Physician agency, consumerism, and the consumption of lower-limb MRI scans

We study where privately insured individuals receive planned MRI scans. Despite significant out-of-pocket costs for this undifferentiated service, privately insured patients often receive care in high-priced locations when lower priced options were available. The median patient in our data has 16 MRI providers within a 30-minute drive of her home. On average, patients bypass 6 lower-priced providers between their homes and their actual treatment locations. Referring physicians heavily influence where patients receive care. The share of the variance in the prices of patients' MRI scans that referrer fixed effects (52 percent) explain is dramatically greater than the share explained by patient cost-sharing (< 1 percent), patient characteristics (< 1 percent), or patients' home HRR fixed effects (2 percent). In order to access lower cost providers, patients must generally diverge from physicians' established referral patterns. (C) 2021 Elsevier B.V. All rights reserved.

Automated summary

The study reveals that privately insured patients often opt for high-priced MRI providers over lower-priced options, with referring physicians playing a significant role in determining the location of care. Referrer fixed effects explain a much larger share of the variance in MRI scan prices compared to patient cost-sharing, patient characteristics, or patients' home HRR fixed effects. Patients generally need to deviate from physicians' established referral patterns to access lower-cost providers.