The Cost Conundrum

As the debate about health care reform moves into its decisive and most contentious phase, Atul Gawande has once again joined the fray in the June 1st issue of The New Yorker. In this article he reports on the costs of medical care in McAllen, Texas, an obscure town on the south-west border of the state that claims to be the Square Dance Capital of the World. Why McAllen?

According to Gawande, McAllen is one of the most expensive health-care markets in the country. He says in 2006 Medicare spent fifteen thousand dollars per enrollee there, almost twice the national average. Gawande wants to know why. Step by step he considers each of the likely reasons.

He notes that the people who live in McAllen are not healthy and with its high poverty rate “has an incidence of heavy drinking, sixty percent higher than the national average. And the Tex-Mex diet has contributed to a thirty-eight percent obesity rate.”

Still he says that the incidence of cardiovascular disease there is actually lower than the national average and that the health statistics in nearby El Paso County are “just as bad as in McAllen, yet Medicare expenditures were half as much as in McAllen, so an unhealthy population couldn’t be the reason that McAllen’s health care costs are so high.”

Further, after visiting most of the hospitals in the area, Gawande concludes there’s no evidence the treatments and technology in McAllen are superior (and therefore more costly) than those found at some of the best medical centers in the country, e.g., Harvard, Stanford and the Mayo Clinic.

So the service is no better, physician malpractice insurance isn’t any higher, and McAllen is no more litigious than anywhere else in the country. A surgeon finally confessed, “We all know…There is overutilization here, pure and simple. Doctors, he said, were racking up charges with extra tests, services and procedures.”

Gawande writes, “Compared with patients in El Paso and nationwide, patients in McAllen got more of pretty much everything—more diagnostic testing, more hospital treatment, more surgery, more home care…critically ill Medicare patients received almost fifty percent more specialist visits in McAllen than in El Paso…twenty percent more abdominal ultrasounds, thirty percent more bone density studies, sixty per cent more stress tests with echocardiography…The primary cause of McAllen’s extreme was, very simply, the across-the-board overuse of medicine.”

In spite of this, the patients in such high spending areas do “no better than other patients, whether this is measured in terms of survival, their ability to function, or satisfaction with the care they received. If anything they seemed to do worse.” They simply do not get what they need, such as low cost preventive services, flu and pneumonia vaccines, etc.

In addition to over utilization of costly medical technology, the physicians in this area of the country have come to view their practice as primarily a business, as a revenue stream. Gawande writes, “They instruct their secretary to have patients who call with follow-up questions to schedule an appointment, because insurers don’t pay for phone calls, only office visits. They consider providing Botox injections for cash. They take a Doppler ultrasound course, buy a machine, and start doing their patient’s scans themselves, so that the insurance payments go to them rather than to the hospital. They figure out ways to increase their high-margin work and decrease their low-margin work.”

Taken together with the over-utilization of medical services, the medicine-as-business mindset has led to the extraordinary per person cost of medical care in this community, while at the same time, doing little if anything to improve patient health.

To get a handle on these costs, Gawande urges the expansion of “accountable care organizations in which doctors collaborate to increase prevention and the quality of care while discouraging overtreatment, undertreatment, and sheer profiteering.”

The President has said that the biggest threat to our nation’s economic future is the “skyrocketing” cost of medical services. Gawande makes it abundantly clear that we can avoid this threat by delivering better health care, avoiding unnecessary medical tests, and taking measures to blunt excessive financial incentives. Doing all this is likely to reduce significantly the “skyrocketing” costs of medical services in this country without negatively affecting the quality of patient care.