Port-wine stain (PWS) is a congenital capillary malformation with an incidence of 3–5 per 1000 newborns . Initially, it presents as a flat, irregular lesion with red to purple color and it could progress into a thicker or more nodular appearance if not given treatment [2, 3]. This may lead to serious psychological consequences, thus affecting the patients’ quality of life [4–6].
Over the past decade, pulsed dye laser (PDL) has been the treatment of choice for PWS [1, 4, 5] as it utilizes the theory of selective photothermolysis . PDL with wavelengths of 585 to 595 nm are usually used, since there is a high absorption by hemoglobin and decreased absorption by melanin, thereby reducing epidermal injury . Lasers with longer wavelength such as Alexandrite laser 755 nm and neodymium:yttrium aluminium garnet (Nd:YAG) laser 1064 nm have been developed to target the oxy- and deoxyhemoglobin at a deeper level and to enhance the clearance of lesions .
Multiple PDL treatment sessions are needed to attain a near-complete clearance of the lesion . However, the high cost and limited availability of PDL devices are considered factors in health policy issues. In the United States of America (USA), PDL treatment is charged at approximately 500 USD per session . In Thailand, the Universal Health Coverage (UHC) does not include laser treatments since it is classified under cosmetic services. Therefore, low-income PWS patients have limited access to proper treatment due to the high cost of PDL. Majority of the PDL devices in Thailand are available in government or private hospitals, chain clinics and in some doctor’s office. The laser fee depends on the type of facility, location, type of PDL used as well as the wage of the medical personnel (general practitioners, dermatologists, or dermatologic surgeon). As a result, patients who are not aware of these hidden costs tend to pay more.
Objectives of this study include (i) to analyze the factors determining the treatment price of PWS (PDL fee); (ii) to analyze and determine the shadow price of PWS treatment based on different medical personnel (providers) and types of PDL; (iii) to evaluate the implicit government subsidy of PWS treatment in government hospitals; and (iv) to quantify the implicit value of network externality of the hospital/medical center locations.
In 1974, Rosen came up with the idea of describing the price determinants of heterogeneous quality products that have no standard unit . A good example is the price of a house, the cost varies based on its characteristics (land price, number of bedrooms and bathrooms, living space and garage) and not on the number of units. A big or small house can only be quantified as one house. Hedonic pricing concept has been applied to study the pricing of heterogeneous quality products and services, including medical, house and hotel. In 1986, Custer did a study on the different attributes of medical services and physician wages using a hedonic pricing model, since it did not have a standardized quality of service . Our study have a similar pricing determination, therefore, we utilized the hedonic pricing concept to determine the PWS treatment price according to its attributes.
Based on the expectancy theory, laser treatment operators with more experience and training would expect to earn more, thus, the physician wage of a specialist or dermatologists will be higher . PDL have more operating features than non-pulsed dye vascular lasers, so the investment cost and service fee of this type of laser is expected to be higher. Government hospitals offer a lower service fee compared to private hospitals and clinics since it is owned and subsidized by the government. The location of the facility is another factor that could influence the service fee. People living within Bangkok have a higher cost of living, so the service fee is usually higher than those living outside Bangkok. Private clinics located in shopping centers would charge a higher service fee due to higher facility expenses. Lastly, in order to compete in the industry, many private clinics would offer discounted treatment packages (usually 10 treatment sessions with approximately 10% discount).
Using the hedonic pricing concept mentioned above, PWS treatment price can be determined by its characteristics as presented in this formula:
Charge Price = f(Treatment Operator, Types of Laser, Types of Hospital/Healthcare Center, Location of the Hospital/Healthcare Center, Treatment Package)
Where: Charge Price is the PWS treatment price; Treatment Operator is the specialty of the medical service provider (general practitioners, dermatologists, or non-medical doctor); Types of Laser is the type of laser used (non-PDL, 595-nm PDL, 585-nm PDL or 1064-nm Nd:YAG); Types of Hospital/Healthcare Center is the type of healthcare facility (Medical School, Government Hospital, Private Hospital, Chain Clinic, or Doctor’s Office); Location of the Hospital/Healthcare Center is the location of the hospital/healthcare center (Within or Outside Bangkok, Located in a Hospital, Shopping Center, or Private Property); Treatment Package is the treatment package (usually 10 sessions per package).