Both providers and patients drive health care spending, study finds
By a
One explanation focuses on providers: In some regions, they may be more likely to use expensive tests or procedures. Another account focuses on patients: If the underlying health or the care preferences of regional populations varies enough, that may cause differences in spending. In recent years, public discussion of this issue has largely highlighted providers, with the implication that reducing apparently excessive treatments could trim overall health care costs.
But now a unique study co-authored by
"We find it is about 50/50, half due to patients and half due to places," says
Specifically, the study finds that nearly 50 percent of the spending differences across geographic areas stems from the characteristics of patients, meaning both their basic health and their varying preferences concerning the intensiveness of medical care. The rest of the spending differences derive from place-specific factors, potentially due to disparities in provider practices and incentives. The finding could help analysts and policymakers better understand the components of medical costs, and could add nuance to the debate about possible inefficiencies in health care spending.
After all, says co-author
The paper, "Sources of Geographic Variation in Health Care: Evidence from Patient Migration," appears in the November issue of the
To conduct the study, the scholars analyzed a sample of 2.5 million
Essentially, by examining the health care usage patterns of the same people as they lived in different places, Finkelstein, Williams, and Gentzkow were able to develop a natural experiment to address the providers-or-patients issue.
Beyond their bottom-line result, the researchers unearthed several more specific findings. For instance, when it comes to emergency care, a relatively larger share of the regional spending discrepancy -- 71 percent -- was attributable to patients, who likely make more of the decisions about whether or not to seek care in those situations.
However, patients accounted for only 9 percent of the regional discrepancy for diagnostic tests and 14 percent of the discrepancy for imaging tests; in those cases, the variation by geographic region seems due to differing provider practices, with health care institutions in some places consistently spending more money on testing than other providers do elsewhere.
The researchers also found that when a
Even given these more detailed findings, the researchers note that it is still difficult to assess which of the higher-spending or lower-spending regions have more "efficient" medical practices. In Williams' view, an overly simplistic reading of the paper's results would be that variation on the provider side reflects inefficiency, in the sense of some institutions providing suboptimal levels of care. She stresses that there may also be efficient geographic variation if providers in some areas are relatively more skilled at certain intensive procedures and provide more of those procedures.
"Just because there's geographic variation on the provider side doesn't mean that is necessarily inefficient," Williams observes.
The scholars, who initiated the study in 2010, tried to account for potential complications concerning costs. For instance: Could more people with already-existing health problems be moving to warm, sunny, higher-spending places such as
But as the researchers discovered, such a pattern does not seem to exist. People moving to
Regional variation in health care spending has become a prominent issue over the last decade thanks in large part to the Dartmouth Atlas of Health Care.
"We are very much standing on the shoulders of giants," Finkelstein says. "The people at
Some of the better-known
In the view of the
"The current consensus [has been] that almost all this variation was about providers, and that patient-specific health or preferences were unlikely to be important in explaining geographic variation in spending," Williams says. "I think our paper shifts the weight of the evidence."
Keywords for this news article include: Health Policy,
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