What does it take to make
integrated care work?
Around the world, only a few health care providers deliver
integrated care effectively. Their experiences offer
useful lessons for organizations that want to pilot integratedcare programs.
What does it take to make integrated care work?
Jenny Grant
2
Two interrelated factors—the growing
system and social services can allow elderly
prevalence of chronic diseases and pop-
patients to “fall through the cracks” because
ulation aging—are placing a heavy burden on
neither side understands the full extent
health systems. In all parts of the world
of the patients’ problems. Care fragmentation
except Africa, chronic diseases are by far the
also frustrates patients, who find it dif-
leading cause of death and disability, and
ficult to navigate among the various providers
they now account for 75 percent of global health
and often feel that there is no one person
care spend (an amount that is likely to
who can help them get all essential services.
increase in coming years).1 Furthermore, in
almost every country, the proportion of people
Although closer care integration offers patients
age 60 or older is growing far faster than
significant benefits, it is hard for most health
any other age group, a result of both longer
systems to provide. To date, only a few organiza-
life expectancy and declining fertility rates.2
tions around the world have found ways to
As people grow older, they are more apt
integrate care effectively and thereby offer the
to suffer from chronic diseases, but aging alone
coordinated management that chronically
can increase their frailty—and their need for
ill and elderly patients require. We have spoken
health care.
with these organizations (individually and
in panels) to learn from their experience and
If the health care needs of the chronically ill
identify best practices. In this article, we
and elderly are not adequately addressed,
have summarized our findings as a way to help
the consequences for both patients and health
other groups that want to pilot or improve
systems could be severe. The failure
their integrated-care programs.
to appropriately manage disease often leads to
1Even within Africa, chronic
diseases are becoming
an increasingly common cause
of death and disability,
but they still rank second to
the acute health problems
of the poor, such as communicable diseases, maternal
and perinatal conditions, and
nutritional deficiencies.
(Source: World Health Organization, “Preventing chronic
diseases: A vital investment:
WHO global report,” 2005.)
2United Nations, “World
population aging 2007,”
August 2007.
worsening patient health; the failure to
What integrated care is—and is not
provide patients with carefully coordinated care
Integrated care brings together the different
can allow small problems to escalate into
groups involved in patient care so that,
medical emergencies. Both scenarios can result
from the patient’s perspective, the services deliv-
in unnecessary hospitalizations, increased
ered are consistent and coordinated.
mortality, and higher health system costs.
Too often, providers focus on single episodes of
treatment, rather than the patient’s overall
Although the consequences of providing
well-being. By taking a more comprehensive
inadequate care to these groups are well known,
approach, integrated care offers patients
most health systems have found it difficult
higher-quality, more efficient care that better
to address their needs appropriately, in part
meets their needs. In many cases, the
because care delivery is often fragmented.
increased efficiency also helps control costs.
Poor communication between general practitioners and specialists, for example, can hinder
Different approaches have been used to integrate
effective chronic disease management;
care, but they share this trait: they design
some components of care may be duplicated,
all stages of care delivery around what is best for
whereas others may be overlooked. The
patients. The approaches can be grouped into
absence of a good interface between the health
three broad categories:
3
What does it take to make integrated care work?
Integration between primary care and second-
delivery. Payor-provider integration also makes
ary care. These efforts are usually designed
it easier to ensure that the incentives
to provide “one stop shop” services for patients;
within the system encourage all providers to
to improve care coordination, especially
maximize care quality while minimizing
for people requiring long-term care (who, by
cost. Kaiser Permanente has taken advantage
definition, include chronically ill and elderly
of its integrated payor and provider functions to
patients); or to ensure more appropriate use of
provide better care for patients who have
health care resources. Polikum, the largest
suffered an acute coronary event. It is able to
provider of integrated outpatient health services
identify all such patients and offer them
in Germany, exemplifies this approach. Its
closely coordinated follow-up care. The program
guiding philosophy is that patients should be able
has decreased the need for costly emergency
to obtain all types of outpatient care under
interventions and significantly reduced the risk
one roof. At its polyclinics in Berlin, patients can
of death. 4
consult primary care physicians, specialists,
nutritionists, and other health professionals;
Questions to ask when piloting
they can also undergo diagnostic tests and have
integrated care
prescriptions filled. Polikum executives have
Integration is a means to an end, not an end
estimated that within a year of adopting
in itself. Therefore, any organization that
this approach, the company’s hospitalization
wants to pilot an integrated-care program must
costs were reduced by about
half.3
be clear about why it is conducting the pilot
and what it hopes to accomplish. The organiza-
Integration
between health care and community
tion must also be realistic about what it can
care. These efforts coordinate a wider range
achieve in any one pilot, and thus it should focus
of services, including social services and commu-
on where it can have the greatest impact.
nity nursing services. Sweden took the lead
Even the organizations that are best at providing
in this area more than a decade ago. For example,
integrated care did not attempt initially to inte-
before an elderly or disabled patient can be
grate every aspect of health and social care.
discharged from a Swedish hospital (to go home
3“ Die Optimierer” (an inter-
view with Wolfram Otto),
McKinsey Wissen, 2008,
Volume 19, pp. 44–9.
4 B.G. Sandhoff et al.,
“Collaborative Cardiac Care
Service: A multidisciplinary
approach to caring for
patients with coronary
artery disease,” Permanente
Journal, 2008, Volume 12,
Number 3, pp. 4–11.
or to a lower-acuity care setting), a physician
The five questions below can help an organiza-
from the hospital and a case worker from
tion identify where it can have the biggest
the municipal social services agency must jointly
impact and what it needs to do to achieve that
develop a plan to ensure that the patient will
impact. There are no “right” answers to
receive appropriate follow-up services. This
these questions; decisions should be based on
has enabled the country to improve the care
the needs of the community and the context
delivered to these patients and, at the same time,
within which the organization is operating. In all
to reduce the number of patients kept in
five cases, a range of answers is possible.
the hospital once they no longer need high-acuity
treatment (Exhibit 1).
1. Which patients and clinical pathways should
be integrated?
Integration
between payors and providers.
The answer to this question can be narrow,
These efforts are designed to more closely
expansive, or somewhere in between.
coordinate care planning, commissioning, and
For example, one organization might opt to
What does it take to make integrated care work?
4
Health International 2009
Integrated Care
Exhibit 1 of 3
Glance: After Sweden integrated its health and social care services for elderly patients in 1992, it
substantially reduced the number of patients being kept in the hospital unnecessarily.
Exhibit title: Faster patient discharges
Exhibit 1
Faster patient
discharges
Fewer delayed discharges
After Sweden integrated its
health and social care services
for elderly patients in 1992,
it substantially reduced the
number of patients being kept in
the hospital unnecessarily.
1992
% of hospital beds occupied by patients
whose discharges were unnecessarily delayed
1996
15
6
Reduced need for hospital beds
% reduction in bed capacity 1992–98
Short
term
Geriatric
care
30
55
Source: Organisation for Economic Co-operation and Development (OECD), “Long-term care for older people,” 2005;
Kommunförbundet Norrbotten and Norrbottens Läns Landsting, “Rutiner för samverkan och informationsöverföring”
start with a single clinical pathway; another
In contrast, Geisinger Health System in the
might be more ambitious, wanting to include all
United States wanted to optimize the health of all
patients in need of long-term care. Some
patients with chronic conditions. It therefore
organizations might decide to steer a middle
inaugurated its medical home program, which
course, focusing on all patients who use
includes round-the-clock primary and specialty
specific types of services (for example, home
care access, a nurse care coordinator at every
nursing care).
private provider site, and home-based monitoring. Preliminary data indicate that this program
A narrow approach is best if the goal is to
has reduced hospitalization rates and medical
optimize health outcomes in a specific
costs significantly (Exhibit 2).5
patient population. This was the case when Bolton Primary Care Trust in the United
2. How many people should be included?
Kingdom decided to build a diabetes network
The scale of the effort will depend on the clinical
to address the region’s high prevalence
pathways selected for the pilot. Thus, the
of that disease. The network, which includes
population included can be anywhere from a few
primary care, secondary care, social
thousand people to hundreds of thousands.
services, volunteer groups, and patient represen-
5 K. Davis, R.A. Paulus,
and G.D. Steele, “Continuous
innovation in health care:
Implications of the Geisinger
experience,” Health Affairs,
2008, Volume 27, Number 5,
pp. 1235–45.
tatives, has enabled Bolton to ensure
Both the project’s financial viability and its
that diabetes patients get high-quality care
clinical viability must be considered.
from well-trained local teams. Similarly,
If a large investment is required for a small
many payors in Germany are using integrated
population, the benefit to be achieved
disease-management programs to improve
should be fairly significant. Otherwise, it may
care delivery to patients with specific
be wiser to focus the pilot on a problem
conditions (diabetes, heart disease, and asthma,
affecting a larger population to increase the
for example).
return on the investment.
5
What does it take to make integrated care work?
