Research Brief

Spiraling health care expenditures, which exceeded $1 trillion in 1996, have driven policymakers to explore a variety of economic incentives for reducing utilization and controlling costs. Although these incentives are intended to promote optimal utilization, they have, instead, been shown to decrease the use of both unnecessary and necessary care. This suggests that financial incentives designed to affect utilization need to incorporate some assessment of the appropriateness of the care being delivered.

A large number of RAND studies over the past decade have examined the appropriateness of the use of various medical and surgical procedures. Employing a rigorous methodology, these studies first rated all of the indications for performing a given procedure, then used those ratings to determine whether the procedures were performed for "necessary," "appropriate," "inappropriate," or "equivocal" reasons. Generally, a procedure was considered to be "appropriate" if the patient's expected health benefits exceeded the expected health risks by a substantial margin.

Significant Over- and Underutilization Exist

Proportion of procedures judged either "clinically inappropriate" or "of equivocal value": summary of selected studies.

Overall, the RAND studies indicate that significant proportions of procedures are performed for inappropriate reasons. The rates of inappropriate use range from a low of 2 percent for coronary artery bypass graft surgery (CABG) and cataract removal to a high of 32 percent for carotid endarterectomy. (Please see the figure for further details.) The rates of equivocal use also vary dramatically, ranging from 7 percent for CABG to 38 percent for percutaneous transluminal coronary angioplasty (PTCA). On average, it appears that one-third or more of all procedures performed in the United States are of questionable benefit.

Other studies, although fewer in number, suggest that some procedures or treatments are underutilized. For example, one RAND study found that only 20 to 30 percent of depressed patients seen in general medical practice were prescribed antidepressant medication. Among those who did receive a prescription, almost one-third were prescribed a subtherapeutic dose. Other, non-RAND studies have found even larger discrepancies between the actual and ideal usage of potentially life-saving treatments, such as thrombolytic therapy and antihypertensive regimens.

Are High Procedure Rates the Result of Inappropriate Use?

The rate at which procedures are performed varies dramatically by location, both across and within regions. One of the earliest RAND studies on this topic examined geographic variation in the utilization of 123 medical and surgical procedures in 13 metropolitan areas. For more than half of the procedures, utilization rates differed threefold or more across locations. Another RAND study found similarly large variations in the utilization of seven procedures within Los Angeles County. Because such variations could not be explained by differences in the age, gender, or disease incidence of the population, some have suggested that high rates of inappropriate use contribute to high procedure rates.

However, there appears to be little relationship between the rates at which procedures are performed and their appropriateness. In one study, RAND researchers examined geographic variation in the rates of use of three procedures (coronary angiography, carotid endarterectomy, and upper gastrointestinal tract endoscopy). They found that high- and low-use sites had similar rates of inappropriate use. In another study, which assessed the appropriateness of two cardiac procedures performed in both the United States and Canada, the researchers reached similar conclusions: Higher procedure rates were not associated with higher rates of inappropriate use. Taking a slightly different tack, a third study failed to find a relationship between the rates of hospitalization in six communities and the appropriateness of the admissions. Thus, it appears that high rates of inappropriate use do not account for high procedure rates.

Economic Incentives Do Not Necessarily Improve the Appropriateness of Care

The relatively high rates of questionable procedure use found in the above studies imply that utilization can be decreased without necessarily compromising the quality of care. However, there is little evidence to suggest that economic incentives alone will selectively reduce the use of inappropriate care. Other countries that operate within the resource constraints of a national health care system (such as the United Kingdom, Canada, and Israel) may post lower overall procedure rates, but they also experience significant rates of inappropriate utilization. For example, one study in the United Kingdom found that 21 percent of coronary angiographies and 16 percent of CABGs were performed for inappropriate reasons; a similar study performed in Israel found that 29 percent of cholecystectomies (gallbladder removals) were performed for less-than-appropriate reasons. Contrary to the researchers' expectations, habitual rationing of resources did not restrict use of these sophisticated and expensive treatments to only those who would most clearly benefit from them.

When decreases in utilization are driven solely by cost-containment concerns, they may not occur in clinically sensible ways. In the RAND Health Insurance Study, which compared health outcomes under fee-for-service and managed care, the managed care organization achieved lower hospitalization rates than the fee-for-service system, but it generated decreases in both necessary and unnecessary hospital admissions. Similarly, Canada (which is often cited as an example of fiscally sustainable health care) posts lower rates of cardiac procedures than does the United States, but it has achieved them almost exclusively by reducing those rates for patients age 65 and older.

Policy Implications

UCLA appropriateness method (used throughout the studies described above) can provide a scientific foundation for clinical decisionmaking and inform future resource-allocation strategies. Although no one tool can guarantee optimal outcomes, clinical-evaluation tools can help to rationalize our allocation of health care resources and improve our decisionmaking processes.

Selected Bibliography of RAND Research on Appropriateness of Care

Anderson, G. M., K. Grumbach, H. S. Luft, et al., "Use of Coronary Artery Bypass Surgery in the United States and Canada: Influence of Age and Income," Journal of the American Medical Association, Vol. 269, 1993, pp. 1661–1666.

