A patient walks into a doctor’s office. He has severe back pain and is diagnosed with a herniated disc. Treatment options range from rest and physical therapy to invasive back surgery.
What the patient does not realize is just how much his treatment depends on the doctor he happens to see. A patient who visits one doctor can be up to five times more likely to receive surgery than a patient who visits another doctor. The option that will yield the better result is not always clear to the doctor, and this lack of scientific data on outcomes produces huge “practice variations” in treatment decisions–—with serious consequences in terms of health care costs and quality. This is a big problem not only for patients but also for payers, which end up footing the bill for what could be suboptimal care.
Back pain is just one example. Practice variation is commonly seen in the treatment of many other conditions, such as prostate cancer, and in decisions to perform such procedures as cataract surgery, cesarean section, and hip and knee replacement. Depending on where a patient lives and the doctor he sees, there can be more than a fivefold variation in decisions regarding hospitalization and surgery or other invasive treatments, even after correcting for differences in patient populations. The variation exists among countries, among regions within a country, among hospitals within a region, and even among doctors at the same hospital.
Payers—both public payers and private health insurers—are extremely well positioned to help reduce unwarranted practice variation. Payers have the data, the incentives, and the role in the value chain to make a difference. In our work with payers and our ongoing research in this area, we have looked at the underlying drivers of unwarranted practice variation and mapped out a strategy to help payers mitigate its effects and thereby to improve health care quality and reduce health care costs. By facilitating better decision making, payers can lower costs by €100 million to €200 million for every million lives covered, while at the same time improving patient outcomes. (This assumes an average health-care cost of €2,000 per individual covered for payers in the developed world.)