In some cases, however, the local community
specialists, home nursing services, and perhaps
may not be large enough to make certain
other community-based health profes-
forms of integrated care clinically viable.
sionals will have to be included. If, however,
For example, integrated care can benefit children
the aim is to provide fully coordinated care
with chronic renal failure. Studies have
for elderly patients, then social support services
shown, though, that the medical expertise and
and sometimes other agencies will also need
equipment needed to provide high-quality
to be involved.
care for these children will be cost-effective only
if the local population contains at least
500,000
people.6
If the local population is small-
As the decision about which services to include
is made, a key consideration is whether
er, there will not be a sufficient number of chil-
payors should also be involved. Payor participa-
dren to treat. In this case, it would be
tion is not a requirement, but it can help
far better for the organization to contract with
ensure that all incentives are appropriately
a larger nearby provider than to attempt to inte-
aligned. In Germany, for example, the public
grate care for these children on its own.
payor AOK has used incentives to strengthen
3. Which services should be included?
homes and thereby improve the services
The answers to the two previous questions
delivered to elderly patients.
coordination among GPs, hospitals, and nursing
determine which professionals need to
6 Royal College of Paediatrics
and Child Health, “The
next ten years: Educating
paediatricians for new
roles in the 21st century,”
January 2002.
be involved. For example, if the primary goal
4. Which model of integration should be used?
is to improve the management of chronic
Here, there are basically two choices:
structural and virtual. Structural integration
conditions
by minimizing
Health
International
2009 hospital admissions
requires that different organizations
and maximizing
Integrated
Care care delivered in the
either be merged or have some sort of formal
community,
Exhibit
2 of 3then primary care physicians,
Glance: Geisinger’s Medical Home program improves clinical outcomes and reduces costs among
patients with chronic diseases.
Exhibit title: Lower hospital admissions and costs
Exhibit 2
Lower hospital
admissions and costs
Geisinger’s medical home
program improves clinical
outcomes and reduces
costs among patients with
chronic diseases.
CY 06
CY 07
Hospital admissions per 1,000 Medicare patients
Allowed medical costs per member per month, $
425
650
400
625
600
375
575
350
550
325
300
525
Medical home
Nonmedical home
500
Medical home
Nonmedical home
Source: K. Davis, R. A. Paulus, and G. D. Steele, “Continuous innovation in health care: Implications of the Geisinger experience,”
Health Affairs, 2008, Volume 27, Number 5, pp. 1235–45; Commonwealth Fund Chart Packs
What does it take to make integrated care work?
6
partnership or joint-venture arrangement.
5. What other organizational enablers are needed?
Virtual integration requires only that the
Five factors can help maximize the results
organizations work closely together. In both
obtained with integrated care:
cases, the best results are achieved when
effective governance mechanisms, including
Patient
strong performance management, are in place.
results when patients take control of their
self-care. Integrated care achieves best
own health—when they actively manage their
The Veterans Health Administration (VHA)
own care, avoid unhealthy behaviors, and
is a good example of the value of struc-
can accurately identify when they need clinical
tural integration. VHA , the largest integrated
intervention. Having patients take respon-
health care organization in the United
sibility for their own care helps ensure that they
States, delivers a wide range of health services
do not inadvertently undermine the efforts
to retired military personnel. It outranks
of the integrated-care team. Incentives (discounts
many other US providers in the quality of care
on gym memberships, for example) help
it delivers, the outcomes it achieves, and the
motivate patients to make the necessary changes.
efficiency of its care
delivery.7
In addition, patients must also be given
information, support, and tools they can use to
However, full integration into a single organiza-
manage their condition (for example, visual-
tion is not a necessity. In some countries,
management tools that enable them to see their
physicians in private practice have banded
targets and track their progress).8
together to form independent practice
associations (IPA s). These associations help
Team responsibilities and accountability
physicians in their negotiations with payors; in
(the “panel approach”). Integrated care
addition, they encourage collaboration and
is provided by a team of professionals who must
increased efficiency in care delivery. The
work together to deliver the necessary ser-
physicians remain autonomous, but the IPA s give
vices. For the team to function effectively, there
them incentives to coordinate care.
must be clarity about who is responsible
for what. If possible, a single person should have
7 For a closer look at the
outcomes the VHA achieves,
see James Mountford and
Caroline Webb, “When
clinicians lead,”
mckinseyquarterly.com,
February 2009.
8For more information about
how to encourage self-care,
see Sundiatu Dixon-Fyle, PhD;
and Thomas Kowallik, PhD,
“Engaging consumers to
manage health care demand,”
mckinseyquarterly.com,
January 2010.
When the model of integration is being selected,
ultimate accountability for each patient;
a key issue to consider is what minimum
this helps ensure that all appropriate services
requirements must be in place for the experiment
are delivered but no duplicate or unnecessary
to succeed. Can a virtual model provide
services are ordered. However, a single
strong enough incentives for cooperation, or is
point of accountability may not always be
structural integration required for effective
possible, especially when integration is
governance? Pragmatically, structural integra-
virtual. In such cases, all care providers need
tion is not always possible. When this is the
to understand what they are accountable
case, the organization should put other
for, develop and then agree to follow protocols for
governance mechanisms in place to ensure that
how care will be delivered, and communicate
care is coordinated.
regularly with other team members.
7
What does it take to make integrated care work?
Information
infrastructure (a “registry”). High-
quality, efficient care and information
ship roles should be given appropriate training
and additional compensation.
sharing are possible only if all care providers
have easy access to up-to-date patient
Governance and provider incentives. An
records; they must also be able to update those
integrated-care pilot must be predicated on
records easily. This type of functionality
a strong vision—a clear understanding of what
is best provided through a strong information
the project’s goal is and how that goal will
system. Electronic patient records do more
be achieved. In addition, the project must have
than improve care during individual patient
a clear governance structure; either a single
visits; they also make it easier to plan for
board should be in charge of the effort
future care needs, because they enable more
or the involved organizations should have an
accurate risk profiling and predictive
agreed-upon plan for how decisions will
modeling of which patients are likely to require
be made. Everyone involved in the project must
the most attention. Reliable, real-time
understand that their responsibilities will
information also facilitates more robust perfor-
be defined and their performance—as well as
mance management.
the success of the overall effort—will be
monitored and measured. Incentives (both finan-
Clinical
leadership. If changes in health care
cial and nonfinancial) should be offered
delivery are to succeed, it is crucial that
to all participants to encourage improved care
clinicians (especially physicians) play a prominent
quality and increased productivity.
role. They must learn to see themselves not
only as the professionals who deliver patient care
Ideally, all of these factors should be in place
but also as partners in—and, ideally, leaders of—
if the integration effort is to maximize
the change effort. For this to occur, they will have
its ability to improve outcomes and reduce costs.
to be convinced of the need for integrated care
However, which of these factors are most
and accept responsibility for seeing that the
important to the success of the effort will depend
necessary changes are implemented. Once this
on the pilot being conducted and the setting
attitudinal
shift takes
place, the clinicians
in which that pilot takes place. For example,
Health
International
2009
should
be
encouraged
to
act
as
role
models
for
when Knappschaft, Bahn, See, a German payor
Integrated Care
others. 3Those
and hospital system, decided to implement
Exhibit
of 3 who want to assume leaderGlance: After Torbay Care Trust integrated the interface between health and social care, the time
until patients underwent social care assessment was drastically reduced.
Exhibit title: Shorter waits for social care assessments
Exhibit 3
Shorter waits for social
care assessments
After Torbay Care Trust integrated the interface between
health and social care, the time
until patients underwent
social care assessment was
drastically reduced.
Average time from referral until
social care assessment (in days)
Beginning of pilot
(February 2003)
18 months later
Source: Torbay Care Trust, September 2008
42
9
–79%
What does it take to make integrated care work?
8
clinical pathways as a way to integrate care and
collocated the health and social care
thereby improve its quality and cost-efficiency,
professionals to signal that they would collab-
it focused first on getting physicians’ support
orate from then on. Integrated care is
by having them help develop the clinical
working well in Torbay: the time until patients
pathways and on developing the IT infrastruc-
undergo social care assessment has
ture needed to support the pathways’ use.
decreased substantially (Exhibit 3), and the
In contrast, Geisinger used financial incentives
trust recently won an award for its long-
to encourage physicians to implement the
term care services.
practice infrastructure changes that were necessary for the medical home program to get
An organization that wants to build support for
off the ground.
an integrated-care pilot must remember,
however, that enthusiasm alone is not sufficient
Making integrated care work
for the pilot’s success. What is required
A shift toward integrated care is usually
instead is a deep transformation of attitudes
a substantial change for a health care
and behaviors so that all participants
organization. Change often causes discomfort
commit themselves to integrated care and the
and confusion, and those reactions can
changes it will require. Central to Kaiser
hinder a pilot project’s success. Studies have
Permanente’s success, for example, is the convic-
shown that most change programs fail,
tion among all of the system’s physicians
and most of those failures arise from cultural
and nurses that hospital admissions often
factors—either senior managers are not
represent a failure of care. This belief unites the
supportive of the change or employees are
staff around the common goal of keeping
resistant to it.
patients healthy.
If an integrated-care pilot is to succeed,
therefore, strong support for it must be developed among all participants, which is
In most parts of the world, integrated care is still
part of the reason that appropriate incentives
a new idea, and the number of integrated-
and clinical leadership are so important.
care providers is small. Thus, considerably more
A good communication program can also
research is needed to determine how integrated
help in this regard. For example, when
care can best be used to improve clinical
community care and health care providers in
outcomes and control health care costs. However,
Torbay, England, decided to integrate in
enough organizations have had sufficient
2005, the merged organization (the Torbay
experience with integrated care to prove that it
Care Trust) knew that it would have to
can be a highly effective way to enhance the
offer its staff a clear rationale for change. The
well-being of chronically ill and elderly patients.
trust began by communicating a clear and
concise vision to all staff members of how they—
and their patients—would benefit from
integrated care. The goal was to excite the staff
about a new way of working. The trust then
put a structural solution in place: it physically
Jenny Grant is a consultant in McKinsey’s London
office and specializes in health care reform.
She is currently on leave while attending graduate
school in public health.
Where Are the Cures?
More money spent and fewer cures developed
raise questions for patients and their families.
