Designation, diligence and drift: understanding laboratory expenditure increases in British Columbia, 1996/97 to 2005/06

Abstract Background Laboratory testing is one of the fastest growing areas of health services spending in Canada. We examine the extent to which increases in laboratory expenditures might be explained by testing that is consistent with guidelines for the management of chronic conditions, by analyzing fee-for-service physician payment data in British Columbia from 1996/97 and 2005/06. Method We used direct standardization to quantify the effect on laboratory expenditures from changes in: fee levels; population growth; population aging; treatment prevalence; expenditure on recommended tests for those conditions; and expenditure on other tests. The chronic conditions selected were those with guidelines containing laboratory recommendations developed by the BC Guidelines and Protocol Advisory Committee: diabetes, hypertension, congestive heart failure, renal failure, liver disease, rheumatoid arthritis, osteoarthritis and dementia. Result Laboratory service expenditures increased by $98 million in 2005/06 compared to 1996/97, or 3.6% per year after controlling for population growth and aging. Testing consistent with guideline-recommended care for chronic conditions explained one-third (1.2% per year) of this growth. Changes in treatment prevalence were just as important, contributing 1.5% per year. Hypertension was the most common condition, but renal failure and dementia showed the largest changes in prevalence over time. Changes in other laboratory expenditure including for those without chronic conditions accounted for the remaining 0.9% growth per year. Conclusion Increases in treatment prevalence were the largest driver of laboratory cost increases between 1996/97 and 2005/06. There are several possible contributors to increasing treatment prevalence, all of which can be expected to continue to put pressure on health care expenditures.