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Why health care costs are so high

Writer and surgeon Atul Gawande

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TEXT OF INTERVIEW

Kai Ryssdal: In a speech a couple of months ago, President Obama said the biggest threat to the economy isn't the financial crisis or the recession. It's the rising costs of health care. Today the White House Council of Economic Advisers went the president one further. The council reported that gross domestic product would actually get a boost if health-care costs were scaled back. As much as an 8 percent bump by the year 2030.

Dr. Atul Gawande has been trying to understand why health-care costs are so high. He's got a professional interest. He's a surgeon. But he's also a writer for The New Yorker magazine. And the most recent issue of that magazine found him in McAllen, Tex., in search of answers to his questions. Per capita, McAllen pays more for health care than almost any other city in the country. Almost $15,000 a year. But Dr. Gawande says it's not because McAllen is all that much unhealthier than other places. Or that the people there get better care.

ATUL GAWANDE: Instead what we saw was just more services, more of almost everything that a doctor can order was ordered there. Whether it was more ultrasounds and scans, more heart surgery, more pacemakers, more bladder scopes and knee replacements.

Ryssdal: So it was just more for the sake of more?

GAWANDE: Well, that's the puzzle of it. You know, I looked at a place like Mayo Clinic, which is in the lowest 15 percent of health-care costs in the country. And they do much lower volumes of all these kinds of scans and procedures, and seem to get better results out of it. And so part of what may be going on is just habit. In much of American medicine, we habitually think that more is better.

The second thing I found in McAllen was fragmentization. There's multiple hospitals, the doctors go to different places, and there's no system in place to make sure that preventive care is provided. There's not overtreatment.

And then the last thing, which was the dismal, somewhat depressing thing to find, was there is some layer that I encountered there of just money-mindedness. Where the drive to make sure that the revenues are high, there can be a tendency in a heart-burn patient, to push for the idea that heart-burn patient should get a scope, should get different kinds of studies at much higher rates than they are done elsewhere in the country.

Ryssdal: What I hear is, and this is the point you eventually get to at the end of the article, that it's the way that doctors are paid, and it's this treatment of patients as, as you put it, profit centers that really drive so much of the cost of medicine, in McAllen and then by extension, the rest of this system in the country.

GAWANDE: Yeah, when I think about money as a physician there's three ways you can think about it. One is you just try to ignore it, and hope that your expenses come out OK at the end of the month, and you can pay the secretary, and your malpractice premiums, and the rent on your office.

The second way doctors think is, hey, I've got some good money coming in maybe I'll use it to improve the quality of care for my patients. And so they'll hire a nurse practitioner to follow up on the diabetes patients, make sure people are all getting their mammograms like they are supposed to. And then there's a third way you think about the money, which is that you just focus on how do you maximize the revenue.

Ryssdal: Is it reassuring then, for the prospects of health-care reform, that there seems to be a lot of room to cut fat without really affecting the quality of care?

GAWANDE: Yeah, this is why the economists get excited about seeing place like McAllen. And McAllen, by the way, is a sort of extreme form of a part of medicine that we have everywhere we go. And it's the idea that more does not necessarily result in better. In fact, it seems to make care worse. And that possibility that we could ensure that we are exposing people to less risk from less operations, we will save significant dollars for the country.

Ryssdal: Is it possible to get this done, do you think?

GAWANDE: Yes, but not quickly. This is about the idea that we are going to change the culture of medicine to be one where we have much more collaboration, involvement of primary-care physicians, efforts to make sure that specialty care doesn't introduce more risks than benefits. In some communities they figured that out, and we have to learn from those communities and bring it to the rest of the country. And that's very hard to do in a middle of a huge economic downturn that's hurting hospitals and doctors, like everybody else.

Ryssdal: Atul Gawande is a surgeon at Brigham and Women's Hospital in Boston. He teaches at Harvard Medical School. To our point, though, he writes for The New Yorker magazine. Dr. Gawande, thanks so much for your time.

GAWANDE: Thank you.

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Bernice Thompson's picture
Bernice Thompson - Oct 26, 2010

I have read all your books and you have really enlighten me concerning my health. I had to have brain surgery march of 2009. It was vet friegthening.I didn't have any health insurance but my Neuro docotor was the best. He said he became a doctor tosave lives and that is exactly what he done for me. I love evry article that you have written. Thank you so much

Tom Shillock's picture
Tom Shillock - Jun 4, 2009

About 30 percent of health care costs in America are attributable to insurance companies. They only benefit themselves. As Grover Norquist might say, they are economic parasites. Our current health care system is preeminently concerned with delivering profits to institutions and their members(insurers, hospitals, providers, pharma, etc.) rather than delivering health care value to patients (or preventing people from becoming patients). Essentially, the competition is zero-sum, it's about transferring costs bewteen the institutions.

Michael Porter and Elizabeth Teisberg argue (Redifining Health Care; creating value-based competition on results) that competition can be restructured in ways that improve quality and drive down costs. Whether this is possible the authors provide good critiques of various proposals to reduce costs including the current emphasis on electronic medical records.

