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The Cost Conundrum: What a Texas town can teach us about health care

Posted Aug 13 2009 8:02pm
Atul Gawande is a marvelous writer, as well as a surgeon. In an article in today's New Yorker, Gawande proves himself to be in the first rank of health care pundits, as well. His extraordinary article is a joy to read, but also extremely important. For example, it identifies and explores the reasons a negative correlation between healthcare costs and quality of care exists.
"Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s quality ranking tended to be. In fact, the four states with the highest levels of spending—Louisiana, Texas, California, and Florida—were near the bottom of the national rankings on the quality of patient care."
Gawande travelled to McAllen, Texas, to investigate why per capita healthcare costs (paid by medicare) were higher there than almost anywhere else in the country. Many theories that might explain this were examined, but eventually had to be rejected. Finally, it became clear that in McAllen, many of the doctors had learned how to game the system for maximal financial benefit. The medical culture had evolved to one in which "financial considerations drove the decisions doctors made for patients."

McAllen's patients got an overabundance of illness care. However, preventive care was lacking, and people were no healthier than in markets where health care costs were 50% less. "So here, along the banks of the Rio Grande, in the Square Dance Capital of the World, a medical community came to treat patients the way subprime-mortgage lenders treated home buyers: as profit centers."

Things were McAllen's mirror image at the Mayo Clinic in Rochester, Minnesota. "Among the things that stand out from that visit was how much time the doctors spent with patients," Atul noted. Yet costs were among the nation's lowest at Mayo. Mayo doctors were salaried, and primarily focused on improving the quality of care.

“When doctors put their heads together in a room, when they share expertise, you get more thinking and less testing,” Denis Cortese, Mayo's CEO, told Atul.

Colorado had an interesting model. "Grand Junction’s medical community was not following anyone else’s recipe. But, like Mayo, it created what Elliott Fisher, of Dartmouth, calls an accountable-care organization. The leading doctors and the hospital system adopted measures to blunt harmful financial incentives, and they took collective responsibility for improving the sum total of patient care."

"When you look across the spectrum from Grand Junction to McAllen—and the almost threefold difference in the costs of care—you come to realize that we are witnessing a battle for the soul of American medicine."

Gawande questions whether the doctor--any doctor-- "is set up to meet the needs of the patient, first and foremost, or to maximize revenue. There is no insurance system that will make the two aims match perfectly. But having a system that does so much to misalign them has proved disastrous.. . Every incentive in the system is an invitation to go the way McAllen has gone."

Gawande concludes, "As America struggles to extend health-care coverage while curbing health-care costs, we face a decision that is more important than whether we have a public-insurance option, more important than whether we will have a single-payer system in the long run or a mixture of public and private insurance, as we do now. The decision is whether we are going to reward the leaders who are trying to build a new generation of Mayos and Grand Junctions. If we don’t, McAllen won’t be an outlier. It will be our future."
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