1. AHA Task Force on Variation in Health Care Spending Report to the Institute of Medicine Committee on Geographic Variation In Health Care Spending and Promotion of High-Value Care January 17, 2011 1

2. Findings Variation exists at all levels of the system and within the hospital itself Regions with high levels of spending don’t necessarily have high spending growth Variation in performance goes beyond spending Regional variation in service use is not the same as variation in spending Some spending differences are due to forces beyond a provider’s control While financial incentives matter, providers respond to data 2

3. Findings Broader Societal Factors Related to the Health Care System Market/Provider Factors Regulatory Environment  Health status/disease prevalence  Health behavior  Income/poverty  Level of uninsurance  Urban/rural location  Unemployment  Age/sex  Race/ethnicity  Local culture/care seeking behaviors  Environmental factors (housing conditions, air quality, etc.)  Quality of care  Efficiency per unit of service  Practice patterns/propensity to treat  Access to care  Training of clinicians  Costs of doing business  Penetration of health information technology  Prevalence of physician ownership  Mix of physicians (primary care vs. specialty)  Supply (physicians, beds, technology, etc.)  Predominant physician payment mechanism (salary vs. FFS)  Level of health system integration  Insurance market structure  Payer mix  Managed care penetration  Level of unionization  Medicare payment policies (wage index, IME, DSH, CAH program, etc.)  Medical liability environment  Scope of practice regulations  Other state and federal regulations  CON regulations  Medicaid/CHIP policies (payment rates, eligibility, etc.)  Insurance regulatory environment Many Factors Influence Variation 3

4. Findings. Percent of Variation in Spending per Medicare Beneficiary Explained by Various Factors Source: Deb, Partha. Explaining Geographic Variation in Spending per Medicare Beneficiary. March 2010. Includes spending for Parts A&B. 4

5. Framework 5

6. Conclusions The hospital field is committed to action but cannot tackle it alone Fair performance metrics needed to hold providers accountable –Assign accountability to providers not geographic areas –Distinguish appropriate from inappropriate variation –Adjust for factors beyond the control of providers Need for better evidence base, timely data across the continuum and tools 6