Missing the lesson(s): NEJM gets it wrong

A recent NEJM article really missed the point.

NEJM -- Slowing the Growth of Health Care Costs -- Lessons from Regional Variation

They correctly point out that there is regional variation in health care costs. This is no secret. But why?

This article simplifies the reasons. Their response is that it is some output of "how physicians and others respond to the availability of technology, capital, and other resources in the context of the fee-for-service payment system". This ultimately led, in their thinking, to "Differences in the propensity to intervene in such gray areas of decision making were highly correlated with regional differences in per capita spending."

Health care costs can vary due to a number of reasons - not just because of payment. I'm not going to go through an exhaustive list. But let me highlight a few reasons I think exist for market variation:

-Market consolidation (i.e. there's only one dominant provider, so they can demand a higher price for services rendered for a payer)
-Certificate of need regulation could drive down capacity for technology could help reduce costs
-Percent uninsured in a state can drive variation
-Greater concentration of for-profit or physician-owned hospitals could lead to greater health care consuption
-States with higher acuity service capacity (i.e. ICU) will use these services more, and drive up cost (the "if you build it they will come" phenomenon)
- To the last point - states with higher capacity of any kind (Long term care beds, inpt beds, dialysis, etc) may have higher costs
- Medicaid drug purchasing policies vary from state to state
- States with lower workforce capacity (thus higher visiting nurse needs, etc.) may have higher costs
- States with more complex insurance regulation or higher requirements for insurance reporting may drive up payor costs
- Higher state public health expenditures could account for differences in health care costs

I could go on. But you get the point. It doesn't take a rocket scientist to see that this article has reduced the problem of variation in health care costs to a laughable conclusion.

And don't even get me started on their banal conclusion that health care variation calls for more "physician involvement". Really?!?

I must say I'm very surprised that the NEJM editorial board put out such a half-baked article.