An interdisciplinary team of Indiana University (IU) scientists studying Medicare data have found an association between healthcare industry payments to medical providers for non-research expenses and what these providers charge for medical services—shedding new light on potential hidden costs to the public.
Their findings, published last month in Nature Communications, demonstrate that medical providers receiving higher amounts of industry payments tend to bill higher drug and medical costs. Specifically, they found that a 10% increase in industry payments to medical providers is associated with 1.3% higher medical costs and 1.8% higher drug costs. For example, a $25 increase in annual industry payments to a typical medical provider would be associated with approximately $1,100 higher medical costs and $100 higher drug costs.
“Let’s be clear here, we should not find such an association,” says Jorge Mejia, co-author on the paper and an assistant professor of operations and decision technologies at the IU Kelley School of Business. “Our findings raise the possibility that medical providers may be unduly influenced by payments from the healthcare industry.”
It’s important to note that an association shows that two variables appear to change at the same time, whereas causality implies that one variable causes another variable to change. This study does not prove causality, which the researchers said would be difficult to do with secondary data.
Mejia’s co-authors were Amanda Mejia, assistant professor in the Department of Statistics, and Franco Pestilli, associate professor in the Department of Psychological and Brain Sciences, both at the IU College of Arts and Sciences.
Amanda Mejia said the team controlled for several key variables to rule out the possibility of other drivers of the association between industry payments and medical costs.
“We found that the association was still there after taking into account the size of the practice, its location, and drug prescribing levels,” she says.