Benchmarking tools for reducing costs of care

Publicly available data provide an excellent resource for benchmarking a hospital's performance around diagnostic groups. The benchmarking analysis should seek to identify any unexpected differences in a hospital's average costs relative to those of similar hospitals. A good starting place for such analysis is the most frequent diagnostic groups for Medicare, as defined by Medicare severity-based diagnosis-related groups. A finding of higher-than-expected costs relative to those of peers can provide an impetus for further investigation.