A Systems Approach to Person-Centric Health Economics

The economics of health and the economics of health care are not the same, and in fact can be competitors for resources in some cases. Using a traditional supply/demand framework can clarify the forces at work in person-centric health economics. Use of cost-effectiveness analysis, employing a broader systems perspective that incorporates sectors other than health care, and nudging individuals to better health habits are three strategies that can help to drive a shift from health care to health.

Geographic variation in Medicare and the military healthcare system

OBJECTIVES

To compare geographic variation in healthcare spending and utilization between the Military Health System (MHS) and Medicare across hospital referral regions (HRRs).

STUDY DESIGN

Retrospective analysis.

METHODS

Data on age-, sex-, and race-adjusted Medicare per capita expenditure and utilization measures by HRR were obtained from the Dartmouth Atlas for 2007 to 2010. Similarly, adjusted data from 2007 and 2010 were obtained from the MHS Data Repository and patients assigned to HRRs. We compared high- and low-spending regions, and computed coefficient of variation (CoV) and correlation coefficients for healthcare spending, hospital inpatient days, hip surgery, and back surgery between MHS and Medicare patients.

RESULTS

We found significant variation in spending and utilization across HRRs in both the MHS and Medicare. CoV for spending was higher in the MHS compared with Medicare, (0.24 vs 0.15, respectively) and CoV for inpatient days was 0.36 in the MHS versus 0.19 in Medicare. The CoV for back surgery was also greater in the MHS compared with Medicare (0.47 vs 0.29, respectively). Per capita Medicare spending per HRR was significantly correlated to adjusted MHS spending (r = 0.3; P <.0001). Correlation in inpatient days (r = 0.29; P <.0001) and back surgery (r = 0.52; P <.0001) was also significant. Higher spending markets in both systems were not comparable; lower spending markets were located mostly in the Midwest.

CONCLUSIONS

In comparing 2 systems with similar pricing schemes, differences in spending likely reflect variation in utilization and the influence of local provider culture.

Geographic variation within the military health system

Background

This study seeks to quantify variation in healthcare utilization and per capita costs using system-defined geographic regions based on enrollee residence within the Military Health System (MHS).

Methods

Data for fiscal years 2007 – 2010 were obtained from the Military Health System under a data sharing agreement with the Defense Health Agency (DHA). DHA manages all aspects of the Department of Defense Military Health System, including TRICARE. Adjusted rates were calculated for per capita costs and for two procedures with high interest to the MHS- back surgery and Cesarean sections for TRICARE Prime and Plus enrollees. Coefficients of variation (CoV) and interquartile ranges (IQR) were calculated and analyzed using residence catchment area as the geographic unit. Catchment areas anchored by a Military Treatment Facility (MTF) were compared to catchment areas not anchored by a MTF.

Results

Variation, as measured by CoV, was 0.37 for back surgery and 0.13 for C-sections in FY 2010- comparable to rates documented in other healthcare systems. The 2010 CoV (and average cost) for per capita costs was 0.26 ($3,479.51). Procedure rates were generally lower and CoVs higher in regions anchored by a MTF compared with regions not anchored by a MTF, based on both system-wide comparisons and comparisons of neighboring areas.

Conclusions

In spite of its centrally managed system and relatively healthy beneficiaries with very robust health benefits, the MHS is not immune to unexplained variation in utilization and cost of healthcare.