It's not just hospitals: Widespread variation in spending associated with primary care practices

Primary care has come into greater focus in recent years as an important first step in preventing costly health care conditions. But the choice of a primary care provider can impact health care costs.

A new study, details of which will appear in the July 2021 edition of The American Journal of Managed Care, found widespread variation in spending associated with physician practices. As a result, researchers recommend employers “encourage the individuals and families they cover to use more efficient health care providers.”

Related: Report: Primary care spending on the decline

According to the researchers (whose affiliations include Harvard University and UnitedHealth Group in Minnetonka, Minn.), “significant differences [were found] in adjusted annual per-enrollee health care expenditure across primary care practices within their respective 3-digit zip code. Patients in practices at the 75th percentile have 31% higher annual expenditure than patients in practices at the 25th percentile, even after adjusting for covariates. If patients in above-median practices had spending levels of comparable patients in median spending practices in their area, mean per-enrollee spending would drop by approximately 8%, or about $562 per year.”

“There is likely no magic bullet for reaping these savings,” researchers wrote in their abstract for AJMC, adding that such disparities primarily are driven by differences in facility spending and prescription drug spending. “Benefit design, tiered networks, and other instruments can play a role by encouraging patients to use high-value physicians who deliver affordable, high-quality care and by encouraging high-spending practices to examine their behavior, such as by shifting referrals to lower-cost sites of service. Similarly, innovative payment models can encourage efficient utilization and may promote lower-cost referral patterns. Finally, some policy response to address exceptionally high prices may be warranted.”

Although they cited the need for additional research that digs deeper into specific physician practices, researchers concluded that wide price variations demonstrate “significant opportunity for savings if patients are directed to PCPs with more conservative practice styles, resulting in more efficient utilization patterns or referral patterns that steer patients to lower-priced sites of service.”

Read more: 

• U.S. primary care practices facing $15B hit due to COVID-19
• Patients being priced out of primary care
• How employers can benefit from direct primary care