HJBR Sep/Oct 2025

HEALTHCARE JOURNAL OF BATON ROUGE I  SEP / OCT 2025 11 geographic areas reflected variation in utiliza- tion rather than prices. Decades of research, which has now been replicated and confirmed by many other researchers, demonstrated find- ings that were initially not well received by the medical community. Indeed, though it’s com- mon now to find articles published on value- based care in numerous prestigious medical journals, these same journals initially refused to publish Wennberg’s work. It was the journal Science that first published his findings on dif- ferences in regional variation and utilization patterns of many different medical services. His most controversial concept was that of supply-sensitive care, which accounted for 60% of Medicare spending. It was difficult for the medical community to grasp, because it ran counter to the widespread belief that medical interventions were driven by explicit medical theories and scientific evidence. Most of us, in- cluding many doctors, believe that most medi- cal decisions are grounded in well-articulated medical theory, but repeated research confirms that supply of medical resources in each geo- graphic area exerts greater control over the consumption of medical care within that area. Simply stated, the higher the supply of medi- cal resources (more doctors, specialists, and hospital beds), the more intense the medical care for chronic illness (more doctor visits, spe- cialist visits, hospitalizations, and testing). How- ever, higher intensity of medical care did not lead to measurably better health outcomes. Instead, it led to higher costs, worse patient experiences, more deaths in an ICU setting, more disorganized care (more patients with more than 10 doctors), and lower satisfaction with hospital care. Two Healthcare Institutions, Side by Side One of Wennberg’s more interesting studies compared two similar academically oriented institutions in different geographic areas: Har- vard and its affiliated Boston hospitals, versus Yale and its New Haven, Conn., hospital. Com- pared to Yale–New Haven, patients at Harvard- Boston hospitals were anywhere from 50% to 100% more likely to be admitted. Wennberg conducted the study as a cohort study where he could track outcomes longitu- dinally over time, because critics of his research would try to assert that the extra care provided at Boston hospitals must invariably be produc- but where current practice patterns often de- part from the established evidence. Placement of coronary artery stents is clearly indicated and indeed lifesaving when someone is expe- riencing an acute coronary syndrome, such as an acute heart attack. Stents are also indicated when a patient is suffering from refractory angi- na despite optimal medical therapy, but many of these stents are placed each year in patients who do not meet these criteria. I cannot imagine the uproar we would hear if a payer tried to interfere with paying for a coronary stent placement, and yet here is an area where harm is occurring from these stents being placed under clinically inappropriate cir- cumstances. The discussion might very well de- volve into fear and emotion-based arguments rather than arguments based on rigorous sci- ence. Inappropriate coronary stents are an example of low-value care, where the risk of the proce- dure exceeds the benefit. Utilization manage- ment and prior authorization are intended to dissuade providers from delivering low-value care, but with highly variable rates of success. John “Jack” Wennberg and the Discovery of Overutilization In the last article, I challenged us providers to look in the mirror and scrutinize our own role as contributors to what’s wrong with healthcare. To that end, I introduced the concept of clini- cally unwarranted practice variation, where for a multitude of reasons the way doctors practice medicine does not always fit within accepted evidence-based guidelines. To understand why utilization management and prior authorization exist, we first need to understand the research that revealed that overutilization was even a problem. The discov- ery of this practice pattern variation is pains- takingly documented in the book Tracking Medicine: A Researcher’s Quest to Understand Healthcare , by John “Jack” Wennberg, MD, MPH. Wennberg’s credentials were impeccable. He was a Johns Hopkins–educated medical doc- tor trained as a biostatistician and healthcare epidemiologist who began conducting his re- search in the 1960s using data provided by the newly enacted Medicare program. Because the pricing for Medicare services was determined by the government rather than commercial payers, differences in costs across As we continue to navigate our way to an answer for what’s wrong with healthcare, we’ve explored both the history and “soul” of health insurance. In the last issue, we paused to look in the mirror to get a view from the provider side to examine our own culpability in why there is so much variation in experience of care, quality, outcomes, and affordability. Along that journey, we explored some concepts that affect payers, such as moral hazard and adverse selection, along with the levers that payers use to manage these issues. To manage moral hazard, payers deploy co- payments, co-insurance, anddeductibles, which are inherently imperfect, blunt instruments. To manage adverse selection, payers historically used underwriting and premium pricing based on risk and experience rating. But these practices primarily are concerned with health plans and their members. At the in- tersection of payers and providers is a concept that we have not yet discussed, which is utiliza- tion management, a key component of which is the practice of prior authorization. The Economics of Utilization How one views utilization can be diametrical- ly opposed — like opposing sides of the same coin — depending on whether you are view- ing utilization through the lens of a payer or a provider. For a payer, utilization is an expense where healthcare dollars collected in the form of a premium charged to members are doled out to providers for services rendered. These services can be office visits, imaging, procedur- al or surgical services, ambulance rides, or the cost of medication. From the provider perspec- tive, that same utilization is revenue. Payers therefore seek to reduce avoidable utilization to avoid paying for care that is not deemed medically necessary. Providers may balk at the notion that a payer gets to deter- mine what is medically necessary. Providers will often assert that they alone have the medical expertise to make such decisions. What these providers may not be aware of, however, is that payers often employ teams of physicians whose job is to comb the medical literature and ensure that the services their company is paying for meet the standard of care for being clinically indicated according to current medi- cal evidence. Invariably tension can result. In the last article, we discussed one area where the medical evidence is well defined,