In a lengthy article in the New Yorker earlier this month, Dr. Atul Gawande pondered a single, simple health care question.
Why, he wondered, is McAllen, Texas, 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,” Gawande wrote. “In 2006, Medicare spent $15,000 dollars per enrollee here, almost twice the national average.”
The people of McAllen are both poor and unhealthy, compared to American norms. Hidalgo County, where McAllen is located, has the lowest household income in the country. The obesity rate, at more than 38 percent, is greater than that of Mississippi.
But those sad statistics have little to do with the comparative cost of health care in McAllen.
El Paso, Texas, with virtually identical population demographics, spent $7,503 per Medicare recipient during 2006 — half as much as McAllen.
Gawande concluded that, during our fierce national debate about health care reform, we’re asking the wrong questions, examining the wrong problems and ignoring the root cause of medical price inflation.
Costs have skyrocketed in McAllen, Gawande said, because medical professionals, whether hospital administrators, doctors, home health care providers or specialized group practices, have come to see themselves as primarily entrepreneurs, chasing dollars rather than providing care.
“We pay doctors for quantity, not quality,” Gawande said. “The question we have to ask is whether the doctor is set up to meet the needs of the patient, first and foremost, or to maximize revenue.
“Providing health care is like building a house. The task requires experts, expensive equipment and materials, and a huge amount of coordination. Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet and a carpenter for every cabinet. Would you be surprised if you got a house with a thousand outlets, faucets and cabinets at three times the cost you expected, and the whole thing fell apart a couple of years later? Getting the country’s best electrician on the job (he trained at Harvard, somebody tells you) isn’t going to solve this problem. Nor will changing the person who writes him the check.”
In McAllen, medical professionals compete fiercely for patients and the revenue that they bring. Doctors demand (and apparently often get) hundreds of thousands of dollars in kickbacks for admitting patients to particular hospitals. Physicians order far more tests and procedures than do their peers in other markets.
In Grand Junction and at the Mayo Clinic, cooperative models which emphasize patient well-being rather than system cash flow have succeeded in delivering better care at substantially lower cost.
It’s interesting to compare the present state of health care to the fire insurance business during 17th century England.
Early fire insurance companies used “fire marks” to identify properties they insured because each insurance company had its own fire brigade. These private firefighters only fought fires on properties identified by their employers’ mark.
Perhaps responding to the deficiencies of the English system, American volunteer firefighting companies were created before there were any native insurance companies. The first such company was created by Benjamin Franklin during 1736, as was the first fire insurance company shortly thereafter.
As American cities grew, municipally funded fire departments came into existence. Catastrophic fires in many cities had bankrupted insurers and it was clear that firefighting ought to be a broadly cooperative and sustainable venture.
It was — and is — the job of government to create an environment where structures would be reasonably safe from fire. Property owners and insurers alike find it in their interests to work harmoniously and cooperatively, supporting better fire departments, advanced building codes and other measures to create safer communities.
Is something like this the best model for future health care in America? Maybe so, but in Colorado Springs we seem to be stalled in 17th century England.
Consider this: we have two major health care systems, both of which have constructed hospitals in northeast Colorado Springs — because that’s where the paying patients are. In a more cooperative model, such an outcome would have been as likely as having Colorado Springs and El Paso County build competing fire stations.
And, as the New England Journal of Medicine noted earlier this year, cooperative models that might reduce Medicare costs are a very big deal indeed.
“Small changes in annual per capita growth rates have enormous implications for the long-term solvency of Medicare and the sustainability of expanded insurance coverage. … We estimate that Medicare will be $660 billion in the hole by 2023. Reducing annual growth in per capita spending from 3.5 percent (the national average) to 2.4 percent (the rate in San Francisco) would leave Medicare with a healthy estimated balance of $758 billion, a cumulative savings of $1.42 trillion.”
A trillion here, a trillion and a half there — pretty soon, you’re talking real money …
John Hazlehurst can be reached at John.Hazlehurst@csbj.com or 227-5861.