Atul Gawande, a splendid New Yorker author who is also a practicing surgeon, wrote an eye-opening article on health-care costs in 2009. He compared two Texas border cities, McAllen and El Paso, both among the poorest cities in the country, heavily Hispanic, and with all the usual adverse health indices of American poverty. The reason for the juxtaposition was that McAllen, measured by Medicare spending, had the second-highest per capita health-care costs in the country. El Paso, however, had almost exactly half the per capita rate of spending as McAllen—while also outperforming McAllen on twenty-three of Medicare’s twenty-five quality metrics.
The difference between the two cities’ medical spending was, bluntly, gross “overpractice” in McAllen—doctors there recommending too many unnecessary procedures and tests. At a meeting with a group of McAllen doctors, Gawande posed a hypothetical: a forty-year-old woman experienced chest pains after a fight with her husband. She had no family history of heart disease, her EKG was normal, and the chest pains had gone away. The doctors agreed that fifteen years before in the 1990s, when McAllen’s costs were about the same as El Paso’s, they probably would have just sent her home, with instructions to call if the pains recurred. One said he might give her a stress test, but admitted that it might be overkill.
In 2009, however, they agreed that she would get “a stress test, an echocardiogram, a mobile Holter monitor, and maybe even a cardiac catheterization”—the last a significantly invasive procedure. “Oh, she’s definitely getting a cath,” one of them said. The money-making imperative was distorting practice up and down the service spectrum, to the point where some doctors were taking kickbacks, disguised as part-time consulting salaries, for referring patients to home health-care services.
So what makes this interesting now? In 2015, Gawande made a return vist to McAllen and found astonishing progress. Their per capita spending is still higher than El Paso’s, but inpatient visits had fallen by 10 percent; home health-care spending and ambulance rides were both down 40 percent; and overall spending had fallen by about 20 percent, or nearly $3,000 per capita, for gross savings of almost a half billion dollars. Part of the impetus came from Gawande’s 2009 article. His criticisms became a cause célèbre for the local press and television stations—especially the revelation that McAllen’s per capita health-care costs were higher than its per capita income. And some of the doctors were prosecuted for fraud.
Much of the change, however, was generated by an “accountable care organization,” or ACO, from a health-management firm named WellMed, a company that attempts to provide an integrated-care plan for its patients, managed by primary-care doctors, who provide more hands-on care than in the old model, and control unnecessary testing and procedures. Further proof of the success of WellMed’s approach was that in the Texas cities where they already had centers, patient death rates were half the state average.