Today’s NYT’s on the Dartmouth Research

Today’s New York Times tries to tell a story at the very center of what is shaping up as a stormy debate over  just how much waste there is in our healthcare system.   But while striving to be even-handed,  the Times quotes both informed and uninformed sources—sometimes taking informed sources out of context—and in the process, makes hash of the facts.

The Times begins by reporting that the New Yorker article that I wrote about last week “has become required reading in the White House.” This story, by Dr. Atul Gawande, describes pricey and potentially harmful overtreatment of patients in McAllen, Texas, where Medicare spends more, per capita, than in any other town in the country.  The data behind the story comes from more than two decades of Dartmouth research showing “widespread and unwarranted variations” in how much care very similar patients receive in different parts of the country.  

The Times explains that the Dartmouth research focuses a “problem that intrigues the President very much . . . the huge geographic variations in Medicare spending per beneficiary.” What’s shocking is that “the higher spending does not produce better results for patients.” The paper goes on to quote Senator Ron Wyden (D. Oregon): The president “came into a [recent] meeting with that article having affected his thinking dramatically. He, in effect, took that article and put it in front of a big group of senators and said, ‘This is what we’ve got to fix.’”

“As part of the larger effort to overhaul health care, lawmakers are trying to address the problem ,” the Times observes. 

So far so good. But then the Times engages in a bit of completely unsubstantiated speculation: “Members of Congress are seriously considering proposals to rein in the growth of health spending by taking tens of billions of dollars of Medicare money away from doctors and hospitals in high-cost areas and using it to help cover the uninsured or treat patients in lower-cost regions.

No doubt members of Congress from low-spending states such as Iowa and Minnesota have grumbled about subsidizing  high-spending states such as New York and Massachusetts. As I have noted in the past, many members of the Senate Finance Committee come from low-spending states.. But no one is seriously proposing simply slashing payments to doctors and hospitals in Manhattan, L.A. and Miami.

If we did “that would only make things worse, not better,” Dr, Elliott S. Fisher, one of the Dartmouth researchers, observed in a phone conversation this afternoon. In order to keep their incomes steady, “doctors would increase the volume of what they do.”

Moreover, Fisher and others agree, while, on average, doctors in Manhattan order more tests and recommend many more procedures than doctors in a many other places, not every doctor in Manhattan over-treats her patients. An across-the-board cut would be irrational.

In fact, as the Times rightly points out, “Researchers at Dartmouth Medical School have also found wide variations within states and among cities.” For example, Dartmouth data shows that it costs Medicare far more when patients are treated at UCLA Medical Center than when very similar patients are care for at the University of California at San Francisco. (click on Dartmouth Atlas 2008) Similarly, while  Pennsylvania is not an extremely low-cost state, but the Geisinger Health System is superbly efficient, achieving better outcomes at lower costs than the vast majority of U.S. hospitals.           

How the Medicare Payment Advisory Commission Would Address the Problem

Neither President Obama nor White House Budget Director Peter Orszag plan to rip “tens of billions of dollars” out of the hands of “doctors and hospitals in high-spending areas” in order to  cover the uninsured. Not in their wildest fantasies. (And I personally doubt that either man is prone to wild fantasy.)

Last week, President Obama expressed support for putting the Medicare Payment Advisory Commission (MedPac) in charge of Medicare, suggesting that MedPac would be able to find $200 to $300 billion of waste in Medicare reimbursements. Does that mean MedPac would slice reimbursements in some states?

In 2005 testimony before the Subcommittee on Health of the House Committee on Ways and Means,  MedPac chairman Glenn Hackbarth was very clear: MedPac opposes global across-the -board cuts in physicians’ fees. At the same time, it does recognize what “Dartmouth researchers and others have shown– that often high quality care is not correlated with more services.  We know the private sector is taking steps to control volume in services such as imaging with very high growth rates.  Volume growth must be addressed by determining its root causes and specifying policy solutions.”   But a formula   . . . that attempts to control volume through global payment changes treating all services and physicians alike will produce inequitable results. “

MedPac’s September 2008 report to Congress begins with the Dartmouth “map,” showing regional variations.   But the report does not advise regional cuts in reimbursements. Instead it recommends looking at how individuals hospitals and physicians affiliated with those hospitals use resources, and giving them feedback if they are doing more tests and procedures than hospitals that show better outcomes at a lower cost. The hospital and physicians would be told confidentially if they are outliers–providing an opportunity for them to use the information to improve care.  The information would be made public only after they had had two years to lift quality while lowering costs.  This is the type of reform Dartmouth would like to see, as  Elliott Fisher confirmed in this afternoon’s conversation.

The 2008 report also recognize that “information alone” would not be enough and recommended by bundling payments to doctors and hospitals, providing bonuses for improvement which would allow physicians and hospitals to share in savings. At the same time, MedPac suggested financial penalties for hospitals if they report an unusual number of readmissions. 

Peter Orszag’s Role in Bringing the Dartmouth Research to Washington

The Times article creates the impression that one man, White House Budget Director Peter Orszag, is responsible for bringing the Dartmouth research to Washington: “The research has become phenomenally influential on Capitol Hill since it was popularized by Peter R. Orszag,  as director of the  Congressional Budget Office and then as President Obama’s budget director. Aides said Mr. Obama had been intrigued by regional variations in health spending since before his inauguration. The topic came up at a meeting with Mr. Orszag in Chicago late last year.”

While Orszag has, indeed, written persuasively about the Dartmouth research—and understands it fully, he is hardly alone, nor is he a “popularizer”—someone who simplifies information in order to feed it to the masses.  Meanwhile,  Dr. Jack Wennberg has been doing this work since the 1970s,  and his name has been known in Washington at least since the early 1990s. Hillary Clinton was familiar with his work then, and when running in the presidential primary, she visited Wennberg in New Hampshire to talk at length about health care reform.

In a 2004 interview,  Wennberg recalls that the Dartmouth Research first became known in Washington back in the early 1980s: “It really began in 1984,” he recalled. “Health Affairs published a theme issue on practice variations, and we held a press conference at the Capitol to publicize it. Someone from the AMA spoke, I spoke, and some members of Congress spoke. I think that planted a seed. Some of the politicians were intrigued by variability. Over the years several hearings were held on the Hill. Bill Gradison [R-OH] in the House and David Durenberger [D-MN] in the Senate became interested and supportive. Dan Hanley of the Maine Medical Assessment Program really recruited George Mitchell [Democratic senator from Maine]. He and I met with Mitchell on more than one occasion and persuaded him that he needed to get involved.”

So this is not a case of one man (Peter Orszag) “falling for” a flimsy new theory that no one had ever heard of before he came to CBO– and then getting the president’s  ear.. Yet, this is almost the way the Times makes it sound:

Other researchers and politicians are not so sure [that what Dartmouth says is true.]

“They say it would be a mistake to cut or cap Medicare payments without knowing why spending in some places far exceeds the national average.” Here I would note that politicians are not researchers—lumping them together as expert sources muddies the waters. Nevertheless the Times proceeds to quote Senator John Kerry as an authority:

“There is too much uncertainty about the Dartmouth study to use it as a basis for public policy. Researchers can’t explain why some areas of the country spend more on health care than others. There are many reasons spending could vary: higher costs of living, sicker people or more teaching hospitals.”