If you’ve made a charitable donation to medical research or paid
taxes in the last year, your dollars are part of the $40 billion spent
annually on medical research at universities worldwide. While your
dollars may help to support important basic scientific discoveries in
those laboratories, chances are slim to none that those discoveries
will ever cross the finish line for patient treatments. The system for
funding and conducting medical research and translating that
research into patient treatments is broken.
How big is the problem?
In the last decade, in spite of a doubling of dollars invested in
academic research and commercial research and development, the
number of new drugs coming to market has remained flat. As a
result, for the vast majority of diseases, there continue to be few, if
any, effective treatments or cures. Every American is impacted by
such diseases either directly or indirectly. And the financial and
quality-of-life burden this puts on those individuals, their families
and the entire health care system is enormous. According to current
estimates by the Milken Institute, the cost is $1 trillion a year in
the U.S. and is expected to increase to $6 trillion over the next
20 years.
www.myelinrepair.org
Why is Nothing Happening?
Promising discoveries made in university laboratories
aren’t making it to patient treatments.
Growing Disconnect Between Science and Industry
Academic scientists and commercial biopharma function in different
worlds with different incentives. As a result the gap between the
two has grown rather than narrowed in the last 30 years.
• Understanding complex diseases requires the expertise of multiple
related disciplines. The competitive reward structure of academic
research prevents productive collaboration with others.
• The “product” of medical research done in university laboratories
is scientific articles published in peer-reviewed scientific journals,
not patient treatments. For complex diseases, to assemble, test
and validate the data reported in scientific journals from multiple
unrelated investigators over course of years is virtually impossible.
• Scientific data produced in university laboratories generally do
not meet the necessary industry standards for commercial drug
development. Without industry-standard data sets, pharmaceutical
companies are unlikely to make the multimillion-dollar investment
in validating the thousands of discoveries made in university
laboratories. Today, the cost of bringing a single drug to market
is $1 billion.
• University technology transfer offices have limited resources to
protect the intellectual property developed in their laboratories.
Without this protection, biotech and pharmaceutical companies
will not consider these discoveries for commercial development.
• Venture capital to fund entrepreneurial academic scientists who
wish to spin out their discoveries into commercially-viable therapeutics is drying up.
Today, academic laboratories funded by the NIH and
other non-profit organizations are the source of tens
of thousands of incremental discoveries each year.
Monitoring these discoveries for potential commercial
treatments has become virtually impossible.
A
In the 1950s, the number of
academic discoveries was more
manageable and could more
easily find its way to industry to
be turned into treatments.
P
GROWING
A
Academia
DISCONNECT
Academia
Pharmaceutical companies are unlikely to make
the multimillion-dollar investment in validating
discoveries made outside their own research and
development laboratories.
Pharma
Treatments
P
Pharma
Treatments
Traditional Approach
Promising results from academic laboratories,
even those published in peer-reviewed scientific
journals, are generally viewed as incomplete,
lacking the level of rigor and reproducibility
demanded by industry.
PAST
TODAY
On average it costs industry more
than $1 billion to successfully identify
a single drug compound for a new
target, take it through development,
clinical trials and FDA approval.
MRF is Out Producing the Current System of Drug Discovery
Promising discoveries can be identified, validated
and developed in a fraction of the time.
Identifying the Problem and Bridging the Gap
In 2004, the Myelin Repair Foundation launched its innovative
Accelerated Research Collaboration™ (ARC™) model—a new paradigm for medical research designed to speed the process of basic
science and ensure that discoveries made in university laboratories
were driven toward commercial development and ultimately to
patient treatments for the millions living with diseases for which
there are no effective treatments or cures.
To prove that basic science could be accelerated, the MRF undertook a five-year myelin repair research program that would lead to
new treatments for multiple sclerosis. The goal was an aggressive
one: To license for development, the first myelin repair therapeutic
target within five years.
By infusing goal-oriented, best business practices and ongoing
management oversight into the process of academic medical
research, the MRF’s ARC model has produced extraordinary
results: In just four short years, the identification of 19 potential
myelin repair therapeutic pathways/targets; the development of
two dozen new research tools with application for all neurological
disease research; and the discovery of 18 patentable inventions. By
feeding these discoveries into an MRF-funded target validation and
early-stage drug discovery network, the MRF is ensuring that the
necessary data sets produced by the MRF will meet the standards for
commercial licensing and drug discovery.
To learn more about how the ARC model is out-producing the
traditional model of medical research and driving discoveries into
commercial development, see back and visit www.myelinrepair.org.
A
Academia
TARGET
DISCOVERY
The MRF is the only not-for-profit
medical research foundation that acts as
an intermediary to translate discoveries
from academic laboratories into
commercial development.
MRF ARC Model
TARGET
VALIDATION
DRUG
DISCOVERY
P
Through agreements with participating
universities, the MRF files patent applications
to protect the intellectual property developed
in its funded laboratories.
The MRF funds and manages target validation
studies in multiple animal and in vitro models
to ensure the viability of its therapeutic targets
on humans.
The MRF funds and manages a battery
of standardized pre-clinical tests to refine
and evaluate potential drug leads.
Pharma
Treatments
MRF Approach
By using its not-for-profit status and the necessary resources,
the MRF is playing a unique role in driving forward potential
therapeutic targets into commercial development.
2004–FUTURE
The Accelerated Research Collaboration™ (ARC™) Model
Through its proof-of-concept myelin repair
research program, the Myelin Repair Foundation
has shown that a results-driven, strategic business
model is as important in medical research as it is to
the success of any commercial enterprise. Based on
the principles of cutting edge business models, the
MRF’s ARC Model, establishes new incentives for
both academic scientists and commercial drug
developers to accelerate the process of developing
new patient treatments. The ARC model engages
participants in all phases of the drug discovery
process including target discovery, target validation,
early-stage drug discovery, patent application and
licensing deals, and the development of relevant tools
and biomarkers. By bringing a comprehensive
outside perspective and the necessary resources,
the MRF is playing a unique role in driving
forward potential therapeutic targets into
commercial development.
How the ARC Model Accelerates Target Discovery
In the target discovery phase, scientific investigators
in university laboratories seek to identify the basic
biological building blocks that could potentially
cause or prevent a disease. The ARC model directly
addresses the characteristics of traditional academic
research that slow down the process of discovery,
including the randomness of experiments and the
scientists’ need to protect their discoveries until the
results are published. To accomplish this cultural and
behavior shift, the ARC model requires
• The commitment of an interdisciplinary team of
principal investigators to a collaborative process
in which science is shared in real time;
• The development of a focused, treatment-driven
research plan with milestones and objectives;
• Cooperatively designed experiments conducted
in parallel resulting in a faster rate of the discovery
and application of new knowledge required to
solve the research problem.
• The review and input of senior scientists to ensure
high-quality science;
How the ARC Model Encourages Licensing
by Commercial Pharma Partners
• The active professional management oversight
of the research plan; and
The gap between academic scientists and commercial
drug developers is broad and deep. Few academic
scientists have an interest in commercializing their
discoveries and commercial drug developers, with
competing internal research and development programs, have little interest in funding target validation
and early-stage drug discovery on targets identified
in academic laboratories. To gain the attention and
interest of commercial drug developers in targets
developed outside of their own laboratories, (1) the
targets must be validated to industry standards and
(2) the inventions around targets must be patented to
protect the interests of all parties. Through contracts
with participating universities, the ARC model ensures
the funding and management of patent filing and
execution for all patentable discoveries made in participating laboratories. By agreement, the universities
own the patents but the MRF acts as the licensing
entity. This ensures that targets are rapidly advanced
toward clinical development in accordance with the
MRF’s mission and goals.
• The identification and protection of relevant
discoveries for future licensing to commercial
development.
How the ARC Model Accelerates Target Validation
Validating the targets identified during the target
discovery phase must be accomplished before targets
can advance toward commercial development. Since
this validation is outside the scope, expertise or
interest of academic scientists, it can only be accomplished by commercial contract research organizations
(CROs). These CROs conduct the repetitive validation
studies in animal and in vitro models that will
demonstrate the targets true viability. To accelerate
the validation process, the ARC model assembles a
network of CROs to conduct parallel target validation
studies that speed the go/no go decisions for further
development. The ongoing involvement and oversight by the MRF’s Drug Discovery Advisory Group
ensures that the most promising targets are quickly
validated to commercial standards and advanced
toward early-stage drug discovery.
How the ARC Model Accelerates Early-Stage
Drug Discovery
Drug discovery is typically accomplished in commercial biotech and pharmaceutical companies only for
targets identified within their own research and
development programs. Through a series of studies,
drug leads are refined and evaluated in a battery of
standardized pre-clinical tests. To conduct drug discovery activities on targets identified by the MRF target
discovery team, the ARC model assembles a network
of CROs and biopharma partners to conduct studies
in parallel on multiple validated targets to ensure the
rapid development of clinical drug candidates.
The Myelin Repair Foundation is supported by gifts and grants from individuals, corporations and foundations. Since 2004, we have raised more
than $23 million toward our initial $25 million, five-year myelin repair
target discovery program. While many of our supporters have ties to
multiple sclerosis, half the funds raised to date have come from individuals
and foundations interested in the potential the ARC model holds for
speeding research for all diseases. It is through their support and their
willingness to serve as ambassadors for the MRF that our success to date
has been possible and we are grateful to them.
Moving forward, in addition to continued funding for our target discovery
team, we will also be supporting myelin repair target validation and drug
discovery networks (as much as $1–$3 million per target). As a result, our
funding requirements will increase significantly over the next five years.