Sandi Campbell's picture
Sandi Campbell - Jun 4, 2009

By Robert Dimick
A key missing fact in this article is the medical liability situation in McAllen.---
Mr. Dimick, read the article in The New Yorker- he covers this - the Texas legislature has limited cases to $250k and that effectively killed lawsuits. That's not what's driving this -it's greed, yes, but on the part of someone other than patients or lawyers.

KM In NYC's picture
KM In NYC - Jun 4, 2009

A nice complimentary article from the Economist
"Life is expensive: Treating the sickest part of America's economy"

http://www.economist.com/specialreports/displaystory.cfm?story_id=13686480

Jose R's picture
Jose R - Jun 4, 2009

Have you ever gone into an surgery? How many bills did you receive? If you were to buy a computer, would you accept a bill from the chip manufacturer, another from the hard drive, another from the case, another from the memory chip manufacturer? Why do hospitals do this? They are doing this because it maximizes their revenue.

Have you ever wondered how much the insurance company REALLY pays the hospital? They DO get a discount which you are NOT entitled to see. Why is there no transparency? Why are you kept in the dark? This is also on purpose, and the purpose is to maximize the insurance's revenues.

Have you ever been charged for something that didn't occur by a hospital? Have you tried to argue about it? I bet you weren't because you could never find the person in charge of dismissing wrong claims... probably that person doesn't exist. Again, why should you argue about something that you have no say in.

Why is the US in the 54th place in life expectancy/longevity ? Why are we the country bearing the most costly overall health expenditures? No answer here, but you should not blame yourself or poor people. You should neither blame the hospitals nor the insurance companies, after all, they are just a pirate taking the booty. This is one case I do think you should blame government for being so careless. Send a letter to your Representative in Congress and to your State's Senator. Ask them to support health care reform.

Jose R's picture
Jose R - Jun 4, 2009

Have you ever gone into an surgery? How many bills did you receive? If you were to buy a computer, would you accept a bill from the chip manufacturer, another from the hard drive, another from the case, another from the memory chip manufacturer? Why do hospitals do this? They are doing this because it maximizes their revenue.

Have you ever wondered how much the insurance company REALLY pays the hospital? They DO get a discount which you are NOT entitled to see. Why is there no transparency? Why are you kept in the dark? This is also on purpose, and the purpose is to maximize the insurance's revenues.

Have you ever been charged for something that didn't occur by a hospital? Have you tried to argue about it? I bet you weren't because you could never find the person in charge of dismissing wrong claims... probably that person doesn't exist. Again, why should you argue about something that you have no say in.

Why is the US in the 54th place in life expectancy/longevity ? Why are we the country bearing the most costly overall health expenditures? No answer here, but you should not blame yourself or poor people. You should neither blame the hospitals nor the insurance companies, after all, they are just a pirate taking the booty. This is one case I do think you should blame government for being so careless. Send a letter to your Representative in Congress and to your State's Senator. Ask them to support health care reform.

Jason Walker's picture
Jason Walker - Jun 4, 2009

Unnecessary defensive tests are also ordered by doctors because there is no economic drawback to doing so.

The patient doesn't pay for the additional testing, and neither does the doctor. The insurance company does, making the price invisible.

The doctor probably hates the insurance company. They charge him huge premiums in malpractice insurance, he has to hire staff just to deal with insurance paperwork, and they regulate how he provides care. Why should he care if they're paying for 3 additional tests?

I've seen this when I've gone to the doctor for my semi-annual ear infection and paid cash for the care. The doctor ordered a battery of tests, until I told him that I pay out of pocket. The doctor then said that I didn't really need all those tests. It was the most most genuine, personable thing he had said to me.

Robert Dimick's picture
Robert Dimick - Jun 3, 2009

A key missing fact in this article is the medical liability situation in McAllen. If a physician does NOT order a test, and the patient either dies or becomes severely ill, is the physician liable for millions of dollars in a malpractice lawsuit? If the answer is Yes, then most physicians will choose to spend the extra $800 for the CAT scan to avoid the med mal lawsuit. Reduce the liability, and the amount of "defensive" tests will be reduced. Most dctors will then think like the Minnesota Mayo Clinic doctors in Gawande's article.

Mark Mitchell's picture
Mark Mitchell - Jun 3, 2009

Maybe our thinking about health care is wrongheaded. Health care providers are trying to make a profit. Do we try to limit another profession from making a profit? Did we try to limit real estate , financial service industries? The answer is no.For cost to come down there needs to be greater competition.I am all for health care providers making a buck.

Vanessa Fritz's picture
Vanessa Fritz - Jun 3, 2009

The American public has voted with their dollars: the $50+ billion industry of CAM (Complimentary and Alterntive) therapies is a sign of the times. These are an important part of preventative health care, with therapies that go way beyond making sure regular screening exams take place on time.

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