Regional variation in physician practice pattern: An examination of technical and cost efficiency for treating sinusitis

Objective. An examination of the physician efficiency and resulting cost patterns by region. Data Sources. Virginia Medicaid sinusitis related claims for 1993 were aggregated to physician level (n = 178), and Area Resources File for 1993 was used to identify regions for evaluation. Study Design. The best practice performance in the usage of five resources (i.e., primary care physician visits, referral services, emergency room visits, prescriptions, laboratory tests) was identified using Data Envelopment Analysis (DEA). Five regions in Virginia were identified according to regional planning to evaluate the variation in efficiency across these regions. Principal findings. Inefficient physicians consumed significantly more resources and were 48% more costly than efficient physicians. Substantial regional variation was found and mainly attributed to the differences in use of prescriptions and laboratory procedures. Urban-rural discrepancy may explain part of the variation. Conclusions. As this study reveals the existence of substantial variation in physician efficiency, actions should be taken to minimize the variation that is move affected by personal and structural factors. For example, information on efficient use of resources and corresponding patient outcomes can be disseminated to the attending physicians. Educational workshops can be conducted to allow sharing of experience between efficient and inefficient physicians. Efforts should also be directed to help inefficient physicians to adhere to practice guidelines.