Gawande Nails It on Healthcare Costs

Wachter pic (informal)I just finished reading Atul Gawande’s June 1st New Yorker piece – it’s the Talk of the Health Policy Town – on healthcare’s “Cost Conundrum.” Like most of Atul’s work, the article is lyrical, powerful, insightful, and correct.

As you’ve probably heard, Gawande profiles the town of McAllen, Texas, whose healthcare costs are nearly double the national average. He swats away the usual explanations (our patients are sicker, more obese, more addicted, more Mexican; our lawyers are nastier; our quality is better…) to unblinkingly zoom in on the real culprit: a culture in which providers’ greed trumps the patients’ interests. He contrasts McAllen’s healthcare culture with that of El Paso, just 800 miles up the border, a town with similar demographics but whose healthcare costs are exactly half as high. He also describes the Mayo Clinic, which manages to deliver the best healthcare in the country, perhaps the world, at a fraction of McAllen’s costs.

His main point is that policymakers need to focus less on who pays (i.e., should there be a “public plan”?) and more on creating physician-led accountable entities that manage the dollars and possess the wherewithal and incentives to make rational choices about how to organize care – the ratio of primary care docs to specialists, the number of MRI scanners, the algorithm for the workup of chest pain or gallstones. Atul understands that we can’t snap our fingers and change culture, but that culture will change when structure and incentives are lined up correctly.

The article is both hopeful and depressing. Hopeful because it says that in order to save healthcare costs from bankrupting America, we don’t need to look to Germany, or Denmark, or Canada for inspiration – the models for how to deliver high quality care at a survivable cost are already here, in the good ole’ U.S. of A. We simply need to create a policy landscape that either forces McAllen’s providers and healthcare organizations to become more like El Paso’s (or better yet, Mayo’s) or makes their businesses unviable if they don’t.

Depressing, because in the absence of vigorous federal action, the docs and administrators in El Paso are more likely to start behaving like those in McAllen than the converse. Why? If the healthcare pie begins to shrink, we can expect physicians and communities that have been less profligate to become more entrepreneurial (“why am I being so careful while those other guys reap all the profits?”), not more circumspect.

We won’t have another window to fix healthcare in this generation, and so we’d better take advantage of this one. As I’ve mentioned before, the Obama administration’s game plan is to drive our system toward the optimal quadrant of the two-by-two quality vs. cost matrix: high quality at reasonable cost. This direction is undeniably correct, but the whole thing can feel a bit bloodless and wonky when budget director Peter Orszag explains it. Gawande’s article puts a human face on the issue of cost variations, which makes it an essential read for anyone who cares about healthcare, policy, politics, or the future of our nation.

Robert Wachter, MD, is widely regarded as a leading figure in the modern patient safety movement. Together with Dr. Lee Goldman, he coined the term “hospitalist” in an influential 1996 essay in The New England Journal of Medicine. His most recent book, Understanding Patient Safety, (McGraw-Hill, 2008) examines the factors that have contributed to what is often described as “an epidemic” facing American hospitals. His posts appear semi-regularly on THCB and on his own blog, Wachter’s World.

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