Practice variations in the production of health

This study investigates three questions related to medical practice variation. First, it tests whether average length of stay across Portuguese National Health Service hospitals varies when controlling for differences in patients’ characteristics. Second, it looks at hospital-level characteristics in order to find out whether these are able to explain differences in average length of stay across hospitals. Finally, it proposes a best practice average length of stay for each of the six episodes of care analyzed. To perform the analysis, administrative data from the Diagnosis-Related groups’ data set for the year of 2012 was used. A replication of a hierarchical two-stage model with hospital fixed effects was carried out. The results show that after taking patients’ characteristics into account, variation in average length of stay across hospitals exists. This variation cannot be explained by hospital-level characteristics.