No surprise, over more than thirty years, the Dartmouth researchers considered those possibilities. That is why the researchers adjust for differences in local prices, race, and the underlying health of population when making regional comparisons. Moreover, teaching hospitals do not invariably over-treat:  one of Dartmouth’s landmark studies showed major differences in spending at Yale-New Haven and Harvard.

Kerry defends his home state. “States like Massachusetts are concentrated centers of medical innovation where cutting-edge treatments are tested and some of the nation’s finest doctors are trained. This work might cost a little more, but it benefits the entire country.”

Cost a little more? See this Boston Globe story about Partners HealthCare gouging patients in Massachusetts, charging far more for commonplace procedures while also ratcheting up volume.  The Mayo Clinic is also a center of “medical innovation” and boasts “some of the nation’s finest doctors.”  Yet it costs Medicare 50 percent less when patients are treated at Mayo than when very similar patients are treated at some of the nation’s most prestigious academic medical centers. And Mayo is not alone. The Cleveland Clinic, and the Geisinger Health System also serve as benchmarks for better care at a lower price.

Clearly, Kerry hasn’t read the research. Someone briefed him on it—and did it poorly.

Finally, the Times solicits comments on Dartmouth’s work from a source who is clearly biased. As the reporter himself notes, Dartmouth has cited Cedars-Sinai [in Los Angeles] as having very high Medicare spending per beneficiary. Yet the reporter then turns to Dr. Michael L. Langberg, senior vice president of Cedars-Sinai for an expert opinion:  “’The statement that Medicare costs can be cut by 30 percent has been repated so many times that it has come to be viewed as a proven fact by some,’”  Dr. Langberg declared a recent letter to the Senate Finance Committee. “’It is not a fact. It is a gross oversimplification of an untested theory.’”

Why Is the Times Printing These Allegations?

For a number of years, the New York Times has regularly quoted the Dartmouth research in numerous excellent articles on overtreatment. Why, now, publish a piece suggesting it may be an “unproven theory?

“It’s a standard journalist caper,” says one source who is very familiar with Dartmouth’s work. “You spend a year or two building it up—then you take a whack at it. I’ve been waiting for this.”     In other words, he is suggesting that the Times needed a new slant on the Dartmouth story. (As a long-time journalist, I am afraid that I have to say I have seen this happen. “Hey, we keep doing stories about how interest rates are going up! Why don’t we find someone who will say they’re going down?”)

But I would also note that the piece appears, not in the paper’s “Health” section but under the banner “Politics.” And this certainly is a story about politics in D.C. Those who profit from overtreatment are becoming very, very nervous as they hear President Obama and Peter Orszag talk about Dartmouth’s data–  and the need to excise waste from the system. On top of that, the president’s support for MedPac must be sending shivers down the spines of many a lobbyist.  MedPac has been writing about the Dartmouth research for a number of years.

To be fair, the Times also  seems to be trying to write a “balanced story” by quoting people on both sides of the issue. The problem is that Dartmouth’s critics appear either ignorant of how the work is done, or indignant because its findings casts a particular institution in a poor light. (This is always a problem when you try to report “both sides” of a story when in fact, one side is largely true and the other isn’t.)

MedPac’s Robert Berenson and Dartmouth Agree on Solutions

And finally, when the Times does turn to a very well-informed source—someone who has has no axe to grind—it misinterprets what he is saying.

Dr. Robert Berenson, senior fellow in Health Policy at the Urban Institute, has had frontline experience with Medicare. He oversaw policy and operational matters at the Centers for Medicare and Medicaid (then called the Health Care Financing Administration) during the Clinton years. Recently, he was appointed to MedPac. And he is not just a policy wonk. As an internist, he practiced in a Washington D.C. group practice for a dozen years. (Finally, Bob Berenson has the distinction of being a member of The Century Foundation’s Working Group on Medicare. I have learned a great deal from him.)

In the past, when testifying before Congress, Berenson has pointed to the Dartmouth research as evidence that “a lot of spending in Medicare is wasted.”

Yet, today, the Times quotes Berenson saying “There remains too much uncertainty about the Dartmouth findings to ground public policy on them.”

The Times also cites “Research by Dr. Robert A. Berenson and Jack Hadley of the Urban Institute suggests that much of the geographic variation in health spending can be explained by differences in “individual characteristics, especially patients’ underlying health status and a range of socio-economic factors, including income.”

Today, Berenson sent me an e-mail from Europe. In response to my request for a comment on the Times’ story, he wrote: “there is substantial intra-area variation as well as cross area variation.”  In other words it would make no sense to cut fees across the board in a given region since there are both high-spending and low-spending hospitals within a single region. Here, he and Dartmouth’s Fisher are in agreement. This is what Berenson meant when he said that there “remains too much uncertainty” about Dartmouth’s findings “to ground public policy on them.” You can’t generalize and say reimbursements should be reduced throughout California.

But, Berenson agrees that Medicare is paying for many ineffective and unnecessary treatments, and he notes “we can use efficient hospitals, regardless of location, as benchmarks”—for other hospitals. Like the Dartmouth researchers, and like MedPac, he is recommending measuring less efficient hospitals against benchmarks like Mayo and the Cleveland Clinic..

In other words, Berenson agrees with the Dartmouth –and with Dr. Atul Gawande—on the solution.

“There shouldn’t be a food fight with Bob Berenson,” Elliott Fisher told me this afternoon. Many of us are in agreement– including Bob & I. We know enough about what is going on in Medicare to begin reforming Medicare. We need to move to accountable care,” Fisher added, referring to the “accountable care organizations” that I discussed when write about Gawande’s recent New Yorker story. “We need to move away from volume-based reimbursements to quality- base-reimbursements.”

This is the heart of the Dartmouth Research, and here there is a consensus: More Care is Not Better Care. Often, it is worse. Spending more is not helping patients. We must squeeze the waste out of the system. 

37 thoughts on “Today’s NYT’s on the Dartmouth Research

  1. I cannot stress this too much:
    If we are going to have price reforms that try to encourage effective and efficient management and discourage inefficient care, we need to approach changes on an institution by institution, provider by provider, procedure by procedure, and even patient by patient basis, otherwise we will make a huge mess.
    In particular, as Maggie says, we need to avoid changes in payments based on geography or making across the board cuts of any sort. These would actually hurt the efficient providers, since they are likely to have less money to give than providers that have been collecting huge amounts of payments for inefficient care.

