Data sharing will reduce variation

December 1, 2011

When it comes to predicting geographic variations in cost, what's true for Medicare doesn't necessarily hold for the commercial populations.

WHEN IT COMES TO predicting geographic variations in cost, what's true for Medicare doesn't necessarily hold for the commercial population, according to a new report by Thomson Reuters.

"There was variation even within the variation," says Raymond Fabius, MD, chief medical officer for Thomson Reuters.

In fact, some geographic patterns were diametrically opposed to patterns seen in the Medicare population. For example, while Medicare subscribers in McAllen, Texas-a city often cited as high-cost-spent more on healthcare than subscribers in any other part of the country, Thomson Reuters found the McAllen MSA to be among the 10 lowest spending MSAs for commercially insured enrollees.

Researchers also found significant geographic variation in terms of how enrollees were spending healthcare dollars. In some cases, the findings were affirming: researchers found that areas with high pharmacy costs generally experienced lower medical costs, which would indicate that drug spending is helping curtail medical spending in those areas.

In other cases, however, findings weren't so sunny: areas with high outpatient spending tended to have high inpatient spending as well, indicating that outpatient spending wasn't replacing the use of inpatient services as might be expected.

What accounts for these discrepancies is the million-dollar question. Fabius suggests the variation may be attributable to one or more factors:

While discerning the roots of the discrepancies poses an enormous challenge, Fabius insists it's essential to eliminating variations in care. To fix the problem, he says, national and regional healthcare organizations must tip their hands and share information.

"We have to start recognizing communities that are more effective and efficient and focus on ways to promote best practices," he says. "What is happening now is the opposite of best practice. There are a lot of people trying very hard to do the best job they know how, but until we have more evidence-based guidelines and better sharing of best practices, we're going to have market variations."

-Shelly Reese