"It's Complicated": Marrying the Evidence on Health Spending to Health Policy Reform

For several decades, researchers at Dartmouth College have compiled mounting evidence that notable differences in the levels of health spending and utilization across the United States are not correlated with better health outcomes or increased patient satisfaction. In recent years, some leading health policymakers have recommended using such cost and quality measures to reward health providers on the basis of their "relative efficiency."

However, critics such as pulmonary physician Peter B. Bach, M.D., of the Memorial Sloan-Kettering Cancer Center have cautioned that the current approaches used in hospital efficiency rankings are unsound and fail to accurately identify high-performing providers. Other researchers, such as Andrew Rettenmaier of the Private Enterprise Research Center at Texas A&M University, have observed that different indicators of geographic variation in health spending related to types of insurance coverage show less potential for cost savings. On the other hand, Amitabh Chandra of Harvard University has argued that there is tremendous variation in the efficiency of local health delivery systems, and that we could reduce the rate of growth in health spending by rewarding those systems that successfully keep costs in check while delivering quality health care.

This forum examined what we have learned from research on geographic variation in health spending and which health policy reforms are more likely to succeed in strengthening incentives to improve the efficiency of health providers' performance.

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Thomas P.
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