  2. Pat–
    I completely agree that we have to make these changes on an institution by institution, procedure by procedure (using medical evidence for that procedure)basis.
    We also need to take a close look at the type of patients that individual physican practices and hopsitals are treating, especially in terms of income and severity of illness. Poorer patietns are sicker–which means providers need to “do more” And some providers take more difficult cases than others.
    Though, I would note, Mayo takes some of the most difficult cases, and yet manages to get better outcomes for at a lower cost.
    My guess is that Mayo exercises very good judgement in deciding which patients it can and can’t help. It doesn’t take patients from outside the area just because they can pay: Mayo bases the decision on whether it thinks it can actually do something that hospitals in the patient’s hometown can’t do.
    IF Mayo took patients and offered aggressive treatment simply because the patients could pay it would be betraying its own mission: put the patient first.
    And eventually,its reputation for better outcomes and patient satisfaction would be tarnished.
    On apppracohing change on a provider by providcer and even patient by patient basis . . .
    Under the health care reform that Elliott Fisher, Orszag and MedPac envision, individual providers would be able to make exceptions for indivdual patients– deviating from evidence-based guidelines, if they believe that in this case, the extra procedure or test will benefit the patient.
    They would be penalized only if they are outliers-provindg more tests and treatments for a great many patinets. That is the sign that they are overtreating–unless they can show that there is something about their patient pool that Medicare hasn’t recognized.
    This seems to me the best way to do it.
    And I really think that we can’t judge whether individual doctors are being efficient–their patient pool is too small for risk-adjustemnt for non-compliant or very sick patietns to be very accurate.
    That’s why I prefer the idea of rewarding (or penalizing) networks of hospitals and doctors who refer to that hospital for care–bundling their payments, and rewarding those that
    get within, say, 80% of benchmakrs like Mayo for
    efficiency, and penalizing the outliers (for example hospitals with a striking number of readmissions.).
    It is much, much easier to measure qualtiy for large multi-specialty centers (and not all are good.)
    It will be much harder to fairly reward and penalize small practices–and Medicare reformers at Darmouth and MedPac realize this.
    They recognize that they will need many pilot projects, experimenting with different ways of measursing “virtual networks”, paying bonsues for medical homes that manage to keep their patients out of ERs and hopsitals, etc. etc.
    There will be many ways to pay for value. We just have to explore them.
    One of the many things I like about MedPac and the DArtmouth reserachers is that they realize this.
    They are very sophisticated,
    understand that there are no easy answers or quick fixes.
    The same is true of Orszag..

  3. Thanks for reporting on this, Prof Mahar. I too read that story this morning and was quite frustrated with its superficiality. I’m one of the primary care providers in a high utilization area that an across-the-board cut would hurt the most.
    Although it’s intellectually rewarding to practice high quality, efficient medicine, it’s never been as financially rewarding as indiscriminate intervention and overtesting.
    The only way to change medicine is to change the incentives for physicians and hospitals.

  4. “Cost a little more? See this Boston Globe story about Partners Health Care gouging patients in Massachusetts, charging far more for commonplace procedures while also ratcheting up volume.”
    Isn’t it of note that Gawande is an attending in surgical oncology (a highly reimbursed specialty) at a Partners flagship institution- Brigham and Women’s? He didn’t need to travel to Texas. He could have strolled down Louis Pasteur Ave and simply gazed at the pharma corporate HQs all throughout the Longwood medical campus area, where Brigham and Women’s cozies up to Boston Children’s Hospital, The Joslin Diabetes Center, Dana Farber Cancer Institute, Harvard Medical School, Beth Israel Deaconess Medical Center, Merck, the Harvard School of Public Health, Harvard Dental School, Harvard Pilgrim Health Plan and many research labs. He could have strolled into the Harvard Medical School auditorium and read the pharma donor plaques studding the facility. Harvard is a huge brand name in this area. Yet it does not field a doctoral level nursing program, and it is absolutely blind to the critical contributions that professional nursing makes to keeping patient health management behaviors optimal and preventable hospital utilization rates low. (Dartmouth and the Cleveland Clinic do not field nursing programs, either, although the Cleveland Clinic has close affiliations with the Case Western Reserve University School of Nursing masters and doctoral programs and it fields a strong nursing research agenda.
    Also, along the mote/beam/eye line of reasoning, primary care physicians often have very low rates of hospital admissions and use of hospital resources.
    Indeed, the Boston Globe reported this past week that a mobile health van which travels to low income neighborhoods with higher than average rates of uninsurance and healthcare accessibility barriers is saving hospital admission costs to the tune of over 2 million dollars per annum.
    Incentives must be to prevent hospital admissions, prevent avoidable hospital readmissions and lower the overall use of high cost,tertiary hospital based goods and services.
    At the same time, physicians who produce patient outcomes which demonstrate that they successfully manage health problems before they become catastrophic, and that they provide care which is patient-centered (focusing on prevention, primary care,self-management and provided in local/home/community/ambulatory settings).
    By siloing primary care physicians, medical specialists, & hospitals and by continuing to exclude professional nursing (nurses educated at the minimum of a baccalaureate degree in nursing)from the usage/cost equation, the metrics will never capture the fundamental issue of keeping patients’ elective/preventable use of high cost services/goods/procedures as low as possible. That’s where the rationing needs to occur.
    Instead, rationing occurs by individuals who do not even get in line for care via self denial/prohibitive cost and access. And it usually occurs where care should never be rationed: in prevention, primary care, communicable disease prevention and containment, and in health education/management/self-advocacy where the lifelong behaviors and choices can prevent many significant chronic illnesses and mitigate risks.
    One final note on commercial insurance: instead of spending all of this money,resources and time to preserve a predatory dinosaur, why aren’t retraining, retooling and re-imagining new fields and industries which can tap into the talents of employees and use them elsewhere? Why are we so stuck with this horrible parasite?
    (But I also think that no healthcare organization which receives any type of federal funding should be allowed to spend a single penny on marketing or sales. That is money and resources which should go directly to primary care and health education provided by health care professionals – no marketers, administrators and sales reps should be practicing medicine and nursing without a license.) /rant

  5. “As I have noted in the past, many members of the Senate Finance Committee come from low-spending states. But no one is seriously proposing simply slashing payments to doctors and hospitals in Manhattan, L.A. and Miami….Fisher and others agree, while, on average, doctors in Manhattan order more tests and recommend many more procedures than doctors in a many other places, not every doctor in Manhattan over-treats her patients. An across-the-board cut would be irrational.”
    Oops, who is getting nervous? Whose ox is danger of getting gored?
    Just to play devil’s advocate (a role that I enjoy) what would be wrong with slashing payments to doctors and hospitals in high cost areas (Manhattan, L.A. and Miami)? Wouldn’t this tend to decrease utilization and lead to improvements in outcomes – since the increase in treatment is not bringing about corresponding health benefits?
    “Across-the- board”, “irrational” payment cuts are the modus operandi of Congress. Think of the following analogy: The US is like a family that is spending too much on food, our food budget includes vegetables, cereal, potatoes (primary care) and filet mignon, champagne and caviar (specialist care and unproven treatments). We could cut down on the “luxury items” (filet, champagne and caviar), but that would require intelligence and the ability to make decisions about what is important and what is not. Or we could just put through an across the board 10% cut in everything.
    Which way will it go?

  6. I noted with interest the article’s map of New York State that showed huge variations in Medicare spending per beneficiary within the state. Not surprisingly, spending is extremely high in the five boroughs of NYC plus Nassau and Suffolk counties on Long Island and Westchester and Rockland counties just north and northwest of NYC. Spending elsewhere in the state is far lower. Of course, the high spending counties account for a disproportionate share of the state’s population. I’m quite certain that the same variation exists in the other high spending states. As Gawande notes, the focus needs to be on getting the incentives that drive doctor and hospital behavior right instead of on who writes the checks.

