11 June 2009 • 6:22 pm

Required Reading in the White House

The New York Times reported this week that a recent New Yorker article on health care spending has become required reading in the White House, and that President Obama referred to the article in a briefing on health care reform with Democratic senators. The article, which is a lengthy but very worthwhile read, was written by Atul Gawande, who is both a staff writer for the New Yorker and general and endocrine surgeon at Brigham and Women’s Hospital in Boston. Along with President Obama, I recommend this article to anyone interested in the likely changes to U.S. health care policy that is on the political horizon.

Gawande’s article follows his curiosity and research into regional disparities in health care spending; why some places spend far more (per Medicare enrollee, an approximation of overall spending) than others, without significant differences in overall public health or patient outcomes. His research focused on the town of McAllen, Texas, “the most expensive town in the most expensive country for health care in the world,” where annual Medicare spending per enrollee (in 2006) was around $15,000, almost twice the national average.

Any attempt to summarize the article here risks injustice to Gawande’s excellent research, analysis, and writing, but here are a few key points to know if you’re unable to read the article:

  • Demographics don’t explain regional disparities. McAllen is similar to El Paso County, Texas in terms of public health, and both health care markets have lower rates of smoking and heart disease than the national average. But El Paso’s annual per enrollee Medicare spending was $7,504, about half that in McAllen.
  • The quality of treatment offered, and the quality of care received is no better(and sometimes worse) in McAllen than in other, lower cost health care markets.
  • Malpractice is not a factor. Overutilization of service explains the difference in costs. Compared with patients in El Paso and nationwide, patients in McAllen got more of pretty much everything-more diagnostic testing, more hospital treatment, more surgery, and more home care.
  • If national health care costs were brought down to the level of such areas as Rochester, Minnesota, or Seattle, Washington, or Durham, North Carolina (where costs are below the national average and quality measures are high), Gawande says, “Medicare’s problems (indeed, almost all the federal government’s budget problems for the next fifty years) would be solved.”
  • Health-care costs ultimately arise from the accumulation of the decisions doctors make about which services and treatments to order. Some doctors think about money in terms of covering their costs, and that’s about it. Some think about money as a way to improve patient care; that money can be used to hire additional staff, employ new technologies, or offer expanded hours. And some doctors think about money as a revenue stream to be maximized. McAllen seems to be a community with a greater share of doctors with this third view.

Aside from the highly-charged political implications of Gawande’s article (which is certain to be disputed by some stakeholders in the debate), looms a larger question: how can change be driven not just in a single organization, but across an entire sector of the economy?

As we watch the political and policy debate unfold over the next several months (some of us are old enough to remember the failed reform efforts in 1992-1993), we’ll see a macrocosm of the challenge of change in a single organization. Stakeholders will defend their interests, and agents of change will seek to overcome those resisting change. Well-meaning and self-interested parties will offer a variety of alternatives that won’t easily be reconciled. Commentators will identify “winners” and “losers” in the debate.

At 17% of its GDP, the U.S. has by far the highest costs for health care in the world, compared with 12% for the next most costly nation. High cost doesn’t buy high quality; U.S. outcomes are lower than elsewhere, with many un- and under-insured persons having little access to lower cost preventive care. Change won’t be easy or pretty, but it will be necessary. As agents of organizational change, we will have much to learn and apply from close observation of this change process. I look forward to your comments and debate in this space.

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