A team of investigators at Dartmouth Medical School has discovered large variations in health spending among regions of the country, with no evidence that health outcomes are better in higher spending regions.⁽¹⁷⁾ Similarly, an analysis by the federal Medicare Payment Advisory Commission found that the quality of care is lower for Medicare beneficiaries in states with higher rates of per person spending.⁽¹⁸⁾ An analysis of cost and quality of care at American hospitals by Sir Brian Jarman at the Institute for Healthcare Improvement documented a three- to five-fold difference in cost and quality for different diagnoses but no systematic relationship between quality and cost.⁽¹⁹⁾ The findings are provocative, yet more refined analysis will be needed to develop effective solutions to improve quality, eliminate wasteful or ineffective care, and increase efficiency.

High-quality care means providing the right care in the right way at the right time. The right care sometimes increases immediate costs and sometimes reduces them but tends overall to generate value by lengthening life expectancy, reducing illness, and enhancing patient functioning. Through a program at New York City's Coney Island Hospital, for example, children and teenagers with asthma are able to dial in readings from their peak flow meters, which are monitored by nurses who respond quickly to any sign of trouble. The result has been a dramatic drop in inpatient admissions and emergency room use.

Poor-quality care can mean underuse of certain services, such as screening or treatment for diabetes, depression, and other conditions. It can also mean overuse of services that provide no benefit or, like antibiotics to treat upper respiratory infections in children, can produce harmful effects. Poor quality can mean errors that endanger patients' health and increase costs, as when a surgical patient needs to be readmitted to treat an infection.

A new study⁽²⁰⁾ by researchers at RAND shows that poor-quality care, especially underuse of effective services, is pervasive. Examining medical records and performance on 439 indicators of quality of care for 30 acute and chronic conditions, the investigators found that patients received the recommended care only 55 percent of the time. Poor care occurs not because physicians are poorly trained or incompetent but because systems that ensure that patients get the right care at the right time are scarce. These include reminders to patients for preventive services, prompts to physicians about appropriate medications or procedures, and techniques such as bar coding or computerized systems for recording doctors' orders.