Though there are many opportunities to give at all levels, our supporters
can feel confident that the largest percentage of their gifts will support
research. In fact, over four years, in part due to the support of the Robert
Wood Johnson Foundation, 90% of each gift made to the MRF has been
Tools and Biomarkers
Given that myelin repair is a new area of study for
multiple sclerosis, existing research tools—animal
models and assays—are not necessarily predictive of
what will happen in humans with the disease. For that
reason, the MRF supports the development of new
models that will more accurately gauge the relative
impact of therapeutic approaches in humans.
The development of biomarkers—biological markers
that indicate disease state—in parallel with target
identification will not only enable earlier diagnosis of
MS but also will increase the speed and reduce the
cost of clinical trials.
The MRF’s tool and biomarker development strategies
are key to accelerating drug discovery.
spent exclusively on research. Most importantly though, our focused
management of research is bearing fruit that will change the lives of
millions suffering from MS and other diseases for which there are currently
few available treatments or no cures.
You are invited to join us in this extraordinary opportunity to change the
way medical research is done and more rapidly deliver patient treatments
to people who shouldn’t have to wait.
For a listing of current supporters or more information about making
your gift to the MRF, please contact us at 408-871-2410 or email
info@myelinrepair.org
Myelin Repair Foundation
18809 Cox Avenue, Suite 190
Saratoga, CA 95070
TEL: 408.871.2410
FAX: 408.871.2409
info@myelinrepair.org
www.myelinrepair.org
©2008 Myelin Repair Foundation. All rights reserved. MRF, the MRF Logo, Accelerated Research Collaboration Model,
ARC Model, and Collaborative Research Process are trademarks of Myelin Repair Foundation. All other marks are the property of their respective owners. 10/2008
Dept. of Medicine
Testing, Testing
The health-care bill has no master plan for curbing costs. Is
that a bad thing?
by Atul Gawande December 14, 2009
In medicine, as in agriculture, efficiency cannot be achieved by fiat.
Cost is the spectre haunting health reform. For many decades, the great flaw in the
American health-care system was its unconscionable gaps in coverage. Those gaps have
widened to become graves—resulting in an estimated forty-five thousand premature deaths
each year—and have forced more than a million people into bankruptcy. The emerging
health-reform package has a master plan for this problem. By establishing insurance
exchanges, mandates, and tax credits, it would guarantee that at least ninety-four per cent
of Americans had decent medical coverage. This is historic, and it is necessary. But the
legislation has no master plan for dealing with the problem of soaring medical costs. And
this is a source of deep unease.
Health-care costs are strangling our country. Medical care now absorbs eighteen per cent of
every dollar we earn. Between 1999 and 2009, the average annual premium for employersponsored family insurance coverage rose from $5,800 to $13,400, and the average cost per
Medicare beneficiary went from $5,500 to $11,900. The costs of our dysfunctional health-care
system have already helped sink our auto industry, are draining state and federal coffers,
and could ultimately imperil our ability to sustain universal coverage.
What have we gained by paying more than twice as much for medical care as we did a
decade ago? The health-care sector certainly employs more people and more machines than
it did. But there have been no great strides in service. In Western Europe, most primary-care
practices now use electronic health records and offer after-hours care; in the United States,
most don’t. Improvement in demonstrated medical outcomes has been modest in most
fields. The reason the system is a money drain is not that it’s so successful but that it’s
fragmented, disorganized, and inconsistent; it’s neglectful of low-profit services like mentalhealth care, geriatrics, and primary care, and almost giddy in its overuse of high-cost
technologies such as radiology imaging, brand-name drugs, and many elective procedures.
At the current rate of increase, the cost of family insurance will reach twenty-seven
thousand dollars or more in a decade, taking more than a fifth of every dollar that people
earn. Businesses will see their health-coverage expenses rise from ten per cent of total labor
costs to seventeen per cent. Health-care spending will essentially devour all our future wage
increases and economic growth. State budget costs for health care will more than double,
and Medicare will run out of money in just eight years. The cost problem, people have come
to realize, threatens not just our prosperity but our solvency.
So what does the reform package do about it? Turn to page 621 of the Senate version, the
section entitled “Transforming the Health Care Delivery System,” and start reading. Does
the bill end medicine’s destructive piecemeal payment system? Does it replace paying for
quantity with paying for quality? Does it institute nationwide structural changes that curb
costs and raise quality? It does not. Instead, what it offers is . . . pilot programs.
This has provided a soft target for critics. “Two thousand seventy-four pages and trillions of
dollars later,” Mitch McConnell, the Senate Minority Leader, said recently, “this bill doesn’t
even meet the basic goal that the American people had in mind and what they thought this
debate was all about: to lower costs.” According to the Congressional Budget Office, the bill
makes no significant long-term cost reductions. Even Democrats have become nervous. For
many, the hope of reform was to re-form the health-care system. If nothing is done, the
United States is on track to spend an unimaginable ten trillion dollars more on health care in
the next decade than it currently spends, hobbling government, growth, and employment.
Where we crave sweeping transformation, however, all the current bill offers is those pilot
programs, a battery of small-scale experiments. The strategy seems hopelessly inadequate
to solve a problem of this magnitude. And yet—here’s the interesting thing—history
suggests otherwise.
At the start of the twentieth century, another indispensable but unmanageably costly sector
was strangling the country: agriculture. In 1900, more than forty per cent of a family’s
income went to paying for food. At the same time, farming was hugely labor-intensive, tying
up almost half the American workforce. We were, partly as a result, still a poor nation. Only
by improving the productivity of farming could we raise our standard of living and emerge as
an industrial power. We had to reduce food costs, so that families could spend money on
other goods, and resources could flow to other economic sectors. And we had to make
farming less labor-dependent, so that more of the population could enter non-farming
occupations and support economic growth and development.
America’s agricultural crisis gave rise to deep national frustration. The inefficiency of farms
meant low crop yields, high prices, limited choice, and uneven quality. The agricultural
system was fragmented and disorganized, and ignored evidence showing how things could
be done better. Shallow plowing, no crop rotation, inadequate seedbeds, and other habits
sustained by lore and tradition resulted in poor production and soil exhaustion. And lack of
coördination led to local shortages of many crops and overproduction of others.
You might think that the invisible hand of market competition would have solved these
problems, that the prospect of higher income from improved practices would have
encouraged change. But laissez-faire had not worked. Farmers relied so much on human
muscle because it was cheap and didn’t require the long-term investment that animal power
and machinery did. The fact that land, too, was cheap encouraged extensive, almost careless
cultivation. When the soil became exhausted, farmers simply moved; most tracts of
farmland were occupied for five years or less. Those who didn’t move tended to be tenant
farmers, who paid rent to their landlords in either cash or crops, which also discouraged
long-term investment. And there was a deep-seated fear of risk and the uncertainties of
change; many farmers dismissed new ideas as “book farming.”
Things were no better elsewhere in the world. For industrializing nations in the first half of
the twentieth century, food was the fundamental problem. The desire for a once-and-for-all
fix led Communist governments to take over and run vast “scientific” farms and collectives.
We know what that led to: widespread famines and tens of millions of deaths.
The United States did not seek a grand solution. Private farms remained, along with the
considerable advantages of individual initiative. Still, government was enlisted to help
millions of farmers change the way they worked. The approach succeeded almost shockingly
well. The resulting abundance of goods in our grocery stores and the leaps in our standard
of living became the greatest argument for America around the world. And, as the
agricultural historian Roy V. Scott recounted, four decades ago, in his remarkable study “The
Reluctant Farmer,” it all started with a pilot program.
In February, 1903, Seaman Knapp arrived in the East Texas town of Terrell to talk to the local
farmers. He was what we’d today deride as a government bureaucrat; he worked for the
United States Department of Agriculture. Earlier in his life, he had been a farmer himself and
a professor of agriculture at Iowa State College. He had also been a pastor, a bank president,
and an entrepreneur, who once brought twenty-five thousand settlers to southwest
Louisiana to farm for an English company that had bought a million and a half acres of land
there. Then he got a position at the U.S.D.A. as an “agricultural explorer,” travelling across
Asia and collecting seeds for everything from alfalfa to persimmons, not to mention a
variety of rice that proved more productive than any that we’d had. The U.S.D.A. now
wanted him to get farmers to farm differently. And he had an idea.
Knapp knew that the local farmers were not going to trust some outsider who told them to
adopt a “better” way of doing their jobs. So he asked Terrell’s leaders to find just one farmer
who would be willing to try some “scientific” methods and see what happened. The group
chose Walter C. Porter, and he volunteered seventy acres of land where he had grown only
cotton or corn for twenty-eight years, applied no fertilizer, and almost completely depleted
the humus layer. Knapp gave him a list of simple innovations to follow—things like deeper
plowing and better soil preparation, the use of only the best seed, the liberal application of
fertilizer, and more thorough cultivation to remove weeds and aerate the soil around the
plants. The local leaders stopped by periodically to confirm that he was able to do what he
had been asked to.
The year 1903 proved to be the most disastrous for cotton in a quarter century, because of
the spread of the boll weevil. Nonetheless, at the end of the season Porter reported a
substantial increase in profit, clearing an extra seven hundred dollars. He announced that he
would apply the lessons he had learned to his entire, eight-hundred-acre property, and many
other farmers did the same. Knapp had discovered a simple but critical rule for gaining
coöperation: “What a man hears he may doubt, what he sees he may possibly doubt, but
what he does himself he cannot doubt.”
The following year, the U.S.D.A. got funding to ramp up his activities. Knapp appointed
thirty-three “extension agents” to set up similar demonstration farms across Texas and into
Louisiana. The agents provided farmers with technical assistance and information, including
comparative data on what they and others were achieving. As experience accrued, Knapp
revised and refined his list of recommended practices for an expanding range of crops and
livestock. The approach proved just as successful on a larger scale.
