After being re-linked to it by my friend Peter, I finally got around to reading one of the most-cited pieces about HCR:

McAllen, Texas and the high cost of health care

To overstate things a bit, this article is a classic in the media discussion of health-care reform, at least from the number of times I’ve seen it referenced. Here’s the main points I took away:

1. McAllen, Texas has per-capita health-care costs that are almost twice the national average, which can’t be accounted for by the health of its population or availability of its care (El Paso, a very similar city, has per-capita costs that are half as much).

2. The primary reason is simple overuse of medical resources; doctors in McAllen appear eager to, say, operate on gallstones that would most likely go away on their own. (The doctor of course makes much more money for an operation than for a pain-med prescription.)

3. This is a powerful answer to the notion that more tests and more treatment are always better, since the average McAllenite is no healthier than Joe Schmo in Muncie, Indiana. On the other end, Rochester MN—home of the Mayo Clinic—is in the bottom 15% of Medicare spending; in fact, there’s a rough inverse relationship between a state’s Medicare spending and the quality of its patient care!

4. The administrators at McAllen hospitals appeared unaware of the cost issues. Rather, the differences in costs appear down to the doctors themselves; a random nationwide survey found that doctors in high-cost areas are simply more likely to order expensive tests, refer to specialists, or operate for identically-described issues than those in low-cost areas.

5. But how does a given area “create” these tendencies, one way or the other? It seems to be cultural, so to speak—many home-health companies in McAllen have taken to literally bribing doctors, or even paying them salaries, for ordering home visits. “The real puzzle of American health care…is not why McAllen is different from El Paso. It’s why El Paso isn’t like McAllen.” Yikes.

6. The Mayo Clinic completely pre-empted any possibility of cost-running-up by pooling all revenues and paying everybody a flat salary, no matter how many tests and whatnot they ordered. Result: doctors take their time, chat with patients, and don’t act like lawyers trying to bill as many hours as possible. Result: better care, lower costs, everyone’s happy.

And you don’t have to work for a place called “Mayo” to get these results; doctors in Grand Junction, CO have a gentleman’s agreement on a similar system and also get low costs and healthy patients.

Ready for a vocabulary word? Accountable-care organizations. That’s what you call these communities of doctors working together, pooling money and resources, and putting the patient first.

This approach has been adopted in other places, too: the Geisinger Health System, in Danville, Pennsylvania; the Marshfield Clinic, in Marshfield, Wisconsin; Intermountain Healthcare, in Salt Lake City; Kaiser Permanente, in Northern California. All of them function on similar principles. All are not-for-profit institutions. And all have produced enviably higher quality and lower costs than the average American town enjoys.

This is a dramatic contrast to the status quo in the US, the pay-per-service system. Lemme blockquote another paragraph:

Providing health care is like building a house. The task requires experts, expensive equipment and materials, and a huge amount of coördination. Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet, and a carpenter for every cabinet. Would you be surprised if you got a house with a thousand outlets, faucets, and cabinets, at three times the cost you expected, and the whole thing fell apart a couple of years later? Getting the country’s best electrician on the job (he trained at Harvard, somebody tells you) isn’t going to solve this problem. Nor will changing the person who writes him the check.

That last line is a dig at all the debates over the HCR bill and who’s providing health insurance, by the way. Almost all people talked about—from tea parties to the Daily Show—were things that had nothing to do with the actual costs of providing the actual health care.

The conclusion of this particular article goes thusly: accountable-care organizations are the way to go, and the results speak for themselves. The system needs to be incentivized and expanded, maybe even to the point of penalizing communities that don’t form them. (One big bonus for those against Big Guv’mint: these groups are necessarily community-based and can be tweaked to fit the needs of a given region.) And the incentives are necessary, cause the organizations would reduce doctor incomes, and free-market economics only flow one way if you catch what I’m sayin.

My understanding is that the HCR bill does indeed include methods to experiment with accountable-care organizations and similar cost-saving measures. But I need to run home for dinner. I promise to follow up.