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McAllen and El Paso Redux: New Evidence from the Insured Under-65 Population

Last year, Atul Gawande wrote in the New Yorker about the remarkable differences in health care spending for two Texas cities: McAllen and El Paso.  In 1992, according to the Dartmouth Atlas, the two cities were essentially identical with respect to per capita Medicare expenditures.  By 2007, McAllen’s spending had surged, with overall expenditures nearly twice as high as in El Paso.  Dr. Gawande visited the two communities, and brilliantly documented a culture of entrepreneurship among McAllen physicians that seemed to explain their elevated rates of hospital admissions, end-of-life care, and home health care.

But what about the under-65 population?  Dr. Gawande spoke with two independent firms about their measures of under-65 utilization, and found generally higher rates in McAllen.  My colleague Thomas Bubolz studies the under-65 Medicare population – primarily people on Social Security Disability Insurance — and his preliminary results also point to much higher utilization in McAllen compared to El Paso.   Another study using national data by Michael Chernew and colleagues (here) found a strong positive correlation between utilization rates for Medicare and the under-65 population insured by large firms.  (That they also found a negative correlation between Medicare spending and the negotiated price per procedure in the under-65 population points to another source of regional variation: market concentration.)

So when Luisa Franzini and Osama Mikhail, professors at the University of Texas School of Public Health, first offered me the opportunity to work with them using Blue Cross-Blue Shield data on under-65 spending in Hildago (McAllen) and El Paso Counties, I had strong expectations that we’d end up with  pretty much the same result.

I was wrong.  In a recent Health Affairs article, we found that, on average, overall spending per patient in McAllen was about 7 percent below that in El Paso.  Granted, we found the familiar Medicare utilization patterns among people over age 50: McAllen admission rates were 89 percent higher than those in El Paso, and overall expenditures 23 percent higher.  But outpatient visits and spending were lower across the board in McAllen, as was total spending for those under age 50.  What was going on?

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McAllen, TX As Outlier? Why Not Houston?

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.Continue reading…

Why McAllen Should Have Mattered in the Health Reform Debate

Jeff GoldsmithBack in June, Atul Gawande, a Harvard trained surgeon, published a riveting article in the New Yorker   about the physician community in McAllen Texas. If ever an article was strategically timed to influence the nation’s health policy debate, this was the one. His story was accompanied by a graphic showing a patient as an ATM machine.  President Obama read it and put it on his staff’s reading list.  Yet, it’s depressing how little impact Atul’s article has had on health reform.

Atul’s purpose was to explain a major policy conundrum: why some communities manage to spend as much as triple on Medicare services as other communities. McAllen’s physicians practice some of the most expensive medicine in the United States, second only to Miami, and spend seven thousand dollars per Medicare beneficiary more than the national average. Peter Orszag has said that eliminating this type of variation could cut Medicare expenses nationally by as much as 30% and actually improve the quality of care.

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Return to McAllen: A Father-Son Interview

By now, Dr. Atul Gawande’s article on McAllen’s high cost of health care has been widely read.  The article spawned a number of responses and catalyzed a national discussion on cost controls and the business of medicine.  It even made it’s way into the President’s address to the AMA.

Almost overnight, McAllen and the Rio Grande Valley were thrust into the national health care spotlight – the once sleepy border town became, not a beacon on a hill, but a balefire in the valley, representing much of what is wrong with the current medical culture.

But, McAllen wasn’t always like something from an old Western, where doctors run wild and hospital CEO’s compete like town bosses.  I remember McAllen quite differently.  I remember it, because as it turns out, it was where I was born.Continue reading…

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