Unwarranted variation from a health economics perspective

Abstract

Sutherland and Levesque have developed a useful conceptual framework to delineate warranted and unwarranted clinical variation in health care systems. They define unwarranted clinical variation as "patient care that differs in ways that are not a direct and proportionate response to available evidence; or to the healthcare needs and informed choices of patients.". 1 Although this is a fairly comprehensive definition, the perspective of health economics appears not to be included. There are currently two dimensions of unwarranted variation in health economics literature. [2][3][4] The first dimension, which is based on the diminishing returns principle, involves the economic consequences of variation in health care utilization. 3 It argues that with the increase in the use of a particular service, the marginal value of that service falls. The optimal service utilization volume, from an economic perspective, is that of which the marginal value is equal to its marginal cost (X*). When the service utilization exceeds this point (X2) or when it is less than that (X1), it will cause inefficiencies. The inefficiency rate depends on the price elasticity of the demand for the service involved and the distance from the optimal utilization point (X*). 5 In Figure 1, areas A and B indicate the inefficiency due to variation in service utilization.Since the exact value of different levels of service utilization is not routinely known, health economists often implicitly assume that the average utilization is the best utilization rate. Given the positivist nature of mainstream health economics, instead of defining the unwarranted variation, economists focus on unexplained variation by examining the factors that determine deviation from the average.The part of the deviation that is determined by the variables is labelled as "explained variation," leaving the remaining part which is not determined by the variables as "unexplained variation." 6 The second dimension involves a normative look at unwarranted variation. Health economics scholars would state that theory of agency between the physician and the patient cannot capture all modes of communication. 7 What determines whether variation is warranted or not, in their view, stems from societal expectations of physicians' clinical practice styles. As long as those expectations are not clear, one cannot not determine with certainty whether variation in clinical practice styles is warranted or not. 2 Incorporation of a health economics perspective on unwarranted variation would strengthen the conceptual framework proposed by Sutherland andLevesque, which has the potential to serve as a basis for further research.

The Future Effects of COVID-19 on the Health System: Applying the Futures Wheel Method

“…Changes in the plan of pharmaceutical production and research and development (R&D) activities are also another future effect of COVID-19 on this market. It is anticipated that the burden of diseases and the economic burden of non-communicable diseases will be increased and the practice variation of the medical professionals to deliver medical interventions experience will be more heterogeneous than before (64)(65)(66)(67)(68).…”