The second task of the consulting firm was to analyze the PHO phy- sicians' current practice patterns. It is clear that utilization, and hence cost, is driven by the PHO's physicians and that variation in practice patterns is costly to the PHO. Results of the analysis show significant variation in practice patterns, both in the physicians' offices and in the hospital. For example, Exhibit 32.2 contains summary data on hospital costs by physician for three common diagnosis-related groups (DRGs). Consider DRG [27 (heart failure). The physician with the lowest hospi- al costs averaged $4,271 in costs per patient, the highest-cost physician averaged $7,394, and the average cost for all physicians was $5,319. The consulting firm commented that it is important to reduce this variation because the PHO is at full risk for patient utilization