Bernstein, S. J., L. H. Hilborne, L. L. Leape, et al., "The Appropriateness of Use of Coronary Angiography in New York State," Journal of the American Medical Association, Vol. 269, 1993, pp. 766–769 (available as RAND Reprint RP-186, 1993).

Bernstein, S. J., E. A. McGlynn, A. L. Siu, et al., "The Appropriateness of Hysterectomy: A Comparison of Care in Seven Health Plans," Journal of the American Medical Association, Vol. 269, 1993, pp. 2398–2402 (available as RAND Reprint RP-204, 1993).

Brook, R. H., "The RAND/UCLA Appropriateness Method," in K. A. McCormick, S. R. Moore, and R. A. Siegel, Clinical Practice Guidelines Development: Methodology Perspectives, Rockville, Md.: DHHS/PHS/AHCPR, AHCPR No. 95-0009, 1994 (available as RAND Reprint RP-395, 1995).

Carlisle, D. M., B. R. Valdez, M. F. Shapiro, and R. H. Brook, "Geographic Variation in Rates of Selected Surgical Procedures Within Los Angeles County," Health Services Research, Vol. 30, 1995, pp. 27–42.

Chassin, M. R., R. H. Brook, R. E. Park, et al., "Variations in the Use of Medical and Surgical Services by the Medicare Population," New England Journal of Medicine, Vol. 314, 1986, pp. 285–290 (available as RAND Note N-2678-CWF/HF/PMT/RWJ, 1986).

Chassin, M. R., J. Kosecoff, D. H. Solomon, and R. H. Brook, "How Coronary Angiography Is Used: Clinical Determinants of Appropriateness," Journal of the American Medical Association, Vol. 258, 1987, pp. 2543–2547 (available as RAND Reprint RP-152, 1993).

Chassin, M. R., J. Kosecoff, R. E. Park, et al., "Does Inappropriate Use Explain Geographic Variations in the Use of Health Care Services? A Study of Three Procedures," Journal of the American Medical Association, Vol. 258, 1987, pp. 2533–2537 (available as RAND Reprint RP-151, 1993).

Gray, D., J. R. Hampton, S. J. Bernstein, et al., "Clinical Practice: Audit of Coronary Angiography and Bypass Surgery," Lancet, Vol. 335, 1990, pp. 1317–1320 (available as RAND Note N-3370-HHS, 1991).

Hilborne, L. H., L. L. Leape, S. J. Bernstein, et al., "The Appropriateness of Use of Percutaneous Transluminal Coronary Angioplasty in New York State," Journal of the American Medical Association, Vol. 269, 1993, pp. 761–765 (available as RAND Reprint RP-186, 1993).

Kleinman, L. C., J. Kosecoff, R. W. Dubois, and R. H. Brook, "The Medical Appropriateness of Tympanostomy Tubes Proposed for Children Younger Than 16 Years in the United States," Journal of the American Medical Association, Vol. 271, 1994, pp. 1250–1255.

Leape, L. L., L. H. Hilborne, R. E. Park, et al., "The Appropriateness of Use of Coronary Artery Bypass Graft Surgery in New York State," Journal of the American Medical Association, Vol. 269, 1993, pp. 753–760 (available as RAND Reprint RP-186, 1993).

McGlynn, E. A., "The State of Quality: How Good Is Care?" Written testimony prepared for the President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry, January 28, 1998.

McGlynn, E. A., and R. H. Brook, "Ensuring the Quality of Care," in R. H. Anderson, T. H. Rice, and G. F. Kominski, eds., Changing the U.S. Health Care System, San Francisco: Jossey-Bass, 1996.

McGlynn, E. A., C. D. Naylor, G. M. Anderson, et al., "Comparison of the Appropriateness of Coronary Angiography and Coronary Artery Bypass Graft Surgery Between Canada and New York State," Journal of the American Medical Association, Vol. 272, 1994, pp. 934–940 (available as RAND Reprint RP-344, 1994).

Pipel, D., G. M. Fraser, J. Kosecoff, et al., "Regional Differences in Appropriateness of Cholecystectomy in a Prepaid Health Insurance System," Public Health Review, Vol. 20, 1992/93, pp. 61–74.

Siu, A. L., F. A. Sonnenberg, W. G. Manning, et al., "Inappropriate Use of Hospitals in a Randomized Trial of Health Insurance Plans," New England Journal of Medicine, Vol. 315, 1986, pp. 1259–1266.

Wells, K. B., W. Katon, W. R. Rogers, and P. Camp, "Use of Minor Tranquilizers and Antidepressant Medications by Depressed Outpatients: Results from the Medical Outcomes Study," American Journal of Psychiatry, Vol. 151, 1994, pp. 694–700.

Winslow, C. M., J. B. Kosecoff, M. Chassin, et al., "The Appropriateness of Performing Coronary Artery Bypass Surgery," Journal of the American Medical Association, Vol. 260, 1988, pp. 505–509.

Winslow, C. M., D. H. Solomon, M. R. Chassin, et al., "The Appropriateness of Carotid Endarterectomy," New England Journal of Medicine, Vol. 318, 1988, pp. 721–727 (available as RAND Note N-3374-HHS, 1991).

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