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Diagnosing what ails the US health-care system


David Chan addresses the Health Policy 2020 symposium on Oct. 14, 2016.
David Chan addresses the Health Policy 2020 symposium on Oct. 14, 2016.
Photo credit: 
Steve Fisch

Few people understand the high costs of medical services in the United States better than David Chan, a practicing physician and Stanford economist specializing in health care. But even Chan isn’t immune from sticker shock at the doctor’s office.

On a recent visit to his doctor, Chan underwent a routine test for seasonal allergies. He figured it would cost about $500. The actual charge was closer to $5,000.

“I should be one of health care’s most informed customers,” says Chan, who is a faculty member at Stanford Health Policy. “But like most people, I didn’t think to ask the price for the test and my doctor probably didn’t know it, anyway.”

To Chan, a faculty fellow at the Stanford Institute for Economic Policy Research and assistant professor at the Stanford School of Medicine, the experience illustrates what’s hobbling U.S. health care.

Although much research into health economics has focused on issues related to insurance, the delivery of patient care — specifically, how to lower costs and manage quality at the ground level — “is really where health care becomes a black box,” says Chan. Economics haven’t figured out why costs and patient outcomes vary widely, even from one hospital to the next in the same city.

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