Refining the Definition of Health Service Units Will Help Control Prices and Gain Value

In recent years there has been a great deal of attention on the variation in service volume across providers and regions. Our suite of tools, collectively entitled Potentially Preventable Events (PPE), has led our research group to engage with a variety of stakeholders in their efforts to minimize volume variation. This variation typically results from inefficiencies, poor quality of care leading to the use of otherwise unnecessary services or the overuse of services resulting from practice pattern. Volume is a sensible target for cost reduction efforts and, when detailed as variation across peer providers or regions, is hard to justify. Price (transaction price) comparisons are more complex but, arguably, have greater bearing on total U.S. healthcare cost. At least this is what we are told each year by the policy folks at the Organisation for Economic Co-operation and Development (OECD).