Required Reading

I think I’d be kicked out of the blogger’s union if I didn’t comment on Dr. Atul Gawande’s article in the June 1, 2009, issue of the New Yorker. Commentary on it is all over the blogosphere. Then yesterday, the New York Times, on its front page, reported that President Obama “summoned aides to the Oval Office to discuss [the article.]”

“He came into the meeting with that article having affected his thinking dramatically,” said Senator Ron Wyden, Democrat of Oregon. “He, in effect, took that article and put it in front of a big group of senators and said, ‘This is what we’ve got to fix.’ ”

So I guess that makes it required reading.

As not to insult your ability to read, briefly, the story tells the tale of McAllen, Texas (MSA total population just over 700,00+) and how it is the second most “expensive” Medicare market in the country. Nationwide, Medicare spends twice the national average – roughly $15,000 – per enrollee here per year. Only Miami, with significantly higher labor and living costs, is more expensive. Worse, in 1992 in the McAllen market, the average cost per Medicare enrollee was $4,891, almost exactly the national average. “But since then, year after year, McAllen’s health costs have grown faster than any other market in the country, ultimately soaring by more than ten thousand dollars per person.”

Interesting side note, the average income per capita in McAllen is right around $12,000 per year…so on an “average” senior, Medicare pays out $3,000 more than that person earns in a year.

A fun exchange in the article comes when Dr. Gawande sits down to dinner with six McAllen doctors. “All bread-and-butter physicians: busy, full-time private-practice doctors who work from seven in the morning to seven at night and sometimes later…” of different specialties. Their explanations run the gamut: “Maybe the service is better here,” says one while an FP says, “It’s malpractice [insurance expense].” A cardiologist agreed, saying McAllen was “legal hell,” before ultimately admitting that since Texas passed tough malpractice laws that limited pain and suffering payouts to $250,000 lawsuits have gown down, “practically to zero.”

“’Come on,’ the general surgeon finally said. ‘We all know these arguments are bulls---. There is overutilization here, pure and simple…the way to practice medicine has changed completely. Before it was about how to do a good job. Now it is about, how much will you benefit?”

Dr. Gawande digs further and proves, in fact, patients in McAllen get more of just about everything – more diagnostic testing, more hospital treatment, more surgery, more home care – than patient nationwide.

Read the article for yourself. You’ll be amazed.

But that’s not the point of today. Yesterday’s NYT article is. It contained some scary stuff. I am going to quote at length here, sorry…

“As part of the larger effort to overhaul health care, lawmakers are trying to address the problem that intrigues Mr. Obama so much — the huge geographic variations in Medicare spending per beneficiary. Two decades of research suggests that the higher spending does not produce better results for patients but may be evidence of inefficiency.”

“Members of Congress are seriously considering proposals to rein in the growth of health spending by taking tens of billions of dollars of Medicare money away from doctors and hospitals in high-cost areas and using it to help cover the uninsured or treat patients in lower-cost regions.”

“The Senate Finance Committee recently suggested that one way to pay for health care overhaul would be to reduce geographic variations by cutting or capping Medicare payments in “areas where per-beneficiary spending is above a certain threshold, compared with the national average.”

“Another proposal would spare health care providers in low-spending, efficient areas from across-the-board cuts in Medicare payments.”

“Dr. Langberg [a senior vice president at Cedars-Sinai Medical Center in Los Angeles] endorsed the goal of covering the uninsured, but said, “We do not believe that rushing to make large cuts in Medicare payments to hospitals is the right way to fund that coverage.”

The reason this got my cackles up was fear of what I see as a tremendously flawed premise. The logic chain goes something like this: 1. Universal coverage is a must [not necessarily], 2. This will be expensive for a variety reasons – a public plan, increased utilization etc. [very true but again, based on a shaky foundational assumption], 3. Providers are paid too much, let’s move cash from care to coverage and overhead [there’s certainly merit to attacking overuse and duplication but that will only go so far, and do any providers think they are paid too much?], 4. That’s not going to be enough money, we’re going to need more and since employer sponsored benefits are sacrosanct [not true] we’ll have to tax those too.

Today I will begin to read the legislative analysis of the 615-page bill that came out of the Senate Health, Education, Labor and Pensions Committee yesterday, but early reports lead me to expect the worst.

So where is all this going? On Monday I posted about hospital CEO’s in a real American town and their differing views on the right strategy for the future. Late last week I sat in on some consumer focus groups to hear them talk about and react to statements about hospital quality. A fascinating study. By and large people know two things: Cleanliness and “reputation,” which, when pressed they can’t elaborate, clarify or define.

I’m confounded because I see all three of these points as deeply, importantly connected. If “reputation” is some nebulous trigonometry of chance, our Big Dog hospital from Monday might be on the right track because better outcomes and lower costs might just not matter to people. But, if some form of payment system reform incentivizes and rewards integration and best practices, maybe, Hospital #2 might be well situated in theory, but if no one goes there, does it really matter? So then that leaves an increasingly larger Federal infrastructure (remember we expanded coverage and costs so now we’re all on the hook for even more) with only one tool to impact both behavior and costs – the hammer of pricing. But now it’s not just pricing on 25%-50% of your business, it could be much more. That makes the hammer bigger and the pain of being hit greater.

God-freaking-dammit Charlie, back up the bus! Go back to the New Yorker article. Think this through. What does the Dartmouth (and others) analysis tell us? It tells us we have a long way to go in best practices implementation and integration before we’re ready pile on a bazillion dollars in new costs! It means we should partner with payers of all stripes to test and trial incentive payment programs to advance best practices and integration. Oh and by the way, it’s going to take hospital/health system innovators a few years to re-engineer the delivery system. It’s hard to redecorate your living room when your kitchen’s on fire.

Ugh.