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

[Mayberry Machiavelli]

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande?currentPage=1


Annals of Medicine
The Cost Conundrum
What a Texas town can teach us about health care.
by Atul Gawande June 1, 2009


It is spring in McAllen, Texas. The morning sun is warm. The streets are lined with palm trees and pickup trucks. McAllen is in Hidalgo County, which has the lowest household income in the country, but it’s a border town, and a thriving foreign-trade zone has kept the unemployment rate below ten per cent. McAllen calls itself the Square Dance Capital of the World. “Lonesome Dove” was set around here.

McAllen has another distinction, too: it is one of the most expensive health-care markets in the country. Only Miami—which has much higher labor and living costs—spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.

The explosive trend in American medical costs seems to have occurred here in an especially intense form. Our country’s health care is by far the most expensive in the world. In Washington, the aim of health-care reform is not just to extend medical coverage to everybody but also to bring costs under control. Spending on doctors, hospitals, drugs, and the like now consumes more than one of every six dollars we earn. The financial burden has damaged the global competitiveness of American businesses and bankrupted millions of families, even those with insurance. It’s also devouring our government. “The greatest threat to America’s fiscal health is not Social Security,” President Barack Obama said in a March speech at the White House. “It’s not the investments that we’ve made to rescue our economy during this crisis. By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost of health care. It’s not even close.”

The question we’re now frantically grappling with is how this came to be, and what can be done about it. McAllen, Texas, the most expensive town in the most expensive country for health care in the world, seemed a good place to look for some answers.

Much more at the link, a detailed and lengthy article well worthy of reading discussing and comparing areas in the country where profit motive or quality of care dominate medical culture.

[eridani]

1. There was an unfortunate omission in the article

--namely some indication of how many hospitals in McAllen vs how many in El Paso. Solid research indicates that the higher the number of hospitals per capita, the higher the costs. That's because more hospitals is like a town having a bunch of competing fire departments. Equipmant in duplicate or triplicate drives prices up because people aren't going to have more heart attacks or more fires. (All bets are off in the case of a for-profit fire department, though.)

[Aragorn]

3. correct! K&R please

And well-written. However, the # of hospitals is indirectly addressed in the article, and bear in mind that doctor and hospital fees are set by Medicare/Medicaid. If in fact profit is the issue, only an increase in patient encounters will do the trick.

I practice cost-effective medicine, and half my patients are uninsured. Some of the other docs in the area really resent it. Apparently I am blowing the curve on profit - which is of course part of my motivation. (I was poor a long time, as were my parents and their parents etc.)

Patients almost always agree with this approach and taking the time to do it right is more "time-effective" in the long run anyway. Believe me, there is no shortage of sick people - just a relative shortage of wealthy and/or well-insured sick people.

The "over-use" of tests etc is a hard call. Most doctors do NOT have any increased income from that practice, and in general it is forbidden by Medicare et al. Perhaps I am naive, and there are secret kickbacks going on all around me - but no one has ever approached me about it and I have had a high-volume practice most years. I have had offers to sign off on care, to get reimbursement for a hospital's specialty program, which I reported and which was investigated - but not prosecuted as it was a "low priority" per FBI.

A related cause is the number of doctors employed by hospitals - which is against the medical practice act in this state, but routinely ignored. This does lead to pressure on the employee (doctor) to increase revenue for the employer (hospital system).

As a doctor AND a taxpayer, the idea of "making more money" from tax-funded programs like Medicare and Medicaid is ridiculous. But those programs (and others) often have policies which worsen the problem, whatever the original intent. The private insurers do a poor job too, and aggravate it more by denying payment after the work is done. No matter what was "authorized" prior to the work BEING done.

Also Medicare in particular does not know how to use its own statistics. I once got a letter warning me I was coding for a particular level of new patient evaluation more than other docs in my specialty - which ACTUALLY showed that on average I was coding lower, therefore charging less, than other docs in my specialty! Another time, due to intentionally coding lower in a particular area, there was incorrectly analyzed statistical "evidence" that I was "over-coding" -because the lower charges were not analyzed as part of the group of codes some company got paid to analyze for Medicare.

However, this article addresses actual cost per capita, and as such I think it is reliable and valid.

BTW I am open to nomination for any national position such as surgeon general, etc, if you are listening Mr O.

[eilen]

4. I work for a home nursing company

and fully 50% of our patients are medicaid and about 50% medicare give or take a percent for private insurance. Private insurance does not really provide coverage for home nursing-- they might for about 2 visits or so but not much.

What we specialize in is management of chronic disease such as diabetes, CHF, COPD, and chronic wounds. There are a few post-op orthopedic and transplant patients and we have a pediatric team as well.

Anyway, our goal is to keep the patient out of the hospital. We do a pretty good job of that however, our stats are always skewed by our long term-- nursing home without walls program. This is frustrating because as you know, in long term care, people are not likely or even expected to progress. We offer supportive care to those who are in their declining years, enabling them to remain at home. We also care for a higher percentage of Medicaid than any other home care agency as part of our mission is to serve the underserved.

Sometimes it is difficult to work with certain physicians -- I wonder if it comes to a level of trust, but it stinks when I have to send a patient to the hospital when a week earlier, I had called her primary and they did not see fit to get her in. I know the hospitals have nothing to gain from keeping patients out of the hospital as admissions drive income, however they certainly utilize us to empty their beds, often too early; their hospitalist's standards for safe discharge keep getting lower and lower. Our theory is they want to discharge before a pressure sore has the possibility of occurring. Whatever it is, our admissions are more and more acute and discharged with little support.

[Mayberry Machiavelli]

8. It's not just the duplication of administration. More doctors serves to drive more demand for

elective services like back surgeries. This has been well established over the years, it's not just that there is some latent, "true" demand for back surgery that is met when there are sufficient surgeons. If you add more surgeons, they will eventually drive demand in various ways for their services.

[WolverineDG]

2. Also missing is an important demographic

I know the author was trying slant his article to make McAllen fit his "Lonesome Dove" hicksville (which was really set in Laredo, but hey, don't let facts stop ya), but for 6 months out of the year, McAllen (& surrounds) are flooded with retired snowdiggers from the Midwest. The population of the McAllen/RGV area is also higher than El Paso as well. That might account more for the difference in Medicare costs....


dg

[pnutbutr]

5. Shouldn't make a difference but

80% of the population in McAllen is Hispanic/Latino.

Also, the median household income in McAllen according to the 2007 census is $38k.

[WolverineDG]

6. Trust me, it does

It seems like the entire midwest empties out of old folks & most of them head to McAllen for the winter.

Also, the writer is discussing MediCARE, not MediCAID, which only those 65 & older can get.

dg

[Mayberry Machiavelli]

7. Actually the high prevalence of Medicare in McAllen is incidental to the central thesis.

It's that fee for service medicine (and Medicare and Medicaid reimburse fee for service too, just at a lower rate than private insurance) provides an incentive for doctors (particularly when they are allowed to be owner/investors in their own hospitals and facilities as in Texas and profit from facility fees, tests etc. in addition to billing for services) to do as many visits, procedures and surgeries as possible, especially if there's any "grey area" at all about whether this in fact represents best practice, the tendency will be to err on the side that profits you, whether this is subconscious or due to naked greed.

I see this same pattern of behavior in areas that are a lot more affluent with a lot lower prevalence of Medicare and Medicaid than McAllen. If anything, the forces are even stronger because there's a lot more money involved.

There is some discussion of why this hasn't happened everywhere, but why it could, under our current system of reimbursement.