The Association Between Provider Price and Complication Rates
for Outpatient Surgical Services
Christopher Whaley, Ph.D.
RAND Corporation, Santa Monica, CA, USA;
School of Public Health, University of California, Berkeley, Berkeley, CA, USA.
BACKGROUND: Wide variations exist in price and quality
for health-care services, but the link between price and
quality remains uncertain.
OBJECTIVE: This paper used claims data from a large
commercially insured population to assess the associa-
tion between both procedure- and provider-level prices
and complication rates for three common outpatient sur-
DESIGN: This is a retrospective cohort study.
SETTING: The study used medical claims data from com-
mercial health plans between 2009 and 2013 for three
outpatient surgical services—joint arthroscopy, cataract
surgery, and colonoscopy.
MAIN MEASURES: For each procedure, price was
assessed as the sum of patient, employer, and insurer
spending. Complications were identified using existing
algorithms specific to each service. Multivariate regres-
sions were used to risk-adjust prices and complication
rates. Provider-level price and complication rates were
compared by calculating standardized differences that
compared provider risk-adjusted price and complication
rates with other providers within the same geographic
market. The association between provider-level risk-
adjusted price and complication rates was estimated
using a linear regression.
KEY RESULTS: Across the three services, there was an
inverse association between both procedure- and
provider-level prices and complication rates. For joint ar-
throscopy, cataract surgery, and colonoscopy, a one stan-
dard deviation increase in procedure-level price was as-
sociated with 1.06 (95% CI 1.05–1.08), 1.14 (95% CI 1.11–
1.16), and 1.07 (95% CI 1.06–1.07) odds increases in the
rate of procedural complications, respectively. A one stan-
dard deviation increase in risk-adjusted provider price
was associated with 0.09 (95% CI 0.07 to 0.11), 0.02
(95% CI 0.003 to 0.05), and 0.32 (95% CI 0.29 to 0.34)
standard deviation increases in the rate of provider risk-
adjusted complication rates, respectively.
LIMITATIONS: Results may be due to unobserved factors.
Only three surgical services were examined, and the re-
sults may not generalize to other services and procedures.
Quality measurements did not include patient satisfac-
tion or experience measures.
CONCLUSIONS: For three common outpatient surgical
services, procedure- and provider-level prices are associ-
ated with modest increased rates of complication rates.
KEY WORDS: provider price; provider quality.
J Gen Intern Med
© Society of General Internal Medicine 2018
The US health-care system exhibits substantial variation in
between variations in price and quality remains uncertain
is especially important when trying to improve the efficiency
of the health-care system for the commercially insured popu-
lation. If higher prices are associated with improved outcomes,
then policy makers, insurers, and employers must trade off the
costs and benefits of high-priced providers. Paying higher
prices may be worthwhile if they are associated with mean-
ingfully improved quality or outcomes. However, if there is no
association between prices and quality, or an inverse associa-
tion, then efforts to shift patients to low-priced providers can
both reduce spending and improve the quality of care.
At the same time, while several studies document extensive
variations in the quality of care for health-care services, many
of these studies focus on inpatient services.
As a result, they
do not assess variation in clinical outcomes for many com-
monly received services. As surgical services are increasingly
performed in outpatient settings, understanding the factors that
influence the quality of outpatient surgical services has be-
come more important.
This study examines this question using nationwide data from
the Health Care Cost Institute (HCCI) and focuses on three
common outpatient surgical services—joint arthroscopy, cataract
surgery, and colonoscopy. These services were chosen due to
their frequency and the presence of existing algorithms to iden-
tify complication rates. The HCCI data includes transaction-level
prices, which has been a barrier to previous studies of the
relationship between prices and quality. Quality was assessed
using the frequency of complications associated with each sur-
gical procedure. For each service, the association between price
and complication rates was estimated at both the procedure and
While previous studies have examined the relationship
between physician price and quality outcomes,
Electronic supplementary material The online version of this article
(https://doi.org/10.1007/s11606-018-4506-7) contains supplementary
material, which is available to authorized users.
Received December 11, 2017
Revised February 28, 2018
Accepted May 18, 2018