  7. The Dartmouth research is clearly very important. However, there is still some judgement/interpretation necessary.
    If we take a procedure that has a 3 or 4 fold variability between different geographic regions (tonsillectomy, hysterectomy, etc.) and that variability is directly related to the number of specialists performing that procedure (ENT, GYN), we can conclude that the density of specialists clearly contributes to how often the procedure is performed.
    What is missing is an assessment of whether the procedure is being performed too often in areas where there are a large number of specialists, or not being performed frequently enough in the areas where specialists are scarce. Obviously, morbidity and mortality data can help, but it may be hard to tease this information out of the available data.
    Put another way, what would we say about mammography and childhood immunizations if we found significant variability? Would we conclude that immunization and mammography were “overused” in the areas where they were done more frequently or “underused” in the areas where they were not?
    “A foolish consistency is the hobgoblin of small minds”

  8. Legacy Flyer–
    Originally, Dartmouth’s Jack Wennberg asked just the same question you are asking:
    Does this mean that the areas doing more surgeries are doing too many, or that areas that are doing fewer are doing too few?
    More than two decades of Dartmout reserach shows that, even after adjusting for the underlying heatlh in a particular region, race and age, when you compare very simmilar patients (in term of overall health) you find that outcomes for patients in areas where they receive more treatments are not better–and Often They Are Worse.
    This is because, by definition, unncessary treatments and hospitializations expose patients to extra risks, with no benefits.
    Every year 100,000 patients in the U.S. die of complications from surgery. Many of them didn’t need the surgery . . .
    Meanwhile the number of surgeries done it the U.S has spiralled in recent years- without any evidnece that our heatlth and outcomes are imrproving as a result.
    See the very recent post I did about Dr. Atul Gawande’s piece in the New Yorker, referenced in this psot (see link in this post.)

  9. So the areas where the rate of childhood immunizations is greater and the rate of mammography is greater are doing too many immunizations and mammograms?

  10. The pot is calling the kettle . . .
    Speaking about not getting facts straight- the Texas town in the report is McAllen. Things like this, even though they are small, injure your credibility.

  11. mike–
    Thanks for head’s up about the typo.
    But typos, while unfortunate, are not mis-statements of fact or distortions of ideas.
    When I see a typo in a newspaper, a magazine or online, it in no way affects my judgment of the publication’s (or the reporter’s) credibility.
    It just makes me think they need a better proof-reader. (I don’t have a proof-reader)

  12. Legacy Flyer:
    You are creating strawmen. There is no controversy about whether or not children require certain immunizations. There is no controversy about whether women over 50 and in high risk populations require regular mammography. There is however a LOT of controversy about back surgery, CAD treatments and certain areas of oncology.
    Read Shannon Brownlee’s book, Overtreatment. It’s a really great summary of the Dartmouth research, all couched in clinical terms.
    Great post by annie. Gosh, that never (but should have)
    occurred to me about Gawande’s, um, “predicament”. Yes, that would have been just slightly awkward if he poked around Harvard to write essentially the same story. Guess he has self preservation instincts.

  13. Legacy Flyer–
    Childhood immunizations do not drive Medicare spending. (Very few children on Medicare)
    As for mammorgrams: the U.S. Preventive Services Task Force recommends mammography screening only every 1-2 years for women age 50 -69.”
    After 69, they do not recommend mammograms for average-risk women.
    Meanwhile, the American College of Physicians believes that the risks of unnecessary biopsies far outweighs the likelihood of saving a life and therefore does not recommend mammography before age 50 and suggests that women do not need to be screened after age 74.
    In other words, both groups believe that unnecessary mammograms can pose a threat to the health of older women.
    See also the post Naomi
    wrote about this issue.

  14. To Maggie and Annie I say excellent diary and excellent comment. Bravo! Both the diary and all of the comments bring the discussion of health care reform to the level it needs to attain. One can only hope that the professional staff of the pertinent Congressional committees working on health care reform are as insightful and well informed. I suspect they are. The comments emanating from some Congressional quarters, such as the Blue Dogs, while appropriate to express concerns about getting reform right, are very off-putting as to content because they are about as deep as the NYT article that is the subject of Maggie’s diary. It’s distressing that so many leaders are so ill-informed about this topic and are reduced to repeating sound-bites.

  15. In the just released Senate HELP bill, on page 301 ff, you will find Wennberg and the Dartmouth research all over the place. So whether or not the NY Times got it right, the Senate staffers clearly understand the value of this research.
    http://help.senate.gov/BAI09A84_xml.pdf

  16. ROI of mobile health van:
    http://www.biomedcentral.com/content/pdf/1741-7015-7-27.pdf
    “Table 1. Cost savings from preventing unnecessary emergency department
    visits.
    Annual expenses ($)
    Annual cost of mobile health clinic 565,700
    Total annual visits 4,848
    Total visits discounted by 20% 3,878
    Cost per visit 117
    Cost of preventable emergency department visit [9] 923
    Cost avoided per mobile clinic visit 806
    Annual projected costs avoided 3,125,668
    The Family Van expenses versus costs for non-emergent and emergent but primary
    care treatable emergency department visits.”
    American Association of Colleges of Nursing links:
    Nursing Shortage White Papers
    http://www.aacn.nche.edu/index.htm
    Nursing Education White Papers and US programs by degree granted
    http://www.aacn.nche.edu/Publications/positions/index.htm
    http://www.aacn.nche.edu/Education/nurse_ed/nep_index.htm
    Commitment To Quality Health Reform Consensus Statement From the Nursing Community (undated – addresses advanced practice nurses, primary care, patient outcomes and federal and state reimbursement issues)
    http://www.aacn.nche.edu/Government/pdf/ConsensusStmnt.pdf
    I apologize for the incomplete sentences in my previous comment. Somehow I cut off vital bits between spell checking, previewing and publishing.
    I riffed off my comment on DrRich’s Covert Rationing Blog post titled “The Death of Primary Care Medicine is Official”.
    http://covertrationingblog.com/primary-care-in-america/the-death-of-primary-care-medicine-is-official
    I wish Rich and Maggie would tandem blog sometime, because they both touch upon such vital and under-explored fundamental root cause analyses.

  17. First of all let me say that I agree that too many tests and too many procedures are being done. As a specialist in diagnostic imaging I see what I consider to be excessive testing every night (I work reading images from ERs at night). The kind of research that the Dartmouth group does can be very helpful in finding out which procedures may be overused and where they may be overused.
    But the reflexive assumption that a procedure showing variability is being overused in areas where usage is higher is logically incorrect. Let us take the case of childhood immunizations, which I am sure show variability between middle class suburban areas and poor inner city or rural areas. (Maggie’s objection that there is not good Medicare data on immunizations is true but avoids the point) Using the same logic that one applies to back surgery (which I am sure is overused), the areas of higher immunization rates could be inferred to be areas of excessive immunization. Since most of the readers of this forum are not “Thimersol/Autism kooks”, I think we can dismiss the idea that childhood immunizations are excessive. Since the areas that show higher utilization are actually doing things properly, logically we can infer that merely looking at variance in rates does not tell you when something is excessive.
    There is also the issue of “quality of life”, which is not easily measured. I would predict that there is considerable variability in the rate at which total knee replacements are performed across the US. I would predict that the rates at which total knee surgery is performed correlate with the number of orthopedic surgeons in a particular area. I would also predict that the areas in which total knee replacements are performed show higher rates of mortality since there are post op complications related to knee surgery and people don’t die from bad knees. But is that the full story? Suppose you have severe DJD in your knee which limits your mobility, but won’t kill you – is it good medical care to replace your knee and improve your mobility and “quality of life”? That is not an easy question to answer. As someone who ripped up his knee playing football in college, I have more than a passing interest in this question. When I get to be 70 and can no longer go up stairs, walk the dog, or chase after my grandchildren, I will want to have my knee replaced regardless of whether I could die of surgical complications. What does the Dartmouth data tell us about that decision?

