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Evaluating the policy role of the small area variations and physician practice style hypotheses
1School of Business Administration, Oakland University, Rochester, MI 48309.
Abstract:
The primary purpose of this article is to develop a framework for reinterpreting the role of physician practice style in the small area variations phenomenon. This phenomenon deals with the wide interarea variations in per capita use rates which have been found for many medical and surgical procedures. The variations have been interpreted by many to suggest that large amounts of unnecessary care are being provided. The variations and corresponding perceptions of unnecessary care have also led to a US health policy which is increasingly emphasizing patient outcomes research. I show, however, that most of the empirical studies of the variations phenomenon have inappropriately aggregated either across procedures or across market areas so as to obscure the role of practice style. Its role has also been obscured by the common failure to distinguish practice style from other determinants of utilization. As a result, small area methods can lead to substantial error in identifying procedures associated either with major differences in practice style or with substantial amounts of unnecessary care if all variation is attributed to practice style.
Insights
Physician practice style significantly influences small area variations in healthcare utilization. Attributing all variations to unnecessary care overlooks the impact of physician behavior and can lead to flawed health policy.
Area of Science:
- Health Services Research
- Medical Economics
- Healthcare Policy
Background:
- Small area variations reveal significant inter-area differences in per capita medical and surgical procedure rates.
- These variations are often interpreted as indicators of unnecessary healthcare provision, influencing US health policy towards outcomes research.
Purpose of the Study:
- To develop a framework for re-evaluating the influence of physician practice style on small area variations.
- To address methodological limitations in existing studies that obscure the role of practice style.
Main Methods:
- Critically analyze empirical studies on small area variations.
- Examine aggregation methods across procedures and market areas.
- Differentiate physician practice style from other utilization determinants.
Main Results:
- Most empirical studies inappropriately aggregate data, masking the true impact of physician practice style.
- Failure to distinguish practice style from other factors leads to misinterpretation of utilization variations.
- Small area methods can generate substantial errors when attributing all variation to physician practice style or unnecessary care.
Conclusions:
- Reinterpreting small area variations requires a nuanced understanding of physician practice style.
- Methodological improvements are needed to accurately assess variations and identify unnecessary care.
- Policy implications must consider the distinct role of physician behavior in healthcare utilization patterns.