Willingness to pay for diagnostic services. A new approach to modelling patient benefits in health care.

The paper investigates the benefit the patient derives from medical diagnosis. By considering explicitly the prospects with respect to both health and monetary consequences resulting from a decision taken by the physician, a fairly general approach to discuss diagnostic services is developed. The willingness to pay of the patient is taken to be measured by his compensating option price, evaluated with respect to the reference state without further diagnostic information. Of particular interest are conditions governing positivity of the patient benefit. Imposing additional restrictions upon individual preferences considerably simplifies the analysis by relying on a loss function. The final section discusses the role of the patient benefit as regards cost-benefit analysis of diagnostic services. If health insurance is available providing at least partial coverage, a positive willingness to pay of the patient net of diagnostic cost can be shown to give no clue as to whether utilization of a diagnostic service is beneficial to society in the sense of cost-benefit analysis.