Price Elasticities for Three Types of CAM Services: Experiences of a Boston Public Health Clinic

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Abstract
Objectives: This paper addresses price elasticity, an indicator for the responsiveness of demand for healthcare to changes in price, in the context of a large public health clinic that provides acupuncture, Chinese herbal medicine, and shiatsu. Design: The study is descriptive and observational. The observations resulted from a "natural experiment" and involved examining utilization before and after a $5 (17%) price increase for all services. Aggregate data were collected on demographics and utilization of 222 clients using services over a 6-month period in 2004. Setting: Pathways to Wellness is a nonprofit agency that provides complementary and alternative medicine (CAM) services to underserved, low-income clients. The agency administers a clinic that has been operating for the past 15 years and currently provides approximately 1200 treatments per month. Outcome measures: Utilization data on number of treatments administered were collected for 3 months prior to the price increase and compared to utilization data for the 3 months after the price increase. Comparisons were made for both the immediate changes in utilization (2-month data) and quarterly changes in utilization (6-month data). Results: Utilization dropped for all three services in the month after the price increase. Values of elasticity associated with the immediate changes were calculated as −0.35 for acupuncture services, −1.31 for Chinese herbal consultations, and −2.34 for shiatsu services, and indicate a wide range of responsiveness. Conclusions: Values of price elasticities indicate a range of differential responses to change in price for services. The relatively smaller drop in utilization of acupuncture services may be consistent with clients' perceptions of effectiveness or immediacy of treatment symptom relief.

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