A city of 100,000 persons will have only several hundred patients with a specific disease, and these could easily be dispersed across numerous physicians, even with a tightly concentrated referral system. This scenario provides one basis for understanding how variations arise and persist. Indeed, if the null hypothesis is that the new treatment is better than the old, then small samples have very little power to reject that hypothesis unless treatment differences are very large. Such local testing is usually in the hands of one or two doctors who learn of a new therapy. Once having adopted a therapy, a community may well persist in using it.
Legal incentives serve to reinforce existing practice patterns.
Most notably, medical malpractice law commonly uses standards of negligence that virtually require physicians to conform to local standards. Such small-sample inference is common. The other alternative is a formal randomized trial, organized across many sites and years. Studies of the diffusion of technological innovations shed light on how the situation in medical care differs from that in other markets. An important difference is that with most technological innovations, the superior strategy eventually overtakes the market.