal lifestyle , who are contented with what they have .

Similarly, just because a doctor charges more doesn't automatically mean he's better ! There are some flashy doctors who are very good at marketing , and who spend a lot of money on furnishing their clinic and paying for PR (public relations ). They consider this overhead to be part of the “cost of doing business” and need to recover this additional expense from their patients by charging them more .

Sometimes, patients also contribute to this inflation of prices. When we first started practice, because our overheads were extremely low, we charged much less for an IVF cycle than other clinics did. However, patients felt that if they are charging less , this means they must be worse , which is why very few patients came to us . The moment we increased our fees to match the marketplace , our clinical workload increased  dramatically !

One thing which would help patients to judge whether they were getting value for money would be to encourage  openness and transparency in this area. We should encourage doctors to publish their fees on their websites . This can help patients to make comparisons , so that they can make better informed decisions. It would also help doctors themselves, because they would learn what other doctors were charging . This would help them to tweak how much they charge , so that they can then come up with solutions which work optimally for them and for their patients.

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