Does Location Determine Medical Practice Patterns?

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Research from the Dartmouth Atlas finds that that after adjusting for area differences in Medicare payment levels and patient health, very wide geographical disparities in costs remain. In this editorial, James Reschovsky, Ph.D. reviews findings from his HCFO-funded study and other work, which has shown that that after controlling for variations in Medicare payment and case-mix, population health accounts for at least 75 to 85 percent of the remaining variation in Medicare spending. Reschovsky notes that absent much better clinical data, there is no perfect way to adjust for patient health. He cautions that despite the uncertainty about how much geographic variation remains after adjusting for payments and health, it is not appropriate to attribute the remaining geographic variations in spending to “unwarranted” variations in the efficiency of health care delivery. The unexplained variations could also be attributable to patient preferences for care, state policies affecting health care professionals, further variations in patient health that current case-mix methods don’t account for, and other factors. Reschovsky’s findings show that although location does matter, variations in medical practice spending are very complex.

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