Variations in physician practice and covert rationing

The use of recent research on variations in medical practice to promote competitive market oriented cost containment strategies is critically examined. Research demonstrating widespread variations in physician practices for similar patient populations undermines the medical profession's claims about the scientific objectivity of medical practice and indicates the existence of widespread waste and inappropriate utilization of health care resources. Cost containment programs which rely on market-based care avoidance incentives, such as Medicare prospective payment or cost sharing plans, attempt to impact medical practice variations by creating economic barriers between doctor and patient. An alternative interpretation of research on practice variations is presented, emphasizing containing costs while improving quality of care and achieving greater equity through planning and regulation of medical supply factors.