Spending Varies Widely Across and Within Hospital Systems for Same Procedure

By The Numbers - Spending Varies Widely Across and Within Hospital Systems for Same Procedure

Dr. Hari NathanDr. Karan Chhabra and their team had a question: Was the promise of cost efficiencies from hospitals consolidating into larger systems bearing out?

In search of an answer, they examined Medicare data related to hip-replacement surgeries. The procedure was selected for study because it is a common one among Medicare beneficiaries and a frequent target of bundled-payment programs. It’s also associated with spending variation largely due to discretionary post-acute care utilization rather than complications.

The resulting study, recently published in the Annals of Surgery, found wide variation in surgical spending across and within hospital systems for hip-replacement surgeries. Notably, the degree of variation within systems was comparable to the variation between systems, suggesting that multi-hospital systems have not standardized care to control utilization.

There’s room still to deliver on the promise of efficiencies, including sharing best practices within and across systems, more judicious use of post-acute care facilities and increased participation in certain bundled payment programs, according to the study.

Here are some numbers to consider from the study:

  • 1,128 hospitals involved in the study
  • 60,789 total patients in the data set
  • $2,515 of variation in avg. episode payments between high- and low-cost hospitals within the same systems
  • $2,712 of variation in avg. episode payments between lowest- and highest-cost quintiles of separate systems
  • 86% spending variation between quintiles driven by post-acute care utilization




By Colleen Stone

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