The program had no shortage of critics. Southern Farm Magazine denounced it as
government control of agriculture. But, in 1914, after two years of stiff opposition, Congress
passed the Smith-Lever Act, establishing the U.S.D.A. Cooperative Extension Service. By
1920, there were seven thousand federal extension agents, working in almost every county
in the nation, and by 1930 they had set up more than seven hundred and fifty thousand
demonstration farms.
As Daniel Carpenter, a professor of government at Harvard, points out, the demonstrationfarm program was just one of a hodgepodge of successful U.S.D.A. initiatives that began as
pilots. Another was devoted to comparative-effectiveness research: experimental stations
were established—eventually, in every state—that set about determining the most
productive methods for growing plants and raising livestock. There was a pilot investigation
program, which, among other things, traced a 1904 fruit-decay crisis in California to cuts in
the fruit from stem clippers and the fingernails of handlers (and, along the way, introduced
modern packing methods industry-wide). The U.S.D.A.’s scientific capabilities grew into the
world’s greatest biological-discovery machine of the time.
The department invested heavily in providing timely data to farmers, so that they could
make more rational planting decisions. It ran the country’s weather-forecasting system. And
its statistics service adopted crop-reporting systems from Europe that allowed it to provide
independent crop forecasts—forecasts that, among other things, dramatically reduced
speculation bubbles. (In 1927, Republicans, prompted by aggrieved New York speculators,
managed to prohibit the U.S.D.A. from releasing the forecasts; the program was reinstituted
three years later, following an outcry from farmers.) The department continuously updated
its storehouse of technical assistance, so that when new technologies arrived—new hybrid
varieties, new kinds of fertilizer, new forms of mechanization—farmers were able to make
use of them more swiftly and effectively. The U.S.D.A. established an informationbroadcasting service. A hundred and seventeen commercial and forty-six military radio
stations carried crop reports; printed reports were distributed to fifteen million farmers a
year. It also introduced a grading system for food—meat, eggs, dairy products, and fresh
fruits and vegetables—to flag and discourage substandard quality.
What seemed like a hodgepodge eventually cohered into a whole. The government never
took over agriculture, but the government didn’t leave it alone, either. It shaped a feedback
loop of experiment and learning and encouragement for farmers across the country. The
results were beyond what anyone could have imagined. Productivity went way up,
outpacing that of other Western countries. Prices fell by half. By 1930, food absorbed just
twenty-four per cent of family spending and twenty per cent of the workforce. Today, food
accounts for just eight per cent of household income and two per cent of the labor force. It
is produced on no more land than was devoted to it a century ago, and with far greater
variety and abundance than ever before in history.
This transformation, though critical to America’s rise as a superpower, involved some painful
dislocations: farms were consolidated; unproductive farmers were winnowed out. As the
historian Sally Clarke, of the University of Texas at Austin, has pointed out, it’s astonishing
that the revolution took place without vast numbers of farm foreclosures and social unrest.
We cushioned the impact of the transformation—with, for instance, price supports that
smoothed out the price decline and avoided wholesale bankruptcies. There were
compromises and concessions and wrong turns. But the strategy worked, because United
States agencies were allowed to proceed by trial and error, continually adjusting their
policies over time in response not to ideology but to hard measurement of the results
against societal goals. Could something like this happen with health care?
There are, in human affairs, two kinds of problems: those which are amenable to a technical
solution and those which are not. Universal health-care coverage belongs to the first
category: you can pick one of several possible solutions, pass a bill, and (allowing for some
tinkering around the edges) it will happen. Problems of the second kind, by contrast, are
never solved, exactly; they are managed. Reforming the agricultural system so that it serves
the country’s needs has been a process, involving millions of farmers pursuing their
individual interests. This could not happen by fiat. There was no one-time fix. The same goes
for reforming the health-care system so that it serves the country’s needs. No nation has
escaped the cost problem: the expenditure curves have outpaced inflation around the
world. Nobody has found a master switch that you can flip to make the problem go away. If
we want to start solving it, we first need to recognize that there is no technical solution.
Much like farming, medicine involves hundreds of thousands of local entities across the
country—hospitals, clinics, pharmacies, home-health agencies, drug and device suppliers.
They provide complex services for the thousands of diseases, conditions, and injuries that
afflict us. They want to provide good care, but they also measure their success by the
amount of revenue they take in, and, as each pursues its individual interests, the net result
has been disastrous. Our fee-for-service system, doling out separate payments for
everything and everyone involved in a patient’s care, has all the wrong incentives: it rewards
doing more over doing right, it increases paperwork and the duplication of efforts, and it
discourages clinicians from working together for the best possible results. Knowledge
diffuses too slowly. Our information systems are primitive. The malpractice system is
wasteful and counterproductive. And the best way to fix all this is—well, plenty of people
have plenty of ideas. It’s just that nobody knows for sure.
The history of American agriculture suggests that you can have transformation without a
master plan, without knowing all the answers up front. Government has a crucial role to play
here—not running the system but guiding it, by looking for the best strategies and practices
and finding ways to get them adopted, county by county. Transforming health care
everywhere starts with transforming it somewhere. But how?
We have our models, to be sure. There are places like the Mayo Clinic, in Minnesota;
Intermountain Healthcare, in Utah; the Kaiser Permanente health-care system in California;
and Scott & White Healthcare, in Texas, that reliably deliver higher quality for lower costs
than elsewhere. Yet they have had years to develop their organizations and institutional
cultures. We don’t yet know how to replicate what they do. Even they have difficulties.
Kaiser Permanente has struggled to bring California-calibre results to North Carolina, for
instance. Each area has its own history and traditions, its own gaps in infrastructure, and its
own distinctive patient population. To figure out how to transform medical communities,
with all their diversity and complexity, is going to involve trial and error. And this will require
pilot programs—a lot of them.
Pick up the Senate health-care bill—yes, all 2,074 pages—and leaf through it. Almost half of
it is devoted to programs that would test various ways to curb costs and increase quality.
The bill is a hodgepodge. And it should be.
The bill tests, for instance, a number of ways that federal insurers could pay for care.
Medicare and Medicaid currently pay clinicians the same amount regardless of results. But
there is a pilot program to increase payments for doctors who deliver high-quality care at
lower cost, while reducing payments for those who deliver low-quality care at higher cost.
There’s a program that would pay bonuses to hospitals that improve patient results after
heart failure, pneumonia, and surgery. There’s a program that would impose financial
penalties on institutions with high rates of infections transmitted by health-care workers.
Still another would test a system of penalties and rewards scaled to the quality of home
health and rehabilitation care.
Other experiments try moving medicine away from fee-for-service payment altogether. A
bundled-payment provision would pay medical teams just one thirty-day fee for all the
outpatient and inpatient services related to, say, an operation. This would give clinicians an
incentive to work together to smooth care and reduce complications. One pilot would go
even further, encouraging clinicians to band together into “Accountable Care
Organizations” that take responsibility for all their patients’ needs, including prevention—so
that fewer patients need operations in the first place. These groups would be permitted to
keep part of the savings they generate, as long as they meet quality and service thresholds.
The bill has ideas for changes in other parts of the system, too. Some provisions attempt to
improve efficiency through administrative reforms, by, for example, requiring insurance
companies to create a single standardized form for insurance reimbursement, to alleviate
the clerical burden on clinicians. There are tests of various kinds of community wellness
programs. The legislation also continues a stimulus-package program that funds
comparative-effectiveness research—testing existing treatments for a condition against one
another—because fewer treatment failures should mean lower costs.
There are hundreds of pages of these programs, almost all of which appear in the House bill
as well. But the Senate reform package goes a few U.S.D.A.-like steps further. It creates a
center to generate innovations in paying for and organizing care. It creates an independent
Medicare advisory commission, which would sort through all the pilot results and make
recommendations that would automatically take effect unless Congress blocks them. It also
takes a decisive step in changing how insurance companies deal with the costs of health
care. In the nineteen-eighties, H.M.O.s tried to control costs by directly overruling doctors’
recommendations (through requiring pre-authorization and denying payment); the backlash
taught them that it was far easier to avoid sicker patients and pass along cost increases to
employers. Both the House and the Senate bills prevent insurance companies from
excluding patients. But the Senate plan also imposes an excise tax on the most expensive,
“Cadillac” insurance plans. This pushes private insurers to make the same efforts that public
insurers will make to test incentives and programs that encourage clinicians to keep costs
down.
Which of these programs will work? We can’t know. That’s why the Congressional Budget
Office doesn’t credit any of them with substantial savings. The package relies on taxes and
short-term payment cuts to providers in order to pay for subsidies. But, in the end, it
contains a test of almost every approach that leading health-care experts have suggested.
(The only one missing is malpractice reform. This is where the Republicans could be helpful.)
None of this is as satisfying as a master plan. But there can’t be a master plan. That’s a
crucial lesson of our agricultural experience. And there’s another: with problems that don’t
have technical solutions, the struggle never ends.
Recently, I spoke with the agricultural extension agent for my home town, Athens, Ohio. His
name is Rory Lewandowski. He is fifty-one and has been the extension agent there for nine
years. He grew up on a Minnesota dairy farm, and got a bachelor’s degree in animal science
and agronomy from the University of Minnesota and a master’s degree in agronomy from
the University of Wisconsin. He spent most of his career in farm education, including eight
years in Bolivia, where, as a volunteer for the Mennonite Central Committee, he created
demonstration farms in an area where the mining economy had collapsed.
I had a vague childhood memory of the extension office, on West Union Street, near
downtown Athens; kids in my school used to go to 4-H meetings there. But I had no idea
what the agent really did. So I asked Lewandowski. “I just try to help make farming better in
Athens County,” he said.
