The New Yorker had an incredible article written by Dr. Atul Gawande about waste, fraud, and abuse in the health care industry.  This is a fantastic article written by a general surgeon talking about what really drives up medical care – low value and unnecessary care.  Surprisingly, he doesn’t blame “frivolous lawsuits” as many doctors reflexively argue (without any evidentiary basis).  He blames the structure of the industry and, in some cases, the providers themselves.

Dr. Gawande discusses a study of “low value care” provided to Medicare beneficiaries.  They studied how often people received one of twenty-six tests or treatments that scientific and professional organizations have consistently determined to have no benefit or to be outright harmful. Their list included doing an EEG for an uncomplicated headache (EEGs are for diagnosing seizure disorders, not headaches), or doing a CT or MRI scan for low-back pain in patients without any signs of a neurological problem (studies consistently show that scanning such patients adds nothing except cost), or putting a coronary-artery stent in patients with stable cardiac disease (the likelihood of a heart attack or death after five years is unaffected by the stent). In just a single year, the researchers reported, twenty-five to forty-two per cent of Medicare patients received at least one of the twenty-six useless tests and treatments.

Could pointless medical care really be that widespread? Six years ago, I wrote an article for this magazine, titled “The Cost Conundrum,” which explored the problem of unnecessary care in McAllen, Texas, a community with some of the highest per-capita costs for Medicare in the nation. But was McAllen an anomaly or did it represent an emerging norm? In 2010, the Institute of Medicine issued a report stating that waste accounted for thirty per cent of health-care spending, or some seven hundred and fifty billion dollars a year, which was more than our nation’s entire budget for K-12 education. The report found that higher prices, administrative expenses, and fraud accounted for almost half of this waste. Bigger than any of those, however, was the amount spent on unnecessary health-care services. Now a far more detailed study confirmed that such waste was pervasive.

Virtually every family in the country, the research indicates, has been subject to overtesting and overtreatment in one form or another. The costs appear to take thousands of dollars out of the paychecks of every household each year. Researchers have come to refer to financial as well as physical “toxicities” of inappropriate care—including reduced spending on food, clothing, education, and shelter. Millions of people are receiving drugs that aren’t helping them, operations that aren’t going to make them better, and scans and tests that do nothing beneficial for them, and often cause harm.

One major problem is what economists call information asymmetry. In 1963, Kenneth Arrow, who went on to win the Nobel Prize in Economics, demonstrated the severe disadvantages that buyers have when they know less about a good than the seller does. His prime example was health care. Doctors generally know more about the value of a given medical treatment than patients, who have little ability to determine the quality of the advice they are getting. Doctors, therefore, are in a powerful position. We can recommend care of little or no value because it enhances our incomes, because it’s our habit, or because we genuinely but incorrectly believe in it, and patients will tend to follow our recommendations.

Another powerful force toward unnecessary care emerged years after Arrow’s paper: the phenomenon of overtesting, which is a by-product of all the new technologies we have for peering into the human body. It has been hard for patients and doctors to recognize that tests and scans can be harmful.  Excessive testing is a problem for a number of reasons. For one thing, some diagnostic studies are harmful in themselves—we’re doing so many CT scans and other forms of imaging that rely on radiation that they are believed to be increasing the population’s cancer rates. These direct risks are often greater than we account for.

Overtesting has also created a new, unanticipated problem: overdiagnosis. This isn’t misdiagnosis—the erroneous diagnosis of a disease. This is the correct diagnosis of a disease that is never going to bother you in your lifetime. We’ve long assumed that if we screen a healthy population for diseases like cancer or coronary-artery disease, and catch those diseases early, we’ll be able to treat them before they get dangerously advanced, and save lives in large numbers. But it hasn’t turned out that way. For instance, cancer screening with mammography, ultrasound, and blood testing has dramatically increased the detection of breast, thyroid, and prostate cancer during the past quarter century. We’re treating hundreds of thousands more people each year for these diseases than we ever have. Yet only a tiny reduction in death, if any, has resulted.

H. Gilbert Welch, a Dartmouth Medical School professor, is an expert on overdiagnