Practice Management News

Healthcare Costs Vary Among Specialists Across, Within Hospitals

A new analysis shows thousands of dollars in disparities among hospital providers, affecting healthcare costs and affordability of care for patients.

Healthcare Costs

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By Samantha McGrail

- The different ways that providers take care of the same type of patients is impacting healthcare costs and affordability of care, a new report released by IllumiCare found.

The point-of-care technology vendor examined common diagnosis-related group (DRG) and provider sub-specialty to determine the level of care and cost variation occurring in targeted specialties, such as cardiology and pulmonology. The data showed thousands of dollars in disparities among providers in the same specialties both across and within hospitals.

For example, the data revealed:

  • A $5,438 variation between the 25th and 75th percentiles among pediatric hematology-oncologists
  • A nearly $3,000 difference among OB/GYNs between the 5th and 75th percentiles among vaginal deliveries without a complicating diagnosis
  • A difference of $3,885 between the 25th and 75th percentile range of spending for OB/GYN orders of cesarean sections without complications or comorbidities. 

The data showed that what a specialist spends on a patient depends on “judgement calls.” Therefore, the medications, lab tests, and radiology exams ordered by a specialist contributed significantly to the healthcare cost variation observed in the data.

Cardiology and OB/GYN specialists showed the greatest variation. The study found these variations stemmed from differing practice patterns among providers in the same subspecialties.

For example, out of the medications ordered by cardiologists at three similar academic medical centers, only 33 of the medications were ordered by cardiologists in all three hospitals, whereas 54 of the medications were ordered by cardiologists at only one of the three hospitals. 

Considerable contrast results in significant differences in spending on medications, labs and radiology. 

“These spending disparities ultimately impact patient bills and affordability of care, particularly with patients carrying greater responsibility for their healthcare costs in recent years,”  G.T. LaBorde, CEO of IllumiCare, explained in a press release

Healthcare cost variations also have no relation to quality of care, Niall Brennan, president and CEO of the Health Care Cost Institute (HCCI) explained earlier this year after his organization released a report showing significant healthcare cost variations within and across metropolitan areas.

 “It is highly unlikely that these pricing differences are related in any meaningful way to differences in quality or value,” he stated in a press release emailed to journalists. “Employers should be outraged that they and their employees may be paying radically different prices based on factors like which provider they go to.” 

Closing the gap in provider spending even slightly can also generate significant savings for hospitals. 

The average hospital spends up to 30 percent more to deliver care with comparable or lower quality outcomes, an Advisory Board analysis of over 20 million patients across 13 service lines and 983 diagnosis subgroups revealed.

 “Eliminating this cost gap entirely is not realistic due to underlying clinical, demographic, and operational differences between organizations that are difficult to fully control within study design,” explained Veena Lanka, MD, senior director of research at Advisory Board.

“Closing just a quarter of the cost gap for less than 10 percent of the conditions we analyzed could net over $4 million in annual savings for a typical hospital and over $40 million for 10-hospital system-without compromising quality,” she added. 

It is valuable to understand variation in hospitals and recognize the areas with the most opportunity. Using the combination of real-time, provider-facing solutions and management-facing analysis will drive positive change and improve care quality.