McAllen, TX As Outlier? Why Not Houston?

McAllen, TX As Outlier? Why Not Houston?

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Or Lubbock? Or Oklahoma City? Or New Orleans? Or any of a dozen major and minor metro areas throughout the South? According to the Medicare Payments Advisory Commission, all of them have significantly higher usage rates and costs per Medicare enrollee than McAllen, which was high-cost locale ground zero for Atul Gawande’s famous New Yorker article, “The Cost Conundrum,” which has become, to use the New York Times‘ formulation, “must reading in the White House.”

Gawande grounded his analysis on per-patient Medicare claims data compiled annually by researchers at Dartmouth Medical School. “The explosive trend in medical costs seems to have occurred here in an especially intense form,” Gawande wrote after the Dartmouth Atlas of Health showed McAllen as the highest spending region in the country outside Miami, where Medicare fraud is an especially virulent problem. Not so, MedPAC said. Adjust for prices and McAllen’s outlier status compared to the rest of Texas and large parts of the South all but disappears.

Don’t believe me? Check out the appendix to the report. Medicare service utilization rates compared to the national average: McAllen – 118%; Houston – 122%; Dallas – 117%. Other areas: Oklahoma City – 120%; New Orleans – 125%; Pascagoula, Gulfport or Biloxi, Miss. – 124%.

In other words, Texas and large parts of the South have a problem — not just McAllen. I’ll return to that in a moment.

Why am I writing about this issue today, since I wrote about it last December when the MedPAC report came out? Gawande will be the featured speaker at the National Governors Association meeting that convenes in Washington tomorrow morning. It appears that the Harvard surgeon has not only become must reading in the White House, but is also something of a rock star on the public policy circuit. If he stays on script, he’ll tell the governors that 30 percent of health care costs could be wrung out of the system if all the McAllens were magically transformed to be more like Iowa and Minnesota, where health care costs average 80 to 85 percent of the national average.

Unfortunately, Gawande still hasn’t publicly recognized the flaws in his presentation, at least according to his reaction yesterday on the New Yorker website, where he responded to a brief New York Times report this week questioning the Darmouth analysis. (Ironically, his spokeswoman passed along a “refused to comment” to Times reporter Gardiner Harris. GoozNews asks with Yiddishkeit inflection: “Reporters have spokeswomen?”)

The Times story was based on a commentary in the New England Journal of Medicine by Peter Bach of Sloan Kettering Memorial Cancer Center (a frequent source for my own writing, I should reveal), who argued adjusting the data for illness severity and outcomes — a measure of quality and efficiency — eliminates most of the differentials, at least at the hospital-provider network level.

A rejoinder by Dartmouth’s Jonathan Skinner, Douglas Staiger and Elliot Fisher rejected that conclusion. They said the cost differentials remain quite large even after quality and illness adjustments. But they do include an admission that regional variation is less significant than some interpreters (i.e. Gawande) claim:

The implication of these results is that excessive health care costs arise at the level of the hospital-provider network. Thus, incentives that are designed to reduce costs should be targeted to specific networks, rather than regions or states.

Now let’s return to what Gawande wrote yesterday in response to the Times, and presumably after reading the dueling commentaries:

The patterns of Medicare spending I found showed that McAllen’s medical community and culture simply did more-more surgery, more imaging, more specialist visits, more home-nursing visits-without clear benefit. . .There remains fierce disagreement about how much of the marked differences in spending between communities is the result of health differences between populations and how much is the result of differences in the care their clinicians provide to them. But it remains clear that there are substantial variations in the cost of care for people of similar health depending on which institutions they go to. . . Even if health reform disappears, these fundamental problems will not. The cost conundrum persists.

Note how he switches horses midstream. He starts by defending his work on regions, and concludes by claiming the problem is individual institutions.

Now back to the South. The most recent Medicare cost data revealed an interesting national phenomenon during this recession. Medicare costs soared while private health expenditures stagnated. As I wrote at the time, the most logical explanation for this trend is that local medical institutions made up for charity care given the newly unemployed and uninsured by soaking their best-paying customers: those on public programs like Medicare and Medicaid.

