Variations in surgical spending within hospital systems for complex cancer surgery

Background Approximately 70% of hospitals today are part of larger health systems. Proponents of hospital consolidation tout its potential to reduce health spending and improve outcomes, but to the authors' knowledge the available evidence has suggested that this promise is unrealized. Variations in costs and outcomes within systems may highlight opportunities for collaborative quality improvement and practice standardization. To assess this potential, the authors sought to measure variations in episode spending within and across hospital systems among Medicare beneficiaries undergoing complex cancer surgery. Methods Using 100% Medicare claims data, the authors identified fee-for-service Medicare patients who were undergoing elective pancreatectomy, lung resection, or colectomy for cancer from 2014 through 2016. Risk-adjusted, price-standardized payments for the surgical episode from admission through 30 days after discharge were calculated. The authors then assessed the reliability-adjusted variations at the hospital and system levels. Results Average episode payments varied nearly as much within hospital systems for pancreatectomy ($1946 between the lowest and highest spending systems; 95% CI, $1910-$1972), lung resection ($625 between the lowest and highest spending systems; 95% CI, $621-$630), and colectomy ($813 between the lowest and highest spending systems; 95% CI, $809-$817) as they did between the lowest and highest spending hospitals (pancreatectomy: $2034; lung resection: $1789; and colectomy: $770). For pancreatectomy, this variation was driven by index hospitalization spending whereas both index hospitalization and postacute care use drove variations for lung resection and colectomy. Conclusions In this analysis of Medicare patients undergoing complex cancer surgery, wide variations in surgical episode spending were noted both within and across hospital systems. System leaders may seek to better understand variations in practices among their hospitals to standardize care and reduce variations in outcomes, use, and costs.