  18. I am with the Flyer on this one. Across the board cuts simply continues the subsidy for excess.
    Maggie, Large groups are better to track than individual doctors. But then there is a more heterogeneous practice, the larger the doctor group. Note: It is known that the Cleveland Clinic is more efficient than McAllen Texas and less efficient than the Mayo Clinic for their patient populations. We don’t know the extent that the patient population influences this equation. We have had fellows from both The Cleveland Clinic and Mayo, and my guess on the same population, the Clinic would give better care.
    I see I am not the only one to see the irony of a Partners Surgeon complaining about high cost and low efficiency.
    BTW: The Francis Payne Bolton School of Nursing in Cleveland is a storied institution. Both the Bolton School and The Cleveland Clinic are assoctiated with CWRU.

  19. The Dartmouth Atlas results aren’t a “theory”, but well-found observations. Many theories arise from them, but the authors (Drs. Wennberg, et al.) lean heavily towards supply-side drivers of variation. Others put forward demand-side drivers, but they are ignored because they favor patients controlling health spending. Greg Scandlen notes that some of the first research on variation observed small-area variance in hysterectomies in New England. He observes what the researchers did not: Areas with high frequency of hysterectomies were French Canadian and those with low frequency were Yankee Protestant, at a time when birth-control was shunned by Catholics.

  20. The comments regarding childhood immunizations ignore one basic important idea about health care management: there are some things that are proven to work. Conversely, there are some things that are proven not to work. Before we start talking about anything in terms of use and efficacy, we need to know the science.
    Immunizations are an example of something where the science is clear. Immunizations are a clear benefit, and efficacy analysis should focus on how well providers do at getting their patients immunized.
    Low back pain is also something where the science is clear. Obtaining early MRI and CT, early surgical consultation, and early surgery is overuse in most cases. Efficacy evaluation should focus on seeing how well providers do at not getting MRI, CT, and surgery when it is not needed.
    There are a lot of things that fit in these types of models, and the first thing we need to do is create systems that encourage and reward both appropriate use of proven management and avoiding overuse of ineffective management.
    Then we can start to address issues like mammography, where the science is deficient, by creating studies that do collect accurate data to evaluate the utility or lack of utility.
    Every discussion of this type of thing by people who know what they are talking about emphasize this: adoption of appropriate standards where the science is clear and sponsoring good scientific studies where the science is not clear.
    We can save hundreds of billions a year just on what we have good science on already, then we can go to work filling in the blanks.

  21. Legacy Flyer, everyone–
    Everyone- I’ll be back a little later to respond to other comments.
    Legacy Flyer–Dartmouth is actively involved in studying “shared decisionmaking” as another way of addressing overtreatment that results from patients undergoing elective procedures that
    they may or may not want or need.
    Under shared decision-making, patients are given a pamphlet that explains the risks and benefits of the procedure that they are considering. The pamphlet explains the odds of complications, and what those complications might be. It tell ths patient the percent of knee replacements that go smoothly and the perccentage of patients who are having no problems six months later.
    Prospective patitents are also given a video which goes over some of the same material and also features patients who had a knee replacement explainign why they decdied to do it as well as patients who didn’t–epxlaining why they decided against it.
    Typically the prospective patient will identify with one of more of hte people in the video, saying “that’s just how I feel.”
    After viewing the video at home– often with family members– and reading the pamphlet, the patient talks to a “decision-making coach”–often a nurse specially trained in this area.
    She asks questions to make sure the patients understands what he read about risks, benefits and odds, and then draws the patient out to talk about his own best hopes and fears.
    In the course of the converstaoin, the patient usually decides what he wants to do. Rather than passively “conseting” to the procedure, he makes an informed choice.
    Bottom line: when given this opportunity, 20% to 25% of patients decide against the knee replacement. This is further evidence that patients are being overtreated.
    There is now legislation in Congress that would have Medicare reminburse for shared decision-making.
    Finally, your immunization example is as lurker points out a starwman. WE know immunizations work; there is no question about overtreatment.
    The Dartmouth reserach focuses on the grey areas of medicine (which is most of medicine).
    For example– invasive heart procedures.
    How do we know that people who live in high-spending areas are getting too many angioplasties and by-passes? Because the outcomes for heart patients are no better for patients in these areas; they are worse.
    They measure outcomes in terms of mortalities, patient satisfaction, doctor satisfaction. (Docs in high-spending areas are less satisifed with the practice of medicine, complain about lack of co-ordiantion and collaboration, etc.

  22. Quoting from your Blog, I wondered about the following:
    “But then the Times engages in a bit of completely unsubstantiated speculation: “Members of Congress are seriously considering proposals to rein in the growth of health spending by taking tens of billions of dollars of Medicare money away from doctors and hospitals in high-cost areas…” Then you say,
    …”But no one is seriously proposing simply slashing payments to doctors and hospitals in Manhattan, L.A. and Miami.”
    I don’t think that we can assume that.
    The CBO has proposed in its “Budget Options” released Dec 08 many options to reduce variations in spending for Medicare. Option 50 is “Reduce Medicare’s Fees for Physicians in Areas with Unusually High Spending” p.98 They propose to do this by creating microregions based on Medicare populations of 10,000 or more, and comparing the spending for each microregion with its spending target. Local adjustment factors would be applied to all physicians in a microregion if its spending/target ratio equaled the 90th percentile of all microregions (I am assuming in the US.) The point here is to “create a degree of financial accountability among physicians within local areas” so the local physicians will “monitor, detect and discourage such behavior”
    (This plan does not protect individual physicians.) my comment.
    The purpose of this comment is we need to be careful when assuming how the payments may be modified. A quick reading of this technical passage would lead people to assume there would be deep slashes. Who knows how steep they could be? I am not arguing here that this is a good approach, but merely that it really might be considered.
    Do we wish to advocate for cuts that would take place at practice level?

  23. I am glad to hear about the President’s support for putting the Medicare Payment Advisory Commission in charge of MedPac. I remember researching innovating cancer treatment technologies in the ’90s that could have aided physicians in deciding which chemotherapies worked best in battling an individual patient’s form of cancer. Although the Medicare panel was in the overwhelming majority to approve the full extent of the technology, it wasn’t allowed to. It was the bidding of the cancer industry (chemotherapy concession) that surpressed the technolgy. It wasn’t until 2006 that it Medicare was allowed to reverse trend and go on record as formally approving the service and providing coverage. All the while, 1572 people per day died in the U.S. while we were waiting.

  24. Maggie,
    You say: “Finally, your immunization example is, as lurker points out a strawman. We know immunizations work; there is no question about overtreatment.”
    That is exactly my point which you and the “lurker” seem to have missed. I know that immunization works. My point is that the methodology of the Dartmouth study (as applied to non-Medicare data) would show immunizations have geographic variability which would raise the possibility of OVERUSE of immunization. Since we know this is not true, it suggests that the methodology which brought us to this conclusion (that immunization has variability and may be overused in some areas) is incorrect, limited or needs to be “taken with a grain of salt”.
    In other words, if the methodology brings us to a false conclusion in one area, we need to question the methodology in other areas too. You seem to be saying (in effect) ignore this anomalous result, it doesn’t bear on the validity of the method. That ignores the scientific method which says that if a theory predicts the wrong result in a particular situation, then there is a problem with the theory.
    With respect to “informed consent” (or shared “decision making”) for knee surgery, I am 100% in favor of it – and the better the information available to the patient, the better the “informed consent”. However, having given informed consent to thousands of patients over the last 30 years, I can tell you that the process is not perfect. I have had patients turn down procedures that were very much in their best interest and there will be patients who want to have their knee replaced because “Uncle George had it done and it worked for him”. I think that videos and pamphlets are a good idea, however they are also subject to bias and variability in interpretation.

  25. Legacy Flyer —
    Your discussion of immunizations vis a vis the Dartmouth data is not an appropriate example, since it makes the assumption that the Dartmouth researchers and anyone else doing efficacy and efficiency research are totally ignorant of the scientific facts about medical care. Granted, there is variation in vaccination rates, but everyone (EVERYONE) knows that it would be foolish to think immunizations are overuse. Equally clear, it would be foolish for reseachers not to be concerned that high rates of utilization of some management approaches proven to be less effective.
    It is not appropriate to worry that utilization studies will occur in an information vacuum and, as Maggie points out repeatedly, would occur without consideration of patient differences.
    To suggest anything else is to be deliberately naive in order to create specious hypotheticals to confuse the argument. Utilization research is not only based on science, it is itself science. This argument is the equivalent of suggesting that efficacy data would become concerned about overuse of hand washing and sterile technique. Foolish concerns about proven techniques are not going to happen.

  26. Maggie,
    I suspect you are getting a lot of traffic on this blog post. Can you fix up this confusing wording?
    “President Obama expressed support for putting the Medicare Payment Advisory Commission (MedPac) in charge of MedPac…”

  27. Iain, Pat S. Legacy, Gregory, Joan C. John,
    Christopher & Annie, Annie alone (June 10) Linda B.,
    Susan B., Barry, Annie (your first comment)
    Iain– Fixed –and thanks for pointing it out.
    Pat S. your June 11 comment–Yes–thanks.
    Legacy- What Pat said (June 11) .Also, if you look at the Dartmouth reserach, you will find that they talk specifically about how overtreatment occurs in the “grey areas” of medicine.
    On shared-decisioning making– these pamphlets and videos are created, vetted adn reviwed by an excellent team of doctors at the Shared Decisoin-Making Foundation.
    There are international protocols for shared decision-making. It is quite different from “informed consent.”
    For one thing, it takes place over a period of days or weeks. The decision-making coach is specially trained in how to do this in a netural way, without “leading” the patient.
    The state of Washington has passed legislation making it very hard to sue for malpractice if a patients has gone through the shared decision-making process–following the protocol.
    Gregory– Yes, the wonderful thing about the MedPac panel is that they are very intelligent adn seem truly unbiased and “dispassionate” are Jay Rockefeller puts it.
    The Comptroller General picks them, so this reflects very well on that office . . .
    Joan C. First, the CBO was simply laying out “options” –a great many “options.” It wasn’t endorsing or recommending any of them (that’s not CBOs job) just commenting on how much each one might, theroetically save.
    Some were options that Congress might embrace; others were clearly not likely.
    The Times specifically said that “members of Congress” are talking about slashing salaries in high-cost regions which would be patently unfair (not every doctor in Manhattan overtreats.)
    This statement is the sort of things that the conservatives who oppose reform seize upon to stir up fear. That’s why I think it was irresponsible of the Times to print it unless there is actually a bill in Congress that has a chance of passing which would make cuts by region.
    There isn’t. And everyone knows it wouldn’t pass, both because it is unfair and because Senators (and voters) from high-spending states like N.Y., Mass., California, N.J. Florida etc. are too powerful.
    Bad idea and not viable politically. So why bring it up? It make the story seixier. People read it and say “Did you hear that they’re thinking about . . .!!!”
    John–
    Yes, the Dartmouth researach is based on reams of empirical evidence.
    We know that there is overtreatment in some regions–and in some hopsitals–and we know it has little or nothing to do with the medical needsd of the patietns. Reserachers adjust for differences between patients.
    At to what drives the variation– the Dartmouth reserachers talking about supply (more beds adn more ddctors) leading to more treatment.
    But they also talk about ovetreatment being driven by the “medical signature”of a community and preferences of doctors in that community. There are some towns where a great many people receive knee
    transplants– a medical culture has grown up around one or two orthopedic surgeons who specialize in knee transplants, they attract other “knee men” and the next thing you know everyone is having knee trasnplants. In another town, there is a lot of back surgery . . .
    Then there is the “money culture” that Gawande describes. .
    The evidence seems pretty clear that supply is an important factor, but not the only factor.
    Demand seems to have relatively little to do with it.
    For example, when a military base closes and many people leave a town that has many hospital beds and many hopsitalizations–somehow, the beds still get filled.
    When new people move into the town, they adapt to the medical culture. In other words, when a doctor says “I think you need to be admitted to a hopsital” patients go along–even if they’re from Minnesota.
    Christopher and Annie–
    On Gawande being from Boston: he is cancer surgeon. I don’t think there is great evidence of overtreatment when it comes to most cancer surgery (except for prostate).
    Too much chemo yes, but I’m pretty that when it comes to surgery, there is general agreement that when you can cut the cancer out, that’s the thing to do.
    If you read his book Complications, you will find that he discloses many things that could embarrass his hospital. the hospital has given him great freedom to be surprisringly candid.
    He went to this town in Texas because the DArtmouth reserach shows that it is the most expensive spot in the U.S.
    And, there’s a town not far away with a nearly identical demographic where health care spending is much less.
    This is an ideal situation if you’re trying to frame an argument–so that’s why he wrote about these two towns and not Boston.
    Annie–re your June 10 comment. Thanks for the links. The data from the mobile health van is very interesting–it sounds like a very good idea.
    I, too, like the covert rationing blog.
    Linda B–Yes, Senate stafffers involved in the report definitely understand the Dartmouth reserach.
    Susan B–See Linda B. . . Unlike the Senate staffers who helped put together this draft, today’s Karl-Rove conservatives–and the blue dogs–are not as interested in ideas, more interested in ideology (anything the government does is bad; anything the market does is good.)
    Barry– Yes, upstate NY and the NYC metropolitan area are two different worlds, as are Northern Cal and Southern Cal.
    Smaller high-spending states like Mass are more uniform.
    It does matter who pays, as I write in another post. For-profit insurers are concerned about costs, not quality.
    Long-term, better quality and lower costs go hand in hand,but for-profit insurers, like their investors, are primarily interested in short-term profits.
    This is why only non-profit insurers have created accountable care organizations (as Gawanade shows) not the for-profits.
    So the for-profit insuers charge no co-pay for PSA testing (which does no good) and yet charge a co-pay for going to a smoking cessation clinic. They completely ignore medical research and do whatever will please employers and cutomers so that they can draw more customers.
    For-profits went on covering Vioxx for that reason–even though there was a growing body of reserach showing that it led to heart attacks and strokes. But the for-profits didn’t want to lose cusomters.
    By contrast, non-profits–Kaiser, the Mayo Clinic and the VA — all dropped Vioxx from their formularies more than a year before it was pulled from the market. They wanted to do what was right for their patients–even if their patients were disgruntled.
    annie– I tend to agree that a healthcare organizaiton that receives federal money shouldn’t be allowed to use that money for ads and marketing.
    We’re stuck with the private insurance industry –for the time being at least–because many employers have bought expensive and good insurance for their employees, and their employees like it. They dont’ want to give it up.
    When they have an alternative (Medicare for Everyone) they may well decide they like that bettter. Though there will probably always be some extremely expensive private insurance that covers everything you want–or think you want–and everything your doctor (who doesn’t like to follow guidelines) prescribes. But less than 5% of the population will be able to afford that insurance.
    The other reason we are stuck with the private insurance industry is that for quite a while, Wall Street investors have been making nice profits from it. Though today, many insurers are in financial trouble –becaue the cost of care has been spiralling faster than they can raise premiums.

  28. “It does matter who pays, as I write in another post. For-profit insurers are concerned about costs, not quality.”
    Maggie,
    This is not true anymore, at least to the extent that it may have been at one time. The major insurers, both for profit and non-profit, have embraced the Centers of Excellence concept for major episodes of care such as heart surgery, organ transplants, cancer surgery, etc. One insurer, in a recent presentation, said that care delivered in a Center of Excellence turned out to be approximately 10% less expensive than alternative care even though the per procedure cost is higher. At the other end of the spectrum, they have responded to large employers’ interest in improving health and reducing, or at least slowing the growth of, costs by developing a multitude of disease management programs. Insurers are keenly aware that insurance affordability is a huge issue for customers from large, self-funded employers to small groups to individuals. Aggregate commercial membership declined approximately 10% in the last several years because of declining affordability and, more recently, the severe recession.
    It is simply not true in today’s world that insurers can just blithely pass along costs, including fraudulent payments, in higher premiums to customers. They also can’t please shareholders unless they please customers first. If they don’t please customers, they eventually won’t have any, and they won’t have any shareholders either because they will be out of business. The large non-profit insurance sector, for its part, doesn’t have shareholders, so they don’t have to worry about supporting an investor relations department, holding quarterly earnings conference calls, and interacting with pesky analysts and portfolio managers like me.
    With respect to bare bones policies that are full of holes, this can easily be addressed via regulation. Massachusetts calls this issue “minimum creditable coverage.” Precise coverage can vary among competitors as long as the policies are actuarially equivalent. Otherwise, to meet a coverage mandate, a person could, in theory, buy a policy for $1 a year that would cover everything after, say, a $1 billion deductible. It’s perfectly fine for regulators to set minimum coverage standards within reason without the need for a public plan to “keep insurers honest.” In the (paraphrasing) words from a speech by Medco Health Solutions CEO, David Snow, last year that I alluded to in a prior post, government’s role is to regulate and promulgate (i.e., comparative effectiveness and cost-effectiveness information) while the private sector’s role is to operate and innovate.
    Finally, there has been a lot of consolidation among private health insurers in the last 10-15 years and there is likely to be more to come. Sophisticated and expensive technology and analytics are now more important and it takes a lot more capital to develop and support that infrastructure needed to compete in today’s world. At the same time, net profit margins are well within their historical range and likely to remain so after further consolidation.

  29. To follow up on my last comment, the non-profit Blues, in most markets, do not undersell the for profit insurers most of the time. Any advantage they may have from accepting a lower profit margin tends to be offset by somewhat higher administrative costs vs. the largest, most efficient for profits.
    Kaiser and Geisinger are both insurers and providers. This model, at least so far, has not lent itself to widespread replication because of the enormous cost of building a wholly owned provider network including hospitals. Even Kaiser’s results are uneven at best across its footprint, especially between Northern CA and Southern CA.
    Finally, on bundled pricing, to my knowledge, Geisinger has only used this for heart surgery so far. While I admire their courage to take this pioneering step, I wonder why it hasn’t moved on to, say, hip replacements, and more routine surgical procedures like gall bladder removal.

  30. Barry–
    I’m afraid your comments on private insurers are based on what private insurers say about themselves–thus your comments are filled with half-truths and outright lies.
    Try reading reports investigating for-profit insurers.
    Try reading Barron’s, the WAll Street Journal and Bloomberg and the LA Times on fraud, for-profitr insurers’ illegally cancelling policies when patients file for reimbursements; and bragging about double-digit earnings growth while applauding the fact that the nation’s health care bill is growing by 8% a year.
    For-profit insurers like to talk about quality, but as Joe Paduda points out (below), some of the biggest merely manage costs, not care.
    But let’s begin with what you say about non-profits. First, the Blues.
    The Blues were corrupted a long time ago. Those that have not actually turned for-profit behave like for-profits.
    So when I talk about non-profits I’m not talking about non-Blues.
    The insurer- provider model that Geisinger and Kaiser use works very well because the insurer and the provider have the same goal–healther patients.
    To pursue the model,there is no need to build new hospitals. Geisinger is expanding by buying an existing hopsital.
    Kaiser NOrthern California is widely considered a bench mark for excellence.
    Kaiser Colorado also is excellent. The fact that Kaiser Southern California isn’t as good as Kaiser Northern California doesn’t mean it isn’t good-
    Certainly, it is much better than HealthNet (a for-profit).
    Here’s a story from last September about HealthNet: “Health Net on Thursday agreed to reinstate coverage for 926 former members in California whose health insurance policies were canceled after they filed claims and to pay $3.6 million in fines, the Los Angeles Times reports. The company also will pay as much as about $14 million to reimburse expenses for medically necessary care that would have been covered had the policies not been cancelled.
    “In the last year, Health Net — California’s largest health insurer — has been forced to pay a number of fines and penalties related to the company’s policy rescission and cancellation practices, according to the Times. An investigation by the California Department of Insurance found that the company did not follow state laws when handling policyholders’ claims and treated them unfairly . . ”
    Meanwhile, in California private insurers operating under the Knox Keene Actare supposed to pay out 85% of premiums to cover claims, keeping 15% for administraive costs (which includes profits for shareholders.)
    But California’s insurers have been ignoring the law:
    “Private health insurance companies regulated by the Department of Managed Health Care (DMHC) spend $6 billion each year on administration, and divert an additional $4.3 billion to profit, according to a report released by the California Medical Association (CMA). Prepared using data obtained under the Knox Keene Act, the report breaks down how private health insurance companies spend their revenues.
    “This report paints in stark terms why health care costs are skyrocketing for Californians,” said Dr. Richard Frankenstein, M.D., President of CMA. . . .
    Currently, private health insurance companies regulated under the Knox Keene Act – representing some 60% of the health insurance market – are required to spend no more than 15% of their revenues on administrative costs.
    “CMA and other health care advocates believe the statute includes profits as administrative costs; health insurance companies exclude profits from the 15%, allowing them to spend as little as they want on actual California health care . . . ”
    As to profit margins, this is what Barron’s had to say about Wellpoint’s earnings last month: “WellPoint can continue to deliver annual earnings growth of 15% or more, even in a slower-growth economy, says R. Hutchings “Hutch” Vernon of Alex Brown Investment Management. WellPoint’s revenues, he figures, should continue to grow by 8% or so annually, by virtue of the secular rise in medical costs . . . ”
    Two points: first, Americans cannot afford to pay sky-high premiums so that Wellpoint’s shareholders can enjoy 15% earnings growth. This is obscene.
    In addition, CEO salarlies of $20 million are completely unaccetable.
    Meanwhile, WEllpoint WellPoint spent $1.22 million lobbying the federal government in the first quarter of 2009 to see thatits position on health reform and other issues was heard, according to disclosure forms. (It wants to block Medicare for All) That’s a 16 percent increase from its lobbying spending in the same period a year ago.
    We cannot afford to subsidize a 16% increase in Wellpoint’s attempts to control Congress.
    Secondly, note that, according to Barron’s, the company wants health care spending to grow by 8% a year.
    We, as a nation, cannot afford to have healthcare be a high-growth industry. Moreover, we know that much of that growth includes unnecessary, potentially hazardous treatment.
    Whistle-blowers have testified in court that when they have tried to alert for-profit insurers to waste and fraud in the hospital industry they just laugh and so– the bigger the business, the better for us.
    And then they pass the high cost along in the form of higher premiums.
    Finally, for-profit insurers do not get credit for the “centers of excellence” idea.
    That began as a Medicare pilot project in 1991.
    Virtually all of the research on quality has been done with government dollars. Insurers have made very little investment in the area.
    Private insurers like to talk about quality, but as Joe Paduda points out on “Managed Care Matters’
    when talking about one of the biggest insurers,UHC:
    “This is not a company that invests in medical management — despite its trove of data, analytical expertise, participation in NCQA accreditation and in-house capabilities, UHC has always been about managing reimbursement, not care. Their latest move to increase premiums is the way United has always reacted to bad financial results . . ”
    Finally, on corruption in the private insurance industry, note this report showing that Medicare Advantage insurers
    have failed to pass savings on to beneficiaires(See third paragraph below)
    “Nearly $15 billion could have been saved this year if private insurers that offer Medicare prescription drug plans had administrative costs similar to those of Medicare and if they obtained discounts on drugs similar to those received by Medicaid, according to a report commissioned by House Oversight and Government Reform Committee Chair Henry Waxman (D-Calif.) set to be released this week, the Wall Street Journal reports (Lueck, Wall Street Journal, 10/13).
    “The report reviewed administrative costs, sales costs, profits and drug rebates of the 12 largest insurers participating in the Medicare prescription drug program — including Aetna, Humana and CVS Caremark Group — which cover a total of more than 18 million Medicare beneficiaries, or 75% of seniors enrolled in Medicare drug plans.”
    “Congressional researchers found that the plans failed to pass along to beneficiaries $1 billion in rebates obtained from drug makers. The report also found that negotiated discounts under the program have reduced the amount spent on drugs by 8.1% — far less than the average 26% savings achieved by other government drug programs, such as the one managed by the Department of Veterans Affairs.”
    “In addition, the drug benefit will cost taxpayers $180 per beneficiary in administrative costs — six times the cost of traditional Medicare programs, the report states. Total administrative and sales expenses for the 12 companies will reach $3.6 billion this year, not counting $1 billion in profit (Woellert/Goldstein, Bloomberg, 10/13).”
    Barry– Let me suggest that you get your information about the insurance industry from someone other than the insurance industry (or right-wing think tanks ).
    For information, got to the Wall St. Journal,
    Barron’s and investigative
    reports done by state and federal authorities.

  31. This is an excellent and detailed analysis of the flaws in the New York Times article. One note that we would like to point out is that multiple times throughout the article you, or someone you interviewed said that across-the-board cuts to physicians in high-spending states would be “irrational” or that MedPac “opposes global across-the-board cuts in physicians fees.”
    In reality, Medicare has been making across-the-board cuts to all providers for 20 years with no rationality or distinction based on quality of care or efficiency.
    We would prefer to see Medicare establish rational qualifiers — outcomes, safety, service, efficiency, for example — and then cut reimbursement to providers who don’t measure up. If providers who are delivering excellent outcomes, safety and service at lower costs are rewarded, they will continue to improve. And providers who are delivering below-standard outcomes, safety and service at higher costs have reimbursement cut, they will quickly adopt best practices and begin delivering the good value that patients deserve and that saves money.

  32. Jane Jacobs may work for Mayo and have its interests at heart, but she is dead right. The only thing I would add is that creating a large federal insurance alternative closely allied with Medicare — Part E if you will — combined with a strengthened and independent MedPAC would strengthen the chance that the reforms Ms. Jacobs suggests would be implemented and enforced. Adopting the “Medicare plus 10%” payment plan floated by Obama’s people would turn the program into a profit center for most health systems now losing money on Medicare.
    And yes, Dave Durenberger was and is a Republican, but if he were in office today he would be another endangered moderate Republican, since he is positioned far to the left of the modern Republican party.

  33. Jane–
    Thanks very much for your comment.
    I had written that “across-the-board cuts to physicians in high-spending states would be ‘irrational’ and that MedPac ‘opposes global across-the-board cuts in physicians fees.'”
    You point out that
    “In reality, Medicare has been making across-the-board cuts to all providers for 20 years with no rationality or distinction based on quality of care or efficiency.”
    You’re entirely right.
    But I would stress the difference between MedPac and Medicare.
    You write that one wou;d prefer to see “Medicare establish rational qualifiers — outcomes, safety, service, efficiency, for example — and then cut reimbursement to providers who don’t measure up. If providers who are delivering excellent outcomes, safety and service at lower costs are rewarded, they will continue to improve.”
    I agree completely.
    And, I think you and I probably agree that this is what Obama is calling for.

  34. Vadranor and Pat S.
    Druenberger is actually okay. He still writes a newsletter; I read it.
    There was a time when there were moderate to liberal Republicans who cared about the public good. Lowell Weicker in Ct.was one of them.
    Gerald Ford was okay.
    But in the 1990s Karl Rove drove most of them out of the party.
    Pat S.
    Yes, I really think that what you describe as a “strengthened and independent MedPac” would
    “strengthen the chance for reform.”
    It’s the best idea I’ve heard in a long time.

  35. pushback on McAllen, TX
    http://wizbangblog.com/
    Maggie, You may want to comment on this blog post.
    Mike
    Health Care Costs in McAllen, TX
    Posted by Charlie Quidnunc
    Published: June 16, 2009 – 4:21 PM
    There have been several articles recently on the scandal of Medicare costs in McAllen, TX. The Medicare reimbursement rate is twice as high as in El Paso, another border town 800 miles northwest. A perfect example is the long and completely bogus article by Atul Gawande on the subject published in the New Yorker:

  36. Mike —
    Suggesting that expats are the reason Medicare costs PER PATIENT are higher in McAllen shows a failure to understand math that I suspect is deliberate — although given the source, you never know. The data cited by Gawande are mean costs of Medicare in McAllen and elsewhere. Although the expats may effect total Medicare costs, MEAN costs per patient are not effected by the number of patients, since the mean is calculated by dividing total costs by the number of patients.
    I also would venture a guess that as many American expats on Medicare end up at the Mayo Clinic in Rochester (or in Scottsdale) as in McAllen. Mayo does a large business in providing health care for US Medicare patients from overseas. Mayo specializes in caring for patients from far away — rural Minnesota cannot support an institution like that. When I worked there patients frequently commented that the added costs of plane fare to Rochester were more than erased by less expensive care and by much shorter stays, both due to higher efficiency.