We’re seeing the same thing happen in the individual insurance market, where soaring rates are making headlines. In economically hard-hit California, Detroit and other troubled labor markets, the insurance companies are blaming rising rates on the declining number of workers buying policies. There’s less healthy people paying for the care of those who get sick.

But this is a phenomenon that doesn’t necessarily depend on recessionary levels of unemployment. The South, where there’s no legacy of unionization, decent wages or decent benefits, has the lowest rates of insurance coverage in the nation, with Texas the worst state in that regard. Less than three-quarters of its population has health insurance.

The Dartmouth Atlas of Health looks only at Medicare claims. Isn’t it possible that the huge outlier status for most Texas cities is, in effect, a major cost shifting from the uninsured, who still show up on institutions’ doorsteps for care, to Medicare and Medicaid, which at least pay their bills?

But wait, you say. Even utilization rates are substantially higher in Texas. Agreed. But here’s where I leave data and logic behind and resort to anecdote. In my mother’s last years (in Maryland), she was incapacitated in a nursing home where the doctor would show up about once a week to make his rounds. He would stop in every room for a few minutes, check the chart and move along. He could usually cover a dozen rooms in about an hour. Since most of the patients were in the final stages of severe dementia, there wasn’t much to discuss. Sometimes there was a family member in the room. Those visits took longer.

My point is that utilization can be an imprecise metric. Hospitals and physician offices do what they do and bill whom they can. Overutilization is endemic throughout the health care system, regardless of region. Some institutions — those that are primarily fee-for-service medicine — are more prone to overutilization compared to those that operate with salaried physicians and have incentives to hold down costs. The Dartmouth Atlas of Health’s insights into that phenomenon are spot-on and enduring. But the differences it highlights can be found anywhere.

No doubt some regions have more institutions and physician practices that engage in inefficient and poor quality care. But when it comes to gross outliers — whether Miami, McAllen, Houston or New Orleans — I suspect the differences have more to do with exogenous factors like fraud or the uninsured than a local culture of medicine that encourages overuse. That, my reporting tells me, exists everywhere.

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27 Comments on "McAllen, TX As Outlier? Why Not Houston?"


Guest
bev M.D.
Feb 19, 2010

I’m sorry, but I don’t think this post adds anything to the current discussion about health care costs. All it says is that you can use statistics to prove anything – something we all learned long ago. That is why there are always letters to the editor challenging the methodology and conclusions of virtually every article appearing in any medical journal. So shall we waste time arguing about methodology, or adhere to the basic point – we need to cut medical costs across the board and there is going to be pain on the provider side, as well as elsewhere?

Guest
MD as HELL
Feb 19, 2010

The greed and Narcissism of the American patient is what drives healthcare costs. It is very strong in the south.
The system was built by the last reformers to fix the same problems.
I’ll be happy to fix it for you all.

Guest
Margalit Gur-Arie
Feb 19, 2010

Merill, I don’t quite understand this.
How do you shift costs from Medicare/Medicaid to uninsured? You can’t charge more, so the only thing left is to, knowingly, over treat Medicare folks. Is that where the high utilization is supposed to be coming from?
In that case why is New Mexico not an outlier too? They have very high uninsured rates. And Arizona should be as bad as Louisiana, but it isn’t.

