What good fortune I had to encounter Chris Hogan, a creative and insightful health policy consultant. He was asked to figure out why home oxygen therapy costs Medicare 6-fold more in some states than in others. The highest costs were in Wyoming, Colorado, Utah, Nevada and New Mexico, while Hawaii, Minnesota, North Dakota, Maryland and Rhode Island had the lowest.
Some of this had to do with differences in the prevalence of chronic obstructive pulmonary disease (COPD), but the correlation was weak. Then Hogan looked at a topographical map of the US, and it all made sense. Spending was high at high altitude and low at sea level. When both the prevalence of COPD and altitude were considered, the correlation was 0.93 (almost a perfect 1.00).
Explaining regional variation is important. It guides coherent health policy. But coherent policy doesn’t come from assuming that variation is “unexplained” and therefore due to specialists (or medical equipment companies), which is what the Dartmouth group preaches. And that’s led to strategies from the Office of Management and Budget (OMB) to decrease spending in high spending areas by reining in specialists. Maybe there are clinical reasons for that spending. Whenever anyone has looked closely, they’ve been found.