Is geographic variation really to blame for healthcare costs?


A week rarely goes by when I don't see a study or reference to geographic variations related to the delivery of healthcare. This week was no exception. Earlier this week, I wrote about patients spending less end-of-life time in hospitals. The information was based on a new Dartmouth Atlas Project report on trends and variations related to end-of-life care. It had some interesting findings about where the highest and lowest rates of deaths in hospitals were occurring across the country and what the variations in costs were.

But after finishing that piece, I came across a new study from the National Institute for Health Care Reform (NIHCR) in Washington, D.C., that said that there has been an overemphasis on identifying and fixing geographic variations in the healthcare system. Instead, the researchers said the broader issue of examining the healthcare system as a whole matters more to improving efficiency and quality.

Now, that's an interesting perspective--especially considering the emphasis that had been placed on geographic variation during the healthcare reform debate. Remember the discussion generated by Atul Gawnde, MD, in his New Yorker article about the high healthcare costs found in McAllen, Texas? It brought front and center years of work from Dartmouth looking at geographic variation.

But according to the NIHCR study, much of the current research on geographic variation in healthcare use and spending has focused on the fee-for-service Medicare program. But there's a problem here, they said: the Medicare fee-for-service program has been the only available source of consistent national claims data that can support detailed analysis of variations across areas and populations.

Currently, about a quarter of beneficiaries are enrolled in Medicare Advantage--usually managed care plans--but the percentage of beneficiaries enrolled in these plans varies across areas. Some studies have shown that these plans attract on average a healthier population of beneficiaries.

If the fee-for-service populations in some areas include a disproportionate number of beneficiaries with serious health conditions, the overall fee-for-service enrollees could be exaggerated, the researchers noted.

The researchers point out that while the study of geographic variation has brought the issues of uneven costs and care to the nation's attention, it's really the broader healthcare system that needs the focus. That means paying more attention to such developments as accountable care organizations, bundled payments and medical homes in a quest for broader health system control.

The next question then becomes: are we ready to move to that broader perspective? - Janice