Guest
Gary Lampman
Feb 19, 2010

MD as Hell. I just wonder how greed of the American Patient drives Health Care Cost? I understand the narcisstic tendencies of a large part of the population.Would it not be the greed of CEO’s, Stock Markets ,Medical Device and durable Companies? What about Pharmasuetical and all these companies that feed off Health Insurance and Providers.
Come on! Lets get real about the cost associated with any Procedure, Device,or Service. What are the actual Costs! What is the Mark Up? I dare anyone to Post Publicly the cost of any one Procedure.Explain to me why a wholesale price of $800.00 ends up to be Five Thousand Dollars. How many freaking middle men are their siphioning off the Patient?
How many Office Staff could be Cut to put more nurses on the Floor to care for Patients?Why can’t Hospital staff perform more than one function?
I think doctors should personally hand the Patient the Bill so they can Guage how effective they are or if they can actually justify their billing.Do you think doctors actually consider Costs to the patient before preforming a procedure? The facts are that Doctors seldom think about it as long as the bottom Line is in the Black.
Please, dont expect the patient to clean up their act when the most educated and affluent Profession can’t clean up their own. Reducing Medical Errors and Preventable Hospital Acquired Infections. Of which; cost 12 billion dollars of “wasted” Tax Dollars each year.

Guest
Charo
Feb 19, 2010

http://www.newyorker.com/online/blogs/newsdesk/2010/02/the-cost-conundrum-persists.html
The New Yorker
February 18, 2010
The Cost Conundrum Persists
Posted by Atul Gawande
A New York Times article I just read suggests that a data set I used in my piece “The Cost Conundrum” has been questioned. Not so. A recent opinion piece in The New England Journal of Medicine does take issue with a particular analysis offered by the Dartmouth Atlas of Health Care. But it doesn’t dispute the Dartmouth data I drew on.
Rest of the story at the above link.

Guest
MD as HELL
Feb 20, 2010

Gary,
How can it be anything else? There is zero cost to anyone until the patient shows up and demands care. And demand they do. We treat anxiety with cardiac caths and MRI’s. It’s like they all get Munchausen’s; they will have healthcare, even if it kills them. Of course they don’t pay for anything.
If they had to pay a part of it, they would not consume as much. Certainly families would have to measure end of life decisions against end of estate and depletion of same. Is it illegal to resell grandma’s scooter after she is done with it?
It is greed because they consume all the resources they can possibly comandeer for themselves, regardless of their real need and regardless of anyone else’s needs.
Real tort reform will let me tell people they don’t need their third MRI or their 10th cardiac cath. People would be set free from the fear of not getting healthcare. It would be a new standard that they were entitled to nothing unless they paid for it. Just like Wal-Mart.
I do expect people to clean up their act, because I expect they will be paying real money in the future for care they want, or they won’t get it. The government is broke. Pretty soon we will demand gold instead of Federal Reserve notes.

Guest
Feb 20, 2010

MD as HELL apparently has never discovered the truism in the USA that the customer aka patient is always right. Not only that, but it is the patient who keeps MD as HELL in his chosen occupation, not the other way around.

Guest
Peter
Feb 20, 2010

“Adjust for prices and McAllen’s outlier status compared to the rest of Texas and large parts of the South all but disappears.”
Adjust for prices! Well dah. Isn’t it the prices that’s killing us? Why does that get McAllen off the hook? Isn’t that what the article, “A Look Inside: The Massachusetts Health Reform Law” and their Attorney General’s office investigation found?

Guest
Margalit Gur-Arie
Feb 20, 2010

I read everything quoted in this post and all sorts of other reports from CMS, Kaiser, RAC and others, and what I find fascinating is the obsessive concentration on three factors to explain these variation: physicians over treating, patients over demanding and fraud (including deliberate over treatment by hospitals solely in order to increase revenue).
Whenever the Dartmouth/Gawande discussions came up on this blog, I always asked about the root cause. Why are these things happening in one community and not another? Never got a good answer.
Shouldn’t we look at the numbers in the MedPAC report, and even the Dartmouth Atlas, ignoring the bickering about which hospital is better, and try to superimpose seemingly unrelated regional statistics and differences in culture, geography, personal values, etc.?
For example, there seems to be some correlation between high utilization and poverty and lower education and urban density and cultural aspects.
Medicare folks that retire to a gated community in Miami have different outlooks on life and death than a farmer in Vermont who continues to get up at 4 AM until the day he dies. Seniors who live in areas where children usually move five states away are more likely to substitute payed care for family support. Certain spiritual values and beliefs may discourage over utilization at the end of life. Even something as foolish as scenic surroundings as opposed to wretched desolation may affect one’s perceived well being and therefore perceived need for medical care.
Maybe no one is looking at these things because there really isn’t much we can do to change them, if indeed there is a correlation, but shouldn’t we at least try to understand? Who knows, we may find something useful. Isn’t this what science is all about?

