Variations in efficiency and the relationship to quality of care in the veterans health system

There is widespread belief that the US health care system could realize significant improvements in efficiency, savings, and patient outcomes if care were provided in a more integrated and accountable way. We examined efficiency and its relationship to quality of care for medical centers run by the Veterans Health Administration of the Department of Veterans Affairs (VA), a national, vertically integrated health care system that is accountable for a large patient population. After devising a statistical model to indicate efficiency, we found that VA medical centers were highly efficient. We also found only modest variation in the level of efficiency and cost across VA medical centers, and a positive correlation overall between greater efficiency and higher inpatient quality. These findings for VA medical centers suggest that efforts to drive integration and accountability in other parts of the US health care system might have important payoffs in reducing variations in cost without sacrificing quality. Policy makers should focus on what aspects of certain VA medical centers allow them to provide better care at lower costs and consider policies that incentivize other providers, both within and outside the VA, to adopt these practices.