Athens is a green, hilly county at the edge of the Appalachian Mountains, and the farms
there are small—an average of a hundred and fifty acres, Lewandowski said. There are six
hundred and sixty of them, with, he estimated, as many as a hundred kinds of produce and
livestock. His primary task is to help farmers improve the productivity and quality of their
farms and to reduce environmental harm. A hundred years after Seaman Knapp, the
difficulties have changed but they haven’t gone away.
I’d caught Lewandowski in his office on a Saturday. He routinely puts in sixty-five to eighty
hours a week at his job. He has a five-week small-ruminant course for sheep and goat
producers; a ten-week master-gardener course; and a grazing school. His wife, Marcia, who
has written two knitting books, handles registration at the door. He sends out a monthly
newsletter. He speaks with about half the farmers in the county in the course of a year.
Mostly, the farmers come to him—for guidance and troubleshooting. He told me about a
desperate message that a farmer left him the other day. The man’s spinach plants had been
afflicted with downy mildew and were collapsing. “He said he was going to lose his whole
crop by the weekend and all the markets that he depended on,” Lewandowski said. He
called the farmer back and explained that the disease gets started with cooler temperatures
and high humidity. Had the farmer been using overhead watering?
Yes, he said, but he had poked around the Internet and was thinking about switching to
misting.
Not a good idea. “That still leaves too much moisture on the leaf,” Lewandowski said. He
recommended that the farmer switch to drip irrigation, and get some fans in his
greenhouse, too.
The farmer said that he’d thought about fans but worried that they would spread the spores
around.
They will, Lewandowski said. “But you need wetness on the leaves for four to six hours to
get penetration through the leaf cuticle,” he explained. If the plants were dried out, it
wouldn’t be a problem. “You’ve got to understand the biology of this,” he said to me.
He doesn’t always understand the biology himself. He told me about a beef farmer who had
been offered distiller’s grain from a microbrewery, and wanted to know whether he could
feed it to his cows. Lewandowski had no idea, but he called the program’s beef extension
expert and got the answer. (Yes, with some limits on how much he put in a ration.) A large
organic farm called with questions about growing vegetables in high tunnels, a relatively
new innovation that the farm had adopted to extend its growing season. Lewandowski had
no experience with this, but an extension agent in Wooster, Ohio, was able to supply
information on what had worked best elsewhere.
“You have to be able to say, ‘I don’t know, but I can figure that out for you,’ ” Lewandowski
said.
If he could change one thing about farming in Athens, I asked, what would it be? “Grazing
management,” he said. “Think about how the grass grows in your lawn. A grass plant needs
at least a few days after a mowing to grow.” If you mowed your lawn every day, the grass
would become thin and patchy. That’s what happens when farmers leave their animals out
in one big pasture—which is what most small farmers do—or rotate them too slowly. In his
grazing school and in demonstrations, he asks farmers to keep their animals in a given area
for only a few days, then move them to a section where the grass is eight inches tall and has
reached its highest nutrient value. This way, the pastures won’t erode, and the cattle will
grow better, yielding higher-quality meat and more of it. The technique requires discipline,
though, and extra work, and farmers have been slow to give it a try.
I asked him if he has had any victories. All the time, he said. But he had no illusions: his job
will never end.
Cynicism about government can seem ingrained in the American character. It was, ironically,
in a speech to the Future Farmers of America that President Ronald Reagan said, “The ten
most dangerous words in the English language are ‘Hi, I’m from the government, and I’m
here to help.’ ” Well, Lewandowski is from the government, and he’s here to help. And small
farms in Athens County are surviving because of him. What he does involves continual
improvisation and education; problems keep changing, and better methods of managing
them keep emerging—as in medicine.
In fact, when I spoke with Lewandowski about farming in Athens, I was struck by how much
it’s like the health-care system there. Doctors typically work in small offices, with only a few
colleagues, as in most of the country. The hospital in Athens has less than a tenth the
number of beds that my hospital in Boston has. The county’s clinicians could do much more
to control costs and improve quality of care, and they will have to. But it will be an ongoing
struggle.
My parents recently retired from medical practice in Athens. My mother was a pediatrician
and my father was a urologist. I tried to imagine what it would be like for them if they were
still practicing. They would be asked to switch from paper to electronic medical records, to
organize with other doctors to reduce medical complications and unnecessary costs, to try
to arrive at a package price for a child with asthma or a man with kidney stones. These are
the kinds of changes that everyone in medicine has to start making. And I have no idea how
my parents would do it.
I work in an academic medical group in Boston with more than a thousand doctors and a
vastly greater infrastructure of support, and we don’t know the answers to half these
questions, either. Recently, I had a conversation with a few of my colleagues about whether
we could accept a bundled payment for patients with thyroid cancer, one of the cancers I
commonly treat in my practice as a surgeon. It seemed feasible until we started thinking
about patients who wanted to get their imaging or radiation done elsewhere. There was
also the matter of how we’d divide the money among the surgeons, endocrinologists,
radiologists, and others involved. “Maybe we’d have to switch to salaries,” someone said.
Things were getting thorny. Then I went off to do an operation in which we opened up
about a thousand dollars’ worth of disposable materials that we never used.
Surely we can solve such problems; the reform bill sets out to find ways that we can. And, in
the next several years, as the knowledge accumulates, I suspect that we’ll need our own
Seaman Knapps and Rory Lewandowskis to help spread these practices county by county.
We’ll also need data, if we’re going to know what is succeeding. Among the most important,
and least noticed, provisions in the reform legislation is one in the House bill to expand our
ability to collect national health statistics. The poverty of our health-care information is an
embarrassment. At the end of each month, we have county-by-county data on
unemployment, and we have prompt and detailed data on the price of goods and
commodities; we can use these indicators to guide our economic policies. But try to look up
information on your community’s medical costs and utilization—or simply try to find out
how many people died from heart attacks or pneumonia or surgical complications—and you
will discover that the most recent data are at least three years old, if they exist at all, and
aren’t broken down to a county level that communities can learn from. It’s like driving a car
with a speedometer that tells you only how fast all cars were driving, on average, three
years ago. We have better information about crops and cows than we do about patients. If
health-care reform is to succeed, the final legislation must do something about this.
Getting our medical communities, town by town, to improve care and control costs isn’t a
task that we’ve asked government to take on before. But we have no choice. At this point,
we can’t afford any illusions: the system won’t fix itself, and there’s no piece of legislation
that will have all the answers, either. The task will require dedicated and talented people in
government agencies and in communities who recognize that the country’s future depends
on their sidestepping the ideological battles, encouraging local change, and following the
results. But if we’re willing to accept an arduous, messy, and continuous process we can
come to grips with a problem even of this immensity. We’ve done it before. ♦
ILLUSTRATION: FRANCESCO BONGIORNI
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ANNALS OF MEDICINE
THE COST CONUNDRUM
What a Texas town can teach us about health care.
by Atul Gawande
JUNE 1, 2009
Costlier care is often worse care. Photograph by Phillip Toledano.
t is spring in McAllen, Texas. The morning sun is warm. The streets are lined with palm trees and pickup trucks.
McAllen is in Hidalgo County, which has the lowest household income in the country, but it’s a border town, and a
thriving foreign‐trade zone has kept the unemployment rate below ten per cent. McAllen calls itself the Square Dance
Capital of the World. “Lonesome Dove” was set around here.
McAllen has another distinction, too: it is one of the most expensive health‐care markets in the country. Only
Miami—which has much higher labor and living costs—spends more per person on health care. In 2006, Medicare
spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve
thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average
person earns.
The explosive trend in American medical costs seems to have occurred here in an especially intense form. Our
country’s health care is by far the most expensive in the world. In Washington, the aim of health‐care reform is not
just to extend medical coverage to everybody but also to bring costs under control. Spending on doctors, hospitals,
drugs, and the like now consumes more than one of every six dollars we earn. The financial burden has damaged the
global competitiveness of American businesses and bankrupted millions of families, even those with insurance. It’s
also devouring our government. “The greatest threat to America’s fiscal health is not Social Security,” President
Barack Obama said in a March speech at the White House. “It’s not the investments that we’ve made to rescue our
economy during this crisis. By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost
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of health care. It’s not even close.”
The question we’re now frantically grappling with is how this came to be, and what can be done about it. McAllen,
Texas, the most expensive town in the most expensive country for health care in the world, seemed a good place to
look for some answers.
rom the moment I arrived, I asked almost everyone I encountered about McAllen’s health costs—a businessman I
met at the five‐gate McAllen‐Miller International Airport, the desk clerks at the Embassy Suites Hotel, a police‐
academy cadet at McDonald’s. Most weren’t surprised to hear that McAllen was an outlier. “Just look around,” the
cadet said. “People are not healthy here.” McAllen, with its high poverty rate, has an incidence of heavy drinking sixty
per cent higher than the national average. And the Tex‐Mex diet has contributed to a thirty‐eight‐per‐cent obesity
rate.
One day, I went on rounds with Lester Dyke, a weather‐beaten, ranch‐owning fifty‐three‐year‐old cardiac surgeon
who grew up in Austin, did his surgical training with the Army all over the country, and settled into practice in Hidalgo
County. He has not lacked for business: in the past twenty years, he has done some eight thousand heart operations,
which exhausts me just thinking about it. I walked around with him as he checked in on ten or so of his patients who
were recuperating at the three hospitals where he operates. It was easy to see what had landed them under his knife.
They were nearly all obese or diabetic or both. Many had a family history of heart disease. Few were taking preventive
measures, such as cholesterol‐lowering drugs, which, studies indicate, would have obviated surgery for up to half of
them.
