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Small-area variation: Conventional wisdom, subsequent research, & causes January 2011, presentation to IOM Jonathan H. Sunshine PhD ( jsunshine@acr.org ) 703-648-8924 Mythreyi Bhargavan PhD ( Mbhargavan@acr.org ) The American College of Radiology. Funding.

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  1. Small-area variation:Conventional wisdom, subsequent research, & causesJanuary 2011, presentation to IOMJonathan H. Sunshine PhD (jsunshine@acr.org) 703-648-8924Mythreyi Bhargavan PhD (Mbhargavan@acr.org)The American College of Radiology

  2. Funding Our research on small-area variation was largely funded by the Robert Wood Johnson Foundation’s Changes in Health Care Financing and Organization (HCFO) Initiative. A BIG thanks to RWJ

  3. My standpoint I’m a health economist/quantitative health services researcher. I “sit” at an imaging organization; thus, much of my research deals with imaging.

  4. Small-area variation (SAV): Magnitude Conventional Wisdom: If all areas with per capita spending above the 10th percentile were brought down to the 10th percentile level, U.S. health care costs would be cut by 30%. Curious fact Although widely quoted and repeated, the 30% number stems from a single paper (J Skinner et al., National Tax J., 1997).

  5. Magnitude Subsequent research: The “magic number” is considerably smaller. Need to assume cost-based differences in payment rates and recognize differences in population demographics and health. “Magic number” is probably 1/2 to 2/3 “advertised” value (Cutler & Sheiner, Amer. Econ. Rev., 1999; S Zuckerman et al., NEJM, 2010; Medpac report “…Geographic Variation…” Dec. 2009; our unpublished findings).

  6. Small-area variation & Imaging Conventional Wisdom: Variation in imaging is particularly large. Curious fact This finding is from a MedPAC report (“Variation…”, June 2003) that weights in- office imaging about 4 times as heavily as at-hospital imaging. (This weighting is due to idiosyncracies of Medicare’s physician payment system.)

  7. Imaging Subsequent research: Variability of imaging, with even weighting, is about the same size as health care in general (JM Sutherland et al. NEJM 2009; our research).

  8. Causes of small-area variation Poorly-known Supply of providers (physicians, hospitals) Probably most often mentioned, and at one time an emphasis of the Dartmouth Atlas group (ES Fisher et al., Ann. Intern. Med., 2003, Part 1) Others report little, if any, effectof supply (Cutler & Sheiner, op. cit.; S Zuckerman et al., op. cit.) Supply variation probably at least partly a response to demand differences Want to identify actionable causes.

  9. Causes of small-area variation Financial self-interest (FSI)—aka “self-referral” For imaging, we find a very strong relationship of FSI with utilization. (Details to be provided orally.)

  10. Thank you.Questions? Jonathan H. Sunshine, PhDThe American College of Radiology703-648-8924 or jsunshine@acr.org

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