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Health care delivery varies a LOT – and there’s your opportunity

So, medicine is a science right?

If it is, then the delivery of care should be consistent across the country for patients with identical conditions, right.

Absolutely not.

That’s the quick takeaway from a terrific panel this morning at WCRI; below is the detail.

I’ve long been intrigued by the huge variation in medical care delivery across geography – why medical care for identical conditions for the same type of patient varies greatly from place to place is pervasive, fascinating, and, more to the point, driver of low quality and high cost care.

Dr Jon Lurie of tjhe Dartmouth Institute for Health Policy is one of the nation’s leading experts on this issue.  I’ll get right to the big finding –

There’s tremendous variance in “preference and supply-sensitive medical care” across hospital regions, defined as medical care for procedures such as vertebroplasty, spine surgery, total joint arthroplasty, and, in reality, most musculoskeletal procedures.

The most gross example is vertebroplasty, which varies by a hundred-fold.

That’s right, if you live in one area, you may be 100 times more likely to get this procedure than in another area.

Frequency of the medical procedures done in work comp varies widely across the country, and even within states.  Discussing one type of procedure, authors of a study found; “orthopedic surgeons’ opinions or enthusiasm for the procedure was the dominant modifiable determinant of ara variation.”

In English, doctors’ opinions and enthusiasm – not science, evidence, or outcomes – greatly influences what procedures get done how often.

Shockingly, reimbursement also affects procedure usage.  Washington and California have very different approaches to spinal fusion due to regulatory influences, with WA regulating the procedure much more tightly.  As a result, in WA, costs are lower, outcomes much better, there are far fewer spinal fusions, and the surgeries that are performed are less complex.

Yep, costs are lower, outcomes are better – and, not coincidentally, patients are much better served due to WA’s widespread use of evidence-based medical guidelines.

Next up was WCRI’s Dr Oleysa Fomenko – who got everyone’s attention with the opening statement “why are injured workers in one state three times more likely to get surgery than workers in another state?”

Key takeaway – in general, the higher the rate of surgery in group health, higher the rate of surgery in WC.  So, a payer can look at Medicare data and get a fairly accurate picture of what they can expect to see among their work comp patients.

However (there’s always a however), states that pay really, really well for surgery for work comp patients have a lot more surgeries than one would expect.

Alas, the Land of Lincoln is, once again, our poster child for bad outcomes – the work comp surgery rate is 2.5 times higher than one would expect, due perhaps to the $11,000 higher reimbursement for the procedure in IL vs the other study states.

NCCI’s Barry Lipton led off the panel with a discussion of cost variation across six states, using a methodology that took out fee schedule variations. The takeaway – costs for initial care for knee injuries varied by 71% across the six states, with KY CO and IL well above the other three (MD IN MO).

For knee injuries, one of the differentiators is, not surprisingly, utilization – with MD IN and MO exhibiting low utilization.  Utilization of surgery and physical medicine [PM] are the primary drivers.  There are also differences between and among the high-cost states. KY has much higher surgical costs, with IL spending a lot more on PM.

The other differentiator is the cost associated with diagnoses; cost per diagnosis varied widely across the study states.

Across the three high cost states, surgical utilization accounts for 35% of the cost compared to 23% in the low cost states; in contrast diagnostic imaging accounts for 32% in low cost states and and 24% in high cost states (other cost areas are pretty similar).

That said, looking at elbows and knees, most of the interstate variation is due to surgical and PM utilization AND how specific conditions get different treatment in different states.

For those patient and nerdy enough to make it this far, give yourself a new pocket protector as a reward.

What does this mean for you?

Medicine is a lot art and varies widely, and therein lies the problem – and for smart payers, the opportunity.


One thought on “Health care delivery varies a LOT – and there’s your opportunity”

  1. This is exactly why many of us question the concept of consumer driven health care. We see that these variations are much more entrenched and difficult to overcome than a consumer “shopping” in a particular market.

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Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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