Yet public‐health statistics show that cardiovascular‐disease rates in the county are actually lower than average,
probably because its smoking rates are quite low. Rates of asthma, H.I.V., infant mortality, cancer, and injury are
lower, too. El Paso County, eight hundred miles up the border, has essentially the same demographics. Both counties
have a population of roughly seven hundred thousand, similar public‐health statistics, and similar percentages of
non‐English speakers, illegal immigrants, and the unemployed. Yet in 2006 Medicare expenditures (our best
approximation of over‐all spending patterns) in El Paso were $7,504 per enrollee—half as much as in McAllen. An
unhealthy population couldn’t possibly be the reason that McAllen’s health‐care costs are so high. (Or the reason that
America’s are. We may be more obese than any other industrialized nation, but we have among the lowest rates of
smoking and alcoholism, and we are in the middle of the range for cardiovascular disease and diabetes.)
Was the explanation, then, that McAllen was providing unusually good health care? I took a walk through Doctors
Hospital at Renaissance, in Edinburg, one of the towns in the McAllen metropolitan area, with Robert Alleyn, a
Houston‐trained general surgeon who had grown up here and returned home to practice. The hospital campus
sprawled across two city blocks, with a series of three‐ and four‐story stucco buildings separated by golfing‐green
lawns and black asphalt parking lots. He pointed out the sights—the cancer center is over here, the heart center is
over there, now we’re coming to the imaging center. We went inside the surgery building. It was sleek and modern,
with recessed lighting, classical music piped into the waiting areas, and nurses moving from patient to patient behind
rolling black computer pods. We changed into scrubs and Alleyn took me through the sixteen operating rooms to
show me the laparoscopy suite, with its flat‐screen video monitors, the hybrid operating room with built‐in imaging
equipment, the surgical robot for minimally invasive robotic surgery.
I was impressed. The place had virtually all the technology that you’d find at Harvard and Stanford and the Mayo
Clinic, and, as I walked through that hospital on a dusty road in South Texas, this struck me as a remarkable thing. Rich
towns get the new school buildings, fire trucks, and roads, not to mention the better teachers and police officers and
civil engineers. Poor towns don’t. But that rule doesn’t hold for health care.
At McAllen Medical Center, I saw an orthopedic surgeon work under an operating microscope to remove a tumor
that had wrapped around the spinal cord of a fourteen‐year‐old. At a home‐health agency, I spoke to a nurse who
could provide intravenous‐drug therapy for patients with congestive heart failure. At McAllen Heart Hospital, I
watched Dyke and a team of six do a coronary‐artery bypass using technologies that didn’t exist a few years ago. At
Renaissance, I talked with a neonatologist who trained at my hospital, in Boston, and brought McAllen new skills and
technologies for premature babies. “I’ve had nurses come up to me and say, ‘I never knew these babies could survive,’
” he said.
And yet there’s no evidence that the treatments and technologies available at McAllen are better than those
found elsewhere in the country. The annual reports that hospitals file with Medicare show that those in McAllen and
El Paso offer comparable technologies—neonatal intensive‐care units, advanced cardiac services, PET scans, and so on.
Public statistics show no difference in the supply of doctors. Hidalgo County actually has fewer specialists than the
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national average.
Nor does the care given in McAllen stand out for its quality. Medicare ranks hospitals on twenty‐five metrics of
care. On all but two of these, McAllen’s five largest hospitals performed worse, on average, than El Paso’s. McAllen
costs Medicare seven thousand dollars more per person each year than does the average city in America. But not, so
far as one can tell, because it’s delivering better health care.
ne night, I went to dinner with six McAllen doctors. All were what you would call bread‐and‐butter physicians:
busy, full‐time, private‐practice doctors who work from seven in the morning to seven at night and sometimes
later, their waiting rooms teeming and their desks stacked with medical charts to review.
Some were dubious when I told them that McAllen was the country’s most expensive place for health care. I gave
them the spending data from Medicare. In 1992, in the McAllen market, the average cost per Medicare enrollee was
$4,891, almost exactly the national average. But since then, year after year, McAllen’s health costs have grown faster
than any other market in the country, ultimately soaring by more than ten thousand dollars per person.
“Maybe the service is better here,” the cardiologist suggested. People can be seen faster and get their tests more
readily, he said.
Others were skeptical. “I don’t think that explains the costs he’s talking about,” the general surgeon said.
“It’s malpractice,” a family physician who had practiced here for thirty‐three years said.
“McAllen is legal hell,” the cardiologist agreed. Doctors order unnecessary tests just to protect themselves, he
said. Everyone thought the lawyers here were worse than elsewhere.
That explanation puzzled me. Several years ago, Texas passed a tough malpractice law that capped pain‐and‐
suffering awards at two hundred and fifty thousand dollars. Didn’t lawsuits go down?
“Practically to zero,” the cardiologist admitted.
“Come on,” the general surgeon finally said. “We all know these arguments are bullshit. There is overutilization
here, pure and simple.” Doctors, he said, were racking up charges with extra tests, services, and procedures.
The surgeon came to McAllen in the mid‐nineties, and since then, he said, “the way to practice medicine has
changed completely. Before, it was about how to do a good job. Now it is about ‘How much will you benefit?’ ”
Everyone agreed that something fundamental had changed since the days when health‐care costs in McAllen were
the same as those in El Paso and elsewhere. Yes, they had more technology. “But young doctors don’t think
anymore,” the family physician said.
The surgeon gave me an example. General surgeons are often asked to see patients with pain from gallstones. If
there aren’t any complications—and there usually aren’t—the pain goes away on its own or with pain medication.
With instruction on eating a lower‐fat diet, most patients experience no further difficulties. But some have recurrent
episodes, and need surgery to remove their gallbladder.
Seeing a patient who has had uncomplicated, first‐time gallstone pain requires some judgment. A surgeon has to
provide reassurance (people are often scared and want to go straight to surgery), some education about gallstone
disease and diet, perhaps a prescription for pain; in a few weeks, the surgeon might follow up. But increasingly, I was
told, McAllen surgeons simply operate. The patient wasn’t going to moderate her diet, they tell themselves. The pain
was just going to come back. And by operating they happen to make an extra seven hundred dollars.
I gave the doctors around the table a scenario. A forty‐year‐old woman comes in with chest pain after a fight with
her husband. An EKG is normal. The chest pain goes away. She has no family history of heart disease. What did
McAllen doctors do fifteen years ago?
Send her home, they said. Maybe get a stress test to confirm that there’s no issue, but even that might be overkill.
And today? Today, the cardiologist said, she would get a stress test, an echocardiogram, a mobile Holter monitor,
and maybe even a cardiac catheterization.
“Oh, she’s definitely getting a cath,” the internist said, laughing grimly.
To determine whether overuse of medical care was really the problem in McAllen, I turned to Jonathan Skinner, an
economist at Dartmouth’s Institute for Health Policy and Clinical Practice, which has three decades of expertise in
examining regional patterns in Medicare payment data. I also turned to two private firms—D2Hawkeye, an
independent company, and Ingenix, UnitedHealthcare’s data‐analysis company—to analyze commercial insurance data
for McAllen. The answer was yes. 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, more home care.
The Medicare payment data provided the most detail. Between 2001 and 2005, critically ill Medicare patients
received almost fifty per cent more specialist visits in McAllen than in El Paso, and were two‐thirds more likely to see
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ten or more specialists in a six‐month period. In 2005 and 2006, patients in McAllen received twenty per cent more
abdominal ultrasounds, thirty per cent more bone‐density studies, sixty per cent more stress tests with
echocardiography, two hundred per cent more nerve‐conduction studies to diagnose carpal‐tunnel syndrome, and five
hundred and fifty per cent more urine‐flow studies to diagnose prostate troubles. They received one‐fifth to
two‐thirds more gallbladder operations, knee replacements, breast biopsies, and bladder scopes. They also received
two to three times as many pacemakers, implantable defibrillators, cardiac‐bypass operations, carotid
endarterectomies, and coronary‐artery stents. And Medicare paid for five times as many home‐nurse visits. The
primary cause of McAllen’s extreme costs was, very simply, the across‐the‐board overuse of medicine.
his is a disturbing and perhaps surprising diagnosis. Americans like to believe that, with most things, more is
better. But research suggests that where medicine is concerned it may actually be worse. For example, Rochester,
Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and
quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which
is eight thousand dollars less than the figure for McAllen. Two economists working at Dartmouth, Katherine Baicker
and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s
quality ranking tended to be. In fact, the four states with the highest levels of spending—Louisiana, Texas, California,
and Florida—were near the bottom of the national rankings on the quality of patient care.
In a 2003 study, another Dartmouth team, led by the internist Elliott Fisher, examined the treatment received by a
million elderly Americans diagnosed with colon or rectal cancer, a hip fracture, or a heart attack. They found that
patients in higher‐spending regions received sixty per cent more care than elsewhere. They got more frequent tests
and procedures, more visits with specialists, and more frequent admission to hospitals. Yet they did no better than
other patients, whether this was measured in terms of survival, their ability to function, or satisfaction with the care
they received. If anything, they seemed to do worse.
That’s because nothing in medicine is without risks. Complications can arise from hospital stays, medications,
procedures, and tests, and when these things are of marginal value the harm can be greater than the benefits. In
recent years, we doctors have markedly increased the number of operations we do, for instance. In 2006, doctors
performed at least sixty million surgical procedures, one for every five Americans. No other country does anything like
as many operations on its citizens. Are we better off for it? No one knows for sure, but it seems highly unlikely. After
all, some hundred thousand people die each year from complications of surgery—far more than die in car crashes.
