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March 15, 2017

What do high-spending physicians buy you? Not much, study suggests.

Daily Briefing

On average, doctors who deliver more costly patient care do not achieve better outcomes, according to a new study published in JAMA, Yusuke Tsugawa and Anupam Jena—the study's authors—write in Harvard Business Review.


Tsugawa, a research associate at Harvard T.H. Chan School of Public Health's Department of Health Policy and Management, and Jena, an associate professor of health care policy at Harvard Medical School, cite research at the global and country-level suggesting that health spending isn't strongly tied to patient outcomes.

For instance, they note that the United States spent $3.2 trillion on health care in 2013, which is equal to about 17 percent of U.S. GDP. "This is almost twice as much as the Organisation for Economic Co-operation and Development (OECD) average of 9 percent," Tsugawa and Jena write. But, they add, U.S. health outcomes in many cases are worse than other countries in OECD.

Health care spending also varies considerably within the United States, Tsugawa and Jena write. They cite research showing that variations in health spending within U.S. geographic regions don't have a clear relationship to quality of care or outcomes.  But "geographic regions," they write, "do not make health care treatment decisions; hospitals, doctors, and patients do"—yet there are "surprisingly few studies" assessing exactly how physician-level spending relates to outcomes.

Study findings

Tsugawa and Jena aimed to examine that topic in a recently published study in JAMA. In the study, the researchers looked at a random sample of nationally representative data on Medicare patients who were hospitalized with a general medical condition and treated by a hospitalist between 2011 and 2014. According to Tsugawa and Jena, because hospitals typically work in shifts, much like ED physicians, they are essentially assigned patients at random—making them a good way to examine spending/outcomes variation issues.

New study challenges conventional wisdom on health care spending—and could increase hospital scrutiny

The study looked at a total of 500,000 hospitalizations overseen by 20,000 hospitalists at 3,000 hospitals in the United States. The study found that "even when similar patients were treated, hospitals varied dramatically in their health care spending, but doctors within those hospitals varied even more," Tsugawa and Jena write.

Specifically, the researchers found that:

  • 8.4 percent of the variation in health care spending could be explained by differences between individual doctors; and
  • 7 percent could be explained by differences in hospitals.

 The researchers acknowledged that "most of the variation in spending was explained by patient characteristics," but they found that when adjusting for those differences, "the variation in spending exists due to the differences in practice patterns between physicians." Ultimately, the researchers found that within a single hospital, the highest-spending quarter of doctors spent 40 percent more than the lowest quarter.  

Next, Tsugawa and Jena looked at whether higher-spending physicians have better patient outcomes than lower-spending physicians within the same hospital. For this part of the analysis, the researchers adjusted for physician and patient characteristics that could influence spending, as well for the study's primary outcome measures: mortality and readmissions.

Overall, the study "found that higher-spending physicians did not have lower patient mortality or readmission rates than lower-spending physicians," Tsugawa and Jena write. Moreover, this trend remained when they looked at general internists in addition to hospitalists.

Lessons for hospitals

The study's findings indicate that "policies to improve the efficiency of health care should not only focus on hospitals, as has historically been the case; they should also take doctors into account," Tsugawa and Jena write. For instance, they suggest that CMS' Hospital Value-Based Purchasing program could be more effective if they targeted individual physicians in addition to hospitals. MACRA, they say, is a step in the right direction.

Tsugawa and Jena caution that their study did not examine why some physicians spend more money than others. "So it is too soon to conclude that physician-focused health care reforms can improve the efficiency of health care spending without compromising patients' health," they write.

For example, some physicians may compensate for lower clinical skills by ordering more tests—and thus spend more. In that case, "incentivizing these physicians to utilize fewer resources could worsen patient outcomes," Tsugawa and Jena write. But it is also possible some doctors spend more because they do not directly bear the cost of higher intensity care, in which case they could spend less without harming outcomes.

"Ultimately, we need to experiment with physician-focused strategies for improving health care efficiency," Tsugawa and Jena conclude (Tsugawa/Jena, Harvard Business Review, 3/13).

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