Otter Debate: What's Driving Up the Cost of Health Care in America? The McAllenization of Healthcare.

“Medicine has become a pig trough here…we took a wrong turn when doctors stopped being doctors and became businessmen.” While this doctor was referring to McAllen Texas in The New Yorker's recent health care case study, he could have easily been referring to the US as a whole. The New Yorker blames perverse incentives placed on doctors by insurance companies, hospitals, and medical administrators where doctors are encouraged to churn out a steady volume of tests, procedures, patients and profit. In this instance, market forces have proved effective in creating quantity care but have failed to create quality care.

As the New Yorker article points out, more procedures in many cases offer marginal value as all procedures carry risk. Back surgery is a prime example. John Smith comes in for a bad back; doctor refers John to a colleagues boutique back surgery hospital; John leaves crippled with internal scarring and a new case of arachnoiditis. Specialized hospitals such as the one I mentioned in the example can be seen everywhere. Interestingly, the New Yorker mentions my hometown, Tulsa, as a city trending towards McAllenization of healthcare. Growing up in Tulsa, I've seen boutique hospitals pop up everywhere as enterprising Doctors poach high margin customers (ie John Smith) from larger hospitals. In fact, the number of boutique hospitals has doubled in the US since 2001 to nearly 220. As we debate the new Health Care bill, solutions to these problems remain elusive.

The Wall Street Journal recently discussed one--comparative effectiveness research. The Agency of Healthcare Quality Research (AHQR) is flush with $1.1B in stimulus funds and charged with comparing treatments, medicines, and making recommendations. While my most cynical colleagues might claim that this institute will eventually help justify "rationed care," but rationing already occurs every time a doctor opts one treatment over another. While it may seem by my post that I may think doctors are greedy, the truth couldn't be further from the truth--my dad is one. I've seen him work on the front lines as a family practitioner and pass up lucrative opportunities in favor of staying there. He eschews costly questionable treatments and thinks carefully how best he can improve the patient's quality of life. The solution comes from doctors sharing, collaborating, and setting up systems that are geared towards improving patient health. Bi-partisan consensus legislation can play a role in facilitating these relationships with funding for programs such as the AHQR, setting up peer review committees, and funding for research on different systems of care. Sadly, whether the government is writing a check or private insurers are doesn't address this fundamental problem… but that is best saved for another post.