The financial effect of physician practice style on hospital resource use

Several specifications of a statistical model were used to measure the effect that internal medicine attending physicians had on inpatient charges and length of stay at a large urban teaching hospital. The study was based on a sample of 1,458 patients discharged during 1985-1987 with 12 common principal diagnosis clusters. The relationship between 31 physicians' clinical decisions and hospital charges and length of stay was analyzed controlling for patients' health status, as measured by demographic characteristics, diagnostic group, and ratings for the Severity of Illness Index (SOII). Results indicated that attending physicians were statistically significant predictors of the log of total charges (p = .0030) and the log of length of stay (p less than .0001), and not as significant predictors of untransformed total charges (p = .1255). Equivalent results were obtained when overall SOII ratings were replaced by SOII subscale ratings for the presenting stage of the principal diagnosis on admission. Examination of individual physician regression coefficients revealed that physicians varied within a 40 percent range of generated per patient charges. No significant differences in mortality, early readmissions or residual impairment on discharge were found between the ten highest and ten lowest resource use physicians. The conservatively estimated range of attending physician practice variations observed in this study has serious financial implications for hospitals operating under incentives to minimize operating costs, particularly for teaching hospitals facing reductions in subsidies for graduate medical education.