“Any plan that relies on the sheep to negotiate
with the wolves is doomed to failure.”
— "The Cost Conundrum: What a Texas town can teach us about health care," The New Yorker
We know health care cost growth must be contained. It's hampering our competitiveness, bankrupting families and hamstringing state and federal budgets. But any hope for a systems solution gets tangled in the political struggle that pits free marketry against creeping socialism in every area of community life.
But what if the free market chose something that looked more like "socialized medicine" — and it worked?
That's one intriguing possibility found in surgeon Atul Gawande's New Yorker article, which looks at
high-cost and low-cost health care systems around the country. In light of the evidence, none of the leading
theories about why costs grow out of control account for dramatic health care cost and quality differences among otherwise similar communities.
Looking at McAllen, Texas, one of the most costly healthcare markets in the nation, Gawande found that "the primary cause of McAllen’s extreme costs was, very simply, the across-the-board overuse of medicine." What's more, overutilization was not producing better outcomes there or elsewhere.
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.
[...]
In an odd way, this news is reassuring. Universal coverage won’t be
feasible unless we can control costs. Policymakers have worried that
doing so would require rationing, which the public would never go along
with. So the idea that there’s plenty of fat in the system is proving
deeply attractive. “Nearly thirty per cent 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,”
Peter Orszag, the President’s budget director, has stated.
But what, exactly, accounts for the fat?
Gawande looks at, but finds little evidence to indict, the usual suspects: Government, consumers with little skin in the game, greedy hospitals and insurance companies, unhealthy habits and skewed provider incentives. Instead, he points to a culture shift in the culture of medical practice that mirrors a change in society.
A focus on money, not healthy communities.
The article suggests that physicians are not equipped — with training or data — to focus on the financial considerations of their decisions, while the business orientation of hospitals and insurance companies requires them to focus on
whether they are losing money or making money. They
know that if their doctors bring in enough business—surgery, imaging,
home-nursing referrals—they make money; and if they get the doctors to
bring in more, they make more. But they have only the vaguest notion of
whether the doctors are making their communities as healthy as they
can, or whether they are more or less efficient than their counterparts
elsewhere.
According to Gawande, Stanford sociologist Woody Powell — studying why certain regions became leaders in biotechnology while similar centers did not — has formulated a theory of economic development which holds that "anchor
tenants" define
the character of an economic community, just as anchor tenants in a mall do. By setting certain collaborative community norms, anchor tenants encouraged successful
communities, while those aiming to dominate did not.
Powell suspects that anchor tenants play a similarly powerful community
role in other areas of economics, too, and health care may be no
exception.
About fifteen years ago, it seems, something began to change in
McAllen. A few leaders of local institutions took profit growth to be a
legitimate ethic in the practice of medicine. Not all the doctors
accepted this. But they failed to discourage those who did. 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.
The difference between McAllen and Grand Junction, Colorado, one of the nation's
lowest-cost markets with some of the highest quality-of-care scores,
may be the difference between a culture focused on money versus one
focused on a healthy community.
[Y]ears ago the doctors agreed among themselves to a system that paid
them a similar fee whether they saw Medicare, Medicaid, or
private-insurance patients, so that there would be little incentive to
cherry-pick patients. They also agreed, at the behest of the main
health plan in town, an H.M.O., to meet regularly on small peer-review
committees to go over their patient charts together. They focussed on
rooting out problems like poor prevention practices, unnecessary back
operations, and unusual hospital-complication rates. Problems went
down. Quality went up. Then, in 2004, the doctors’ group and the local
H.M.O. jointly created a regional information network—a community-wide
electronic-record system that shared office notes, test results, and
hospital data for patients across the area. Again, problems went down.
Quality went up. And costs ended up lower than just about anywhere else
in the United States.
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.
It almost sounds like socialism, except Grand Junction is politically a very conservative community. Go figure.
— Charlie Quimby