Conventional wisdom that provider capacity drives cost questioned in new study

Remember the idea that coordination will improve care? Well, if physicians do not get timely reports from other providers, their patients seem to have lower costs!!!  This from a new study out from the Center for Studying Health System Change. 

More importantly, this paper throws cold water on the idea that providers generate a lot of unnecessary cost to fill up excess capacity in the delivery system.   As you know, conventional wisdom driven by the Dartmouth Atlas and other studies has it that that care utilization and cost can vary sharply across regions without being tied to better outcomes, e.g. when there are a lot of ICU beds in a region, then a lot of patients end up in ICUs; when there are a lot of specialists, a lot of specialists tend to get seen, etc. Some studies suggest as much as a 50% cost gap between top decile and bottom decile geographies.

But this new study found – once you adjust for health status of the patient — no real correlation between cost and a variety of provider system structural features (such as bed capacity).


Even if you can change the delivery system structure, don’t expect any real reduction in cost.  Therefore, the study suggests, a lot of public policy and health plan strategy may be focused on a much smaller cost reduction prize than many people hope.

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