Searching for Health : The Effects of Online Price Transparency

Recent technologies provide consumers with access to price information for medical services, a market with uncharacteristic price dispersion and opaque prices. This paper examines the effects of an online price transparency platform on consumer behavior. I find that consumer use of price transparency information leads to a 16% reduction in prices for lab tests, 15% reduction for advanced imaging, and has an approximately 1% effect for physician office visits. Consistent with a search costs model, I find larger effects in markets with high price dispersion. However, for physician office visits, the value of non-price information exceeds the value of price information