Aging population is one of the major concerns in both the U.S. and Japan. The aging population is a result of increase in life expectancy, and therefore, it can be deemed as a success in public health policy – higher quality of healthcare, improved nutrition, and safer environment. However, an unintended and problematic consequence is the rapidly rising health expenditure associated with the aging population. In fact, no country in the world has succeeded in effectively containing healthcare cost without compromising the quality of care, and the financial sustainability of health system is a major challenge in almost all developed countries. In this context, few would disagree that both the U.S. and Japanese health system require a major reform to achieve the same or better outcomes at a lower cost. Understanding the variation in healthcare spending is essential to design a policy that can effectively contain healthcare spending. Although variabilities in spending between regions and hospitals have been extensively studied, decisions on spending are ultimately made by front-line clinicians (through discussions with patients). However, the degree to which physicians' spending patterns vary and the implications of these variations on patient outcomes are not well understood. Therefore, I propose a mixed-method research – a combination of quantitative and qualitative research – to answer a set of research questions. In the proposed research, I will (1) investigate how practice variability between physicians impacts the variation in healthcare spending, (2) determine how between-physician variability in healthcare spending affects the outcomes of their patients, and (3) analyze the upstream determinants of physician spending patterns using semi-structured interviews of physicians both in the U.S. and in Japan. Taken together, these projects will have important policy implications not only for understanding the causes of between-physician variation in spending and its relationship with patient outcomes, but also for designing policy interventions which reduce healthcare spending without compromising the quality of care patients receive. This project is highly policy relevant and contemporary because both the U.S. and Japanese governments are currently considering policy interventions designed to contain health expenditure. The U.S. government has introduced the pay-for-performance system called the Hospital Value Based Purchasing Program (HVBP) in 2011, rewarding hospitals based on their performance rather than on the volume of care. Japan is currently considering to set a target health expenditure level for each prefecture to reduce a wide variation in health spending across prefectures. The challenge for both nations are that these policies may not be able to effectively control costs or have unintended consequences such as deteriorating patient outcomes. This research project is also comparable and transnational as I will analyze both the U.S. and Japanese data and assess if the relationship between physician spending and patient outcomes, or the upstream determinants of physicians' high-spending practice patterns, differ between two countries. The proposed project matches well with the Abe Fellowship's mission – to encourage international multidisciplinary research on topics of pressing global concern.