There is significant regional and small-area variation in cost, quality, and utilization of health care services in the U.S. (AHRQ 2002). Utilization, broadly defined, is the usage of available health care services that include treatments, diagnostic tests, and surgeries. Clinical leaders must be able to distinguish between warranted and unwarranted variation in cost, quality, and utilization, as well as develop plans to address variation appropriately. This chapter provides an overview of the causes and scope of variation within the hospital setting and provides direction on how to measure and manage variation.