The shift toward cheaper settings like outpatient clinics and homes is a worthy goal, but new research is showing us where we shouldn’t cut corners.
How much you spend on medical care depends on what you get, but also where you get it.
Confoundingly to many, the cost of the same procedure on the same patient by the same physician can vary by thousands of dollars depending on whether it’s performed in a hospital, a hospital’s outpatient department, an ambulatory surgical center or a doctor’s office. It can also vary by who’s paying the bill — which insurer or public program.
And even for the same insurer, cataract surgery might cost twice as much in a clinic affiliated with a hospital compared with an independent surgery center. The cost of cancer care is significantly higher in hospital outpatient departments compared with community practices, partly because insurers often pay hospitals double for chemotherapy drugs. Delivering a baby in a teaching hospital costs about $2,000 more than in a community hospital.
Some of this is a result of different prices. Some reflects differences in how much care is delivered: its intensity.
Either way, such cost variation across care settings has led policymakers to consider paying more evenly for medical services regardless of where they’re delivered, and to shift care from expensive, high-intensity settings to cheaper, low-intensity ones. Doing so, the thinking goes, could result in more efficient use of resources by health systems.
By: Dhruv Khullar and Austin Frakt