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GETTING TO SOME CAUSES OF HEALTH CARE COSTS by Robert Seifert

I would like to use this visit to the blog to call attention to a new article by Laurence Baker, Elliott Fisher and John Wennberg, published on the Health Affairs website a couple of weeks ago. The authors analyzed hospital use by chronically ill patients in California and found a wide variation of resource use across hospitals treating patients with similar characteristics. The authors suggest that understanding the variation presents an opportunity for significant savings in health care expenditures by reducing resource use at the most resource-intensive hospitals, particularly because there is some evidence (in this study and others) that systems using greater resources actually deliver lower quality care.

This new research reinforces a larger body of work documenting the inefficient overuse of certain services and calling for better alignment of incentives and local delivery system accountability for the cost and quality of care. (I’ve written about some of Fisher’s contributions before here.)

Cost control solutions such as increasing copayments in order to slow premium growth, as the Connector Authority is now considering, address short-term fiscal demands but are unlikely to have a great effect on costs and may hinder access.

Taking on variation of the sort reported by Baker et al. might produce substantial rewards in both slowed costs and improved quality, but would challenge the status quo and, potentially, the status of some major health care players. (Blue Cross has taken a step in this direction with its recent contracting plan, but its voluntary nature will limit its reach, and it is only one payer, albeit an important one.) The challenge is this: can we contain the growth of health care spending in Massachusetts to the degree needed without a fundamental restructuring of the delivery system and the incentives that drive it? And what institutions will move us in the direction we need to go?

Robert Seifert is a Senior Associate in the Center for Health Law and Economics at UMass Medical School’s Commonwealth Medicine, and is a member of the Massachusetts Health Care Quality and Cost Council.

This program aired on February 25, 2008. The audio for this program is not available.

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