To make matters worse, Fisher found that patients in high‐cost areas were actually less likely to receive low‐cost
preventive services, such as flu and pneumonia vaccines, faced longer waits at doctor and emergency‐room visits, and
were less likely to have a primary‐care physician. They got more of the stuff that cost more, but not more of what they
needed.
In an odd way, this news is reassuring. Universal coverage won’t be feasible unless we can control costs.
Policymakers have worried that doing so would require rationing, which the public would never go along with. So the
idea that there’s plenty of fat in the system is proving deeply attractive. “Nearly thirty per cent of Medicare’s costs
could be saved without negatively affecting health outcomes if spending in high‐ and medium‐cost areas could be
reduced to the level in low‐cost areas,” Peter Orszag, the President’s budget director, has stated.
Most Americans would be delighted to have the quality of care found in places like Rochester, Minnesota, or
Seattle, Washington, or Durham, North Carolina—all of which have world‐class hospitals and costs that fall below the
national average. If we brought the cost curve in the expensive places down to their level, Medicare’s problems
(indeed, almost all the federal government’s budget problems for the next fifty years) would be solved. The difficulty
is how to go about it. Physicians in places like McAllen behave differently from others. The $2.4‐trillion question is
why. Unless we figure it out, health reform will fail.
had what I considered to be a reasonable plan for finding out what was going on in McAllen. I would call on the
heads of its hospitals, in their swanky, decorator‐designed, churrigueresco offices, and I’d ask them.
The first hospital I visited, McAllen Heart Hospital, is owned by Universal Health Services, a for‐profit hospital chain
with headquarters in King of Prussia, Pennsylvania, and revenues of five billion dollars last year. I went to see the
hospital’s chief operating officer, Gilda Romero. Truth be told, her office seemed less churrigueresco than Office
Depot. She had straight brown hair, sympathetic eyes, and looked more like a young school teacher than like a
corporate officer with nineteen years of experience. And when I inquired, “What is going on in this place?” she looked
surprised.
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Is McAllen really that expensive? she asked.
I described the data, including the numbers indicating that heart operations and catheter procedures and
pacemakers were being performed in McAllen at double the usual rate.
“That is interesting,” she said, by which she did not mean, “Uh‐oh, you’ve caught us” but, rather, “That is actually
interesting.” The problem of McAllen’s outlandish costs was new to her. She puzzled over the numbers. She was
certain that her doctors performed surgery only when it was necessary. It had to be one of the other hospitals. And
she had one in mind—Doctors Hospital at Renaissance, the hospital in Edinburg that I had toured.
She wasn’t the only person to mention Renaissance. It is the newest hospital in the area. It is physician‐owned.
And it has a reputation (which it disclaims) for aggressively recruiting high‐volume physicians to become investors and
send patients there. Physicians who do so receive not only their fee for whatever service they provide but also a
percentage of the hospital’s profits from the tests, surgery, or other care patients are given. (In 2007, its profits
totalled thirty‐four million dollars.) Romero and others argued that this gives physicians an unholy temptation to
overorder.
Such an arrangement can make physician investors rich. But it can’t be the whole explanation. The hospital gets
barely a sixth of the patients in the region; its margins are no bigger than the other hospitals’—whether for profit or
not for profit—and it didn’t have much of a presence until 2004 at the earliest, a full decade after the cost explosion
in McAllen began.
“Those are good points,” Romero said. She couldn’t explain what was going on.
The following afternoon, I visited the top managers of Doctors Hospital at Renaissance. We sat in their boardroom
around one end of a yacht‐length table. The chairman of the board offered me a soda. The chief of staff smiled at me.
The chief financial officer shook my hand as if I were an old friend. The C.E.O., however, was having a hard time
pretending that he was happy to see me. Lawrence Gelman was a fifty‐seven‐year‐old anesthesiologist with a Bill
Clinton shock of white hair and a weekly local radio show tag‐lined “Opinions from an Unrelenting Conservative
Spirit.” He had helped found the hospital. He barely greeted me, and while the others were trying for a how‐can‐
I‐help‐you‐today attitude, his body language was more let’s‐get‐this‐over‐with.
So I asked him why McAllen’s health‐care costs were so high. What he gave me was a disquisition on the theory
and history of American health‐care financing going back to Lyndon Johnson and the creation of Medicare, the upshot
of which was: (1) Government is the problem in health care. “The people in charge of the purse strings don’t know
what they’re doing.” (2) If anything, government insurance programs like Medicare don’t pay enough. “I, as an
anesthesiologist, know that they pay me ten per cent of what a private insurer pays.” (3) Government programs are
full of waste. “Every person in this room could easily go through the expenditures of Medicare and Medicaid and see
all kinds of waste.” (4) But not in McAllen. The clinicians here, at least at Doctors Hospital at Renaissance, “are
providing necessary, essential health care,” Gelman said. “We don’t invent patients.”
Then why do hospitals in McAllen order so much more surgery and scans and tests than hospitals in El Paso and
elsewhere?
In the end, the only explanation he and his colleagues could offer was this: The other doctors and hospitals in
McAllen may be overspending, but, to the extent that his hospital provides costlier treatment than other places in the
country, it is making people better in ways that data on quality and outcomes do not measure.
“Do we provide better health care than El Paso?” Gelman asked. “I would bet you two to one that we do.”
It was a depressing conversation—not because I thought the executives were being evasive but because they
weren’t being evasive. The data on McAllen’s costs were clearly new to them. They were defending McAllen
reflexively. But they really didn’t know the big picture of what was happening.
And, I realized, few people in their position do. Local executives for hospitals and clinics and home‐health agencies
understand their growth rate and their market share; they know whether they are losing money or making money.
They know that if their doctors bring in enough business—surgery, imaging, home‐nursing referrals—they make
money; and if they get the doctors to bring in more, they make more. But they have only the vaguest notion of
whether the doctors are making their communities as healthy as they can, or whether they are more or less efficient
than their counterparts elsewhere. A doctor sees a patient in clinic, and has her check into a McAllen hospital for a CT
scan, an ultrasound, three rounds of blood tests, another ultrasound, and then surgery to have her gallbladder
removed. How is Lawrence Gelman or Gilda Romero to know whether all that is essential, let alone the best possible
treatment for the patient? It isn’t what they are responsible or accountable for.
Health‐care costs ultimately arise from the accumulation of individual decisions doctors make about which services
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and treatments to write an order for. The most expensive piece of medical equipment, as the saying goes, is a
doctor’s pen. And, as a rule, hospital executives don’t own the pen caps. Doctors do.
f doctors wield the pen, why do they do it so differently from one place to another? Brenda Sirovich, another
Dartmouth researcher, published a study last year that provided an important clue. She and her team surveyed
some eight hundred primary‐care physicians from high‐cost cities (such as Las Vegas and New York), low‐cost cities
(such as Sacramento and Boise), and others in between. The researchers asked the physicians specifically how they
would handle a variety of patient cases. It turned out that differences in decision‐making emerged in only some kinds
of cases. In situations in which the right thing to do was well established—for example, whether to recommend a
mammogram for a fifty‐year‐old woman (the answer is yes)—physicians in high‐ and low‐cost cities made the same
decisions. But, in cases in which the science was unclear, some physicians pursued the maximum possible amount of
testing and procedures; some pursued the minimum. And which kind of doctor they were depended on where they
came from.
Sirovich asked doctors how they would treat a seventy‐five‐year‐old woman with typical heartburn symptoms and
“adequate health insurance to cover tests and medications.” Physicians in high‐ and low‐cost cities were equally likely
to prescribe antacid therapy and to check for H. pylori, an ulcer‐causing bacterium—steps strongly recommended by
national guidelines. But when it came to measures of less certain value—and higher cost—the differences were
considerable. More than seventy per cent of physicians in high‐cost cities referred the patient to a gastroenterologist,
ordered an upper endoscopy, or both, while half as many in low‐cost cities did. Physicians from high‐cost cities
typically recommended that patients with well‐controlled hypertension see them in the office every one to three
months, while those from low‐cost cities recommended visits twice yearly. In case after uncertain case, more was not
necessarily better. But physicians from the most expensive cities did the most expensive things.
Why? Some of it could reflect differences in training. I remember when my wife brought our infant son Walker to
visit his grandparents in Virginia, and he took a terrifying fall down a set of stairs. They drove him to the local
community hospital in Alexandria. A CT scan showed that he had a tiny subdural hematoma—a small area of bleeding
in the brain. During ten hours of observation, though, he was fine—eating, drinking, completely alert. I was a surgery
resident then and had seen many cases like his. We observed each child in intensive care for at least twenty‐four hours
and got a repeat CT scan. That was how I’d been trained. But the doctor in Alexandria was going to send Walker
home. That was how he’d been trained. Suppose things change for the worse? I asked him. It’s extremely unlikely, he
said, and if anything changed Walker could always be brought back. I bullied the doctor into admitting him anyway.
The next day, the scan and the patient were fine. And, looking in the textbooks, I learned that the doctor was right.
Walker could have been managed safely either way.
There was no sign, however, that McAllen’s doctors as a group were trained any differently from El Paso’s. One
morning, I met with a hospital administrator who had extensive experience managing for‐profit hospitals along the
border. He offered a different possible explanation: the culture of money.
“In El Paso, if you took a random doctor and looked at his tax returns eighty‐five per cent of his income would
come from the usual practice of medicine,” he said. But in McAllen, the administrator thought, that percentage would
be a lot less.
He knew of doctors who owned strip malls, orange groves, apartment complexes—or imaging centers, surgery
centers, or another part of the hospital they directed patients to. They had “entrepreneurial spirit,” he said. They
were innovative and aggressive in finding ways to increase revenues from patient care. “There’s no lack of wor...
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