Expenditures for ambulatory episodes of care: the Michigan Medicaid experience.

It is widely accepted that ambulatory care furnished in hospital outpatient department (OPD) settings is more costly than similar care furnished in office settings, but few researchers have explored whether practice patterns differ between the two settings. Differences in practice patterns may account for differences in the overall cost of care associated with these settings. Diagnosis-specific episodes of care were used to compare the costs of treating disease episodes in OPDs and offices. The findings suggest that OPD care is more costly not only because of price, but also because continuity of care is less common and the likelihood of hospital admission is substantially greater.