Examining regional variation in health care spending in British Columbia, Canada

Examining regional variation in health care spending may reveal opportunities for improved efficiency. Previous research has found that health care spending and service use vary substantially from place to place, and this is often not explained by differences in the health status of populations or by better outcomes in higher-spending regions, but rather by differences in intensity of service provision. Much of this research comes from the United States. Whether similar patterns are observed in other high-income countries is not clear. We use administrative data on health care use, covering the entire population of the Canadian province of British Columbia, to examine how and why health care spending varies among health regions. Pricing and insurance coverage are constant across the population, and we adjust for patient-level age, sex, and recorded diagnoses. Without adjusting for differences in population characteristics, per-capita spending is 50% higher in the highest-spending region than in the lowest. Adjusting for population characteristics as well as the very different environments for health service delivery that exist among metropolitan, non-metropolitan, and remote regions of the province, this falls to 20%. Despite modest variation in total spending, there are marked differences in mortality. In this context, it appears that policy reforms aimed at system-wide quality and efficiency improvement, rather than targeted at high-spending regions, will likely prove most promising.