When Greed Happens to Good People: Atul Gawande's Solution to the Health Cost Crisis

You might have already seen Atul Gawande’s piece in the New Yorker called The Cost Conundrum. It has been covered in the excellent Century Foundation Blog, Taking Note.

In it, he tackles one of the problems at the core of our nation’s health care cost crisis: greedy doctors, or rather, greed-inducing incentives for good doctors. In this blog, I’ve looked at how greed has distorted the decisions doctors make when they are providing education to other doctors. It’s not that the key opinions leaders are bad people, but they are responding as rational human beings to perverse economic incentives. If you put yourself in a situation where you can make thousands of dollars for omitting certain points about a drug during a talk, chances are that you will, indeed, omit those points. The solution, in this case, is to remove the problem incentive (that is, stop accepting industry money for medical education), and the doctors will no longer be tempted to bend the truth.

Gawande looks at this same kind of greed from another perspective, and arguably a more important one. How does the allure of money actually affect the medical decisions doctors make about your care?

He starts his investigation by focusing on the small Texas city of McAllen, population about 130,000 . He finds that McAllen has the surprising distinction of being one of the most expensive health care markets in the country. In 2006, according to Gawande, Medicare spent $15000 per enrollee, more than twice the national average.

Gawande spends the rest of the article wondering why. Is it because people in McAllen are twice as sick as those in other cities? No—McAllen has lower than average rates of cardiovascular disease, cancer, asthma, HIV, infant mortality, and injury. McAllen has essentially the same demographics and health statistics as El Paso county, 800 miles to the north, but El Paso’s Medicare expenditures were only half that of McAllen's--$7504 per enrollee.

Perhaps doctors in McAllen are ordering more tests because they are more afraid of malpractice suits than other doctors? But that doesn’t make sense, because Texas has passed one of the toughest malpractice laws in the country, capping pain-and-suffering awards at $250,000. The number of lawsuits has plummeted, said one cardiologist interviewed by Gawande.

Finally, Gawande meets with a hospital administrator who is willing to speak frankly (though anonymously). It turns out that at some point over the last 15 years, doctors in McAllen developed a thirst for profit. Rather than seeing their practices as noble professions that also happened to provide them with a good income, they began to view their practices as income streams. Doctors began buying imaging centers and surgery centers, and found that they could profit greatly by referring patients to their own treatment centers for expensive tests. In some cases, Gawande heard stories of blatant corruption, such as doctors demanding huge fees from hospital executives for steering patients to their hospitals. One doctor, for example, reportedly asked for $500,000 per year as a kickback for sending the hospital his business.

A marketing rep for a home health agency told Gawande that doctors have requested kickbacks for sending patients to home health agencies as well:

“Doctors have asked her for a medical-director salary of four or five thousand dollars a month in return for sending her business. One asked a colleague of hers for private-school tuition for his child; another wanted sex.”

What in God’s name has happened to the doctors of McAllen, Texas? Somehow, they have embraced the culture of money, just as the key opinion leaders in psychiatry and other fields jumped onto the gravy train of industry-funded medical education. Gawande interviews Woody Powell, a Stanford sociologist who has studied the “anchor tenant” theory of economic development. Just as an anchor tenant store will dictate the character of an entire mall, so will an anchor tenant university or hospital or physician foreshadow the culture of a community. To quote Gawande:

“About fifteen years ago, it seems, something began to change in McAllen. A few leaders of local institutions took profit growth to be a legitimate ethic in the practice of medicine. Not all the doctors accepted this. But they failed to discourage those who did. So here, along the banks of the Rio Grande, in the Square Dance Capital of the World, a medical community came to treat patients the way subprime-mortgage lenders treated home buyers: as profit centers.”

Dr. Lester Dyke, a cardiac surgeon in McAllen, and one of the few doctors to publicly criticize its health care system, tells Gawande that “Medicine has become a pig trough here….We took a wrong turn when doctors stopped being doctors and became businessmen.”

In the last part of his article, Gawande outlines some solutions, highlighting organizations and communities that have kept health costs below the national average while achieving some of the highest quality-of-care scores in the country. These include the Mayo Clinic in Minnesota, the community of Grand Junction, Colorado, Kaiser Permanente in Northern California, the Geisinger Health System of Pennsylvania, the Marshfield Clinic of Wisconsin, and Intermountain Healthcare of Salt Lake City.

The key to all these systems is creating financial incentives to coordinate care, rather than to simply order as many tests and procedures as possible. Such a system, he believes, is possible in the context of either a single payer system or a mixed private and public insurance system, as is more likely to be the outcome of Obama’s health care reform efforts. More important than the specifics of health care reform, concludes Gawande, is “whether we are going to reward the leaders who are trying to build a new generation of Mayos and Grand Junctions. If we don’t, McAllen won’t be an outlier. It will be our future.”