TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

A study finds that showing the doctors the price for tests they order results in a significant reduction in expenses:

When doctors saw this information, they ordered 9.1 percent fewer tests for their patients. That, a new paper in the Journal of the American Medical Association finds, saved the hospital just about $400,000.

“Our study offers evidence that presenting providers with associated test fees as they order is a simple and unobtrusive way to alter behavior,” the study authors, lead by Johns Hopkins professor Leonard Feldman, write. “Unlike the process in previous studies, no extra steps were added to the ordering process and no large-scale educational efforts accompanied this exportable intervention.”

Breaking news! Prices work as a signaling and rationing mechanism! (But I thought medical care was something too important to leave up to the market?)

The obvious next question here is this: if showing doctors how much things costs reduces the number of tests they order, wouldn’t showing patients the true costs have the same result?

Yes. The answer is yes.