The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.

 
By Truven Staff

Price Variation with No Discernible Relationship to Quality or Outcomes

Mike Taylor imageTina Rosenberg, a highly respected healthcare journalist for the New York Times, recently published a two-part “Opinionator” series on healthcare costs. The second article in the series discussed the Truven Health white paper from 2012 that describes the $36 billion savings opportunity due to price variation among providers. I was pleased to speak with Ms. Rosenberg about the topic, and provide background information for the article.

Our research (and others) has shown price variation based on geographic location, with some areas of the country charging much higher rates than others for similar services—and not demonstrating any significant improvement in quality or outcomes. Our white paper extends the research to show prices also vary within any given market, again without discernible differences in quality. As an example, a hospital charge for a similar procedure may vary by a two-fold difference, based on the discounts negotiated between the payer and the hospital.

Further, the Institute of Medicine (IOM) recently reported even more information on price variation and pointed out the value of price transparency. That paper argues that it would be a mistake for CMS to make significant pricing changes based on geographic principles alone. One of the major data sources? The Truven Health MarketScan® Research Databases, and one of the consultants working with IOM on this paper was our own Teresa Gibson, PhD.

This topic of price transparency helps understand how to improve the quality and decrease the price of healthcare—the stated vision of Truven Health Analytics. This is a tangible example of how we are fulfilling that vision.

Michael L. Taylor, MD FACP
Chief Medical Officer
3637

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