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Disparities in Regional Health Care Costs

In 2009, during the “Obamacare” debate that was dominating the news, Atul Gawande wrote an article in the New Yorker that was widely praised and cited, including by president Obama himself. The article is a thought-provoking discussion of why some communities in the US have much higher health care costs than other regions. I took two main conclusions from the article.

The first is the success of the Mayo model – organizing care as a team approach. The idea here is to pool optimal expertise in the care of each patient. Greater expertise leads to “more thinking and less testing,” as Gawande puts it. I agree with this. It takes expertise to be comfortable not doing a test. Often testing is ordered because a physician does not feel secure in their diagnostic assessment.

The second main conclusion was the McAllen model, a town in Texas that has double the average Medicare costs per capita in the country. Gawande concluded that these increased costs are likely due to the culture of medical practice in the region, leading to greater unnecessary care and procedures. He wrote:

The Medicare payment data provided the most detail. Between 2001 and 2005, critically ill Medicare patients received almost fifty per cent more specialist visits in McAllen than in El Paso, and were two-thirds more likely to see ten or more specialists in a six-month period. In 2005 and 2006, patients in McAllen received twenty per cent more abdominal ultrasounds, thirty per cent more bone-density studies, sixty per cent more stress tests with echocardiography, two hundred per cent more nerve-conduction studies to diagnose carpal-tunnel syndrome, and five hundred and fifty per cent more urine-flow studies to diagnose prostate troubles. They received one-fifth to two-thirds more gallbladder operations, knee replacements, breast biopsies, and bladder scopes. They also received two to three times as many pacemakers, implantable defibrillators, cardiac-bypass operations, carotid endarterectomies, and coronary-artery stents. And Medicare paid for five times as many home-nurse visits. The primary cause of McAllen’s extreme costs was, very simply, the across-the-board overuse of medicine.

Is that, however, a necessary conclusion from that data? The data support the conclusion that McAllen (the highest cost region) uses many more medical procedures than El Paso (the lowest cost region), but does that necessarily equate to “overuse” of medicine? Evidence does not support the conclusion that the population in McAllen is sicker than El Paso, but it is also possible that El Paso simply underdelivers care.

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Posted in: Politics and Regulation, Public Health

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