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A recent article in The New Yorker is a must-read for anyone interested in health reform.
Surgeon-author Atul Gawande explores the reason why McAllen, Texas – a small border town near El Paso – is one of the most expensive health-care markets in the country. At the same time, Rochester, Minn., home of the world-renowned Mayo Clinic, is one of the least expensive.
Using annual reports of Medicare expenditures, the best measure of spending patterns, Gawande said per-capita spending in the McAllen area ranks second only to Miami, where labor and living costs are much higher. In 2006, Medicare spent about $15,000 per enrollee in the McAllen area, almost twice as much as the national average.
Meanwhile, in Rochester, Medicare spent $6,688 per enrollee. That's in the lowest 15 percent in the country and about $8,000 less per person than in McAllen.
You might think McAllen residents were healthier because of all that spending. But Gawande quoted statistics showing they're no more healthy than residents in the El Paso area, where Medicare spent about half as much.
In fact, Gawande quoted a Dartmouth College study which found that the four states with the highest levels of Medicare spending – Louisiana, Texas, California and Florida – were near the bottom of national rankings on the quality of patient care.
“Physicians in places like McAllen behave differently from others,” Gawande wrote. “The…question is why. Unless we figure it out, health reform will fail.”
Gawande also cited Durham, home of the respected Duke University Medical Center, as one of the low-cost markets. In 2006, Medicare spent $7,202 per patient in the Durham market, less than half the amount spent in McAllen.
All N.C. and S.C. markets compare favorably. For example, Medicare spent $7,742 per enrollee in Charlotte, $8,051 in Raleigh, and $7,427 in Columbia in 2006.
Gawande concluded the primary cause of McAllen's extreme costs was “across-the-board overuse of medical care.” He blames a health-care system in which doctors have financial incentives to prescribe more and expensive treatments instead of collaborating to achieve the best outcomes for patients.
Doctors in McAllen, Gawande found, have an “entrepreneurial spirit” that goes beyond that in other parts of the country. Many own imaging and surgery centers that increase their revenues from patient care.
By contrast, Mayo years ago eliminated financial incentives for doctors by paying them salaries. Doctors are encouraged to collaborate – “more thinking and less testing.” The result has been lower costs.
“Most Americans would be delighted to have the quality of care found in places like Rochester…or Durham…,” Gawande wrote.
Oddly, this is encouraging because it offers a way to control costs without rationing care, Gawande wrote.
President Obama's budget director, Peter Orszag, has been quoting Gawande's article and is also quoted in it: “Nearly 30 percent of Medicare's costs could be saved without negatively affecting health outcomes if spending in high- and medium-cost areas could be reduced to the level in low-cost areas.”
Much of the current debate in Congress is over whether to have a “public option” – tax-payer financed insurance – in addition to private insurance.
But Gawande says changing who pays the doctor won't make medical care better or cheaper. He argues that unless we change incentives for doctors, we'll never control costs.
“The lesson of high-quality, low-cost communities is that someone has to be accountable for the totality of care,” Gawande wrote. “Otherwise you get a system that has no brakes. You get McAllen.”