Guest
MD as HELL
Feb 20, 2010

Wendell,
I have no customers. Customers get Percocet on demand, so the doctor’s patient satisfaction scores don’t cause administration to fire his ass.
You failed to address my contention that there are no costs until the patient shows up and demands care.

Guest
Margalit Gur-Arie
Feb 20, 2010

MD as HELL, would you prefer that the patients begged for care instead of demand it? Or maybe they should just never show up at all and just go away and die or suffer stoically somewhere out of sight.
There are plenty of costs before the patient actually shows up. They are somebody else’s costs. It costs tons of money to keep a hospital operating even if there are no patients in beds. There are costs to employers, families, producers/sellers of goods and the economy in general if patients don’t receive treatment and don’t get better.
If you think that patients, or people, are a bunch of spoiled cry babies, and medical care is really not necessary, then why practice medicine?

Guest
archon41
Feb 20, 2010

You ask me, it’s all those New York doctors who have flocked to McAllen. All those citrus groves, palms, verdant fields (ever see a periwinkle field in full bloom?), no end of “gated communities,” high-end malls awash in petrodollars, the Gulf Coast in easy reach, and tropical winters. Beats the aspirated “L” out of the “wretched desolation” of NYC.

Guest
Gary Lampman
Feb 20, 2010

So consumption of the product or service is what drives costs? So why seek Patients or advertise medical services? However, I disagree that cost are zero as if there are no obligations. Such as tuition expenses, Utilities,staffing,furniture,licensing fees,credit card machines,loans,benefits etc. The rate of return to cover your fixed costs are directly associated to the Cost of providing care. I can only assume that the rates are fixed to a targeted amount to cover all of this and maintain a projected profit ratio.
Interestingly enough; the Consumer(patient)is not zero either. The absence of medical attention is costing them as well. As a Home owner or even a renter we pay for services for the establishment of fire stations and ambulance services.Federal,State, Counties and Cities use tax dollars to support community Hospitals. Please ,lets not forget the insurance companies take their weekly draw as well.
“It is greed because they consume all the resources they can possibly comandeer for themselves, regardless of their real need and regardless of anyone else’s needs.”
This is true of Corporate Behavior as well. Health Care has become a advertisement for expensive procedures and a manipulator of patient Codes to maximize Payment returns from insurance. Providers feel they are being shafted by Insurance and so the consumer is a safe target to justify their ends. However,it doesn’t end there! No! Not by a long shot. The Consumer also feels disenfranchised by excessive fees ,out of Pocket expenses,and the endless testing just to prove to insurance ,you need another Test? Do you think Patients are getting their monies worth? I often wondered if we needed a self serve lane to avoid waiting to be seen.
Wal-mart provided Americans with greater costs than some realized. Wal-Mart’s driving down prices included demanding manufacturing to China.America lost jobs and manufacturing.Wal-mart opened mega stores in small towns and priced Mom and Pop stores out of business.The employees they hired were told to use Medicaid for health insurance because (like most business’s) they wanted to cut overhead. Someone always pays.
Don’t think for a minute that Health Care can not be outsourced. Third World Countries basing Hospitals in the United States and Bringing in Doctors and Nurses at a fraction of the costs. This is what I see in the future for Health Care,if real solutions are not found.Future Graduates may indeed need to seek work overseas.Certainly at lower wages.

Guest
MD as HELL
Feb 20, 2010

The demand for care determines the size of the system and the “fixed” costs in it. There is too much demand for unnecessary care. Patients will not take “no” for an answer any more. They are entitled to receive all the care they want; just ask them.

Guest
Peter
Feb 21, 2010

“The demand for care determines the size of the system and the “fixed” costs in it.”
like the demand generated by drug advertising that boosted the price of drugs about 30%?