Physician and Hospital Drivers of Spending Variation in Localized Prostate Cancer

Payment reform to reduce unnecessary spending variation is an important strategy to reduce waste. Prostate cancer is the most common male cancer and has a wide range of treatment options; the magnitude and drivers of spending variation within prostate cancer are unknown. Using data on 38,971 men ≥ 66 years diagnosed with localized prostate cancer in 2010-2013 in the Surveillance, Epidemiology, and End Results (SEER)-Medicare database, we examined contributions of (1) urologist and radiation oncologist physicians and hospitals, (2) patient characteristics, (3) disease risk, and (4) treatment modalities to variation in total medical spending excluding pharmacy in the year following diagnosis. Variation across physicians within hospitals was similar to that across hospitals (for urologists, 5% between-physician and 6% between-hospital; for ROs, 7% vs 6%, respectively). Differences in treatment modalities drove more variation across physicians than differences in patient and disease characteristics (69% vs 15% for urologists, 20% vs 1% for ROs). Analyses of physician by regression adjusted patient-level spending, finds the highest-spending physicians spent 46% more than the lowest and had more imaging tests, inpatient care, and radiotherapy spending, with more advanced technology. These findings suggest that payment reform and efforts to improve value must address decision-making at both physician and hospital levels.