Information Asymmetry in Hospitals: Evidence of the Lack of Cost Awareness in Clinicians

BACKGROUND: Information asymmetries and the agency relationship are two defining features of the healthcare system. These market failures are often used as a rationale for government intervention. Many countries have government financing and provision of healthcare in order to correct for this, while health technology agencies also exist to improve efficiency. However, informational asymmetries and the resulting principal-agent problem still persist, and one example is the lack of cost awareness amongst clinicians. This study explores the cost awareness of clinicians across different settings. METHODS: We targeted four clinical cohorts: medical students, Senior House Officers/Interns, Mid-grade Senior Registrar/Residents, and Consultant/Attending Physicians, in six hospitals in the United Kingdom, the United States, Australia, New Zealand and Spain. The survey asked respondents to report the cost (as they recalled) of different types of scans, visits, medications and tests. Our analysis focused on the differential between the perceived/recalled cost and the actual cost. We explored variation across speciality, country and other potential confounders. Cost-awareness levels were estimated based on the cost estimates within 25% of the actual cost. RESULTS: We received 705 complete responses from six sites across five countries. Our analysis found that respondents often overestimated the cost of common tests while underestimating high-cost tests. The mean cost-awareness levels varied between 4 and 23% for different items. Respondents acknowledged that they did not feel they had received adequate training in cost awareness. DISCUSSION: The current financial climate means that cost awareness and the appropriate use of scarce healthcare resources is more paramount than perhaps ever before. Much of the focus of health economics research is on high-cost innovative technologies, yet there is considerable waste in the system with respect to overtreatment and overdiagnosis. Common reasons put forward for this include defensive medicine, poor education, clinical uncertainty and the institution of protocols. CONCLUSION: Given the role of clinicians in the healthcare system, as agents both for patients and for providers, more needs to be done to remove informational asymmetries and improve clinician cost awareness. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s40258-022-00736-x.