Do market-level hospital and physician resources affect small area variation in hospital use?

This study evaluates the effect of market-level physician and hospital resources on hospital use. It is anticipated that higher hospital discharges are associated with (1) greater hospital and physician resources, (2) more differentiated hospital and physician resources, and (3) higher levels of teaching intensity in the community. Data on 14 modified diagnostically related groups (DRGs) and 58 hospital market communities in Michigan are analyzed during a 7-year period. Findings indicate that physician resources, hospital resources, differentiation of hospital and physician resources, and teaching intensity contribute only modestly to discharges, holding constant the socioeconomic attributes of the community and adjusting for the variation in hospital use over time. With the inclusion of hospital and physician resource variables, socioeconomic factors remain important determinants of the variation across market communities. Findings are discussed in terms of their implications for health care organizations, managed care programs, and cost control efforts in general.