Background There are substantial variations in medical services that are difficult to explain based on differences in pathophysiology alone. The scale of variation and the number of people affected suggest substantial potential to lower healthcare costs with the reduction of practice variation. Our study assessed practice variation across three affiliated urban sites in one city in the United States and related healthcare costs following the diagnosis of hand osteoarthritis (OA) in patients. Questions/purposes (1) What are the factors associated with increased costs and surgery in the first year after diagnosis of hand OA? (2) How much practice variation exists among hand surgeons in terms of the number of patient visits, use of imaging tests, use of injections, occupational therapy use, and surgery? (3) What proportion of total cost is accounted for by patients who consult with an additional provider? Methods Patients receiving a new diagnosis of primary hand OA between January 1, 2007, and December 31, 2011, were identified from the research database of three affiliated urban hospitals in a single city in the United States. We included 2814 patients (69%, 1929 women) treated by six hand surgeons. We recorded all visits, imaging tests, injections, occupational therapy visits, and surgical procedures in the first year after that diagnosis. Costs were extracted from the Medicare Physician Fee Schedule. Reliability of the database was assessed by manual checking of 120 patient charts (4.3% of all data); reliability was determined to be 94% (113 of 120) for diagnoses, 97% (116 of 120) correct surgeon, 100% (120 of 120) second surgeon, 99% (278 of 282) visits, 99% (132 of 134) imaging procedures, 92% (11 of 12) injections, 95% (21 of 22) surgical procedures, and 85% (102 of 120) prescribing occupational therapy.One of the authors (SJEB) is supported by Dutch research grants from Anna Foundation|NOREF (less than USD 10,000) (Oegstgeest, The Netherlands), Genootschap Noorthey (less than USD 10,000) (Bussum, The Netherlands), Stichting Fonds Doctor Catharine van Tussenbroek (less than USD 10,000) (Amsterdam, The Netherlands), and Stichting Vreedefonds (less than USD 10,000) (Amsterdam, The Netherlands). One of the authors (TT) received research grants from the Prince Bernhard Culture Fund & Kuitse Fung (less than USD 10,000) (Amsterdam, The Netherlands) and Fundatie van de Vrijvrouwe van Renswoude te's-Gravenhage (less than USD 10,000) (The Hague, The Netherlans). One of the authors (DR) certifies that he, or a member of his immediate family, has or may receive payments or benefits, during the study period from Wright Medical (less than USD 10,000) (Memphis, TN, USA); Skeletal Dynamics (less than USD 10,000) (Miami, FL, USA); Biomet (less than USD 10,000) (Warsaw, IN, USA); AO North America (less than USD 10,000) (Paoli, PA, USA); and AO International (less than USD 10,000) (Dubendorf, Switzerland). All ICMJE Conflict of Interest Forms for authors and Clinical Orthopaedics and Related Research 1 editors and boa...