Geographic Variation in Healthcare Costs : A Statistical Analysis and Review
Grost, Daniel James
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Geographic variation in the costs of healthcare exists at both the national and regional levels. Studies have shown that the differences in healthcare spending and costs across the United States do not result in better health outcomes. The possible sources of variation have been debated in recent years in an effort to suggest improvements that might decrease excess spending and improve the efficiencies of healthcare providers to reduce the cost variations. Statistical analysis of US hospital charges data from hospitalization due to pneumonia, cardiac dysrhythmias, congestive heart failure, septicemia, and COPD & bronchitis highlights the existence of variation in mean covered charges, total payments, and Medicare payments across the US. Additionally, analysis of variance (ANOVA) tests provided statistically significant evidence of cost differences at the regional level by studying provider charge data across the nine Census Bureau divisions of the US. Furthermore, regression analysis indicates positive relationships between costs of hospitalization in a provider’s ZIP Code tabulation area (ZCTA) and both the median household income and population density of that provider’s ZCTA..