Does Geographic Region Matter?
Do regions affect physician payment rates? While many hospital executives answer with a resounding yes, consultants with nationwide practices often feel that variance by region is overplayed.
With the growth of its customer base, MD Ranger has considerable geographic diversity, with hospital contracts from 27 states covering dozens of MSAs, rural and urban areas. To investigate possible systematic variation, we pooled all MD Ranger’s contract data, over 10,000 records, and then joined it to data from various state and federal agencies, including CMS cost report data, BLS Occupational Employment Survey, various BLS price indices, etc. A multivariate approach modeled contract rates on hospital, contract, and market characteristics, and both linear and nonlinear techniques were employed. After extensive testing of a variety of geographic clusters defined by MSA’s and combinations of MSA’s, along with urban/rural distinctions, MD Ranger data scientists found no statistically significant geographic variation. More important factors influencing rates are trauma status, whether the hospital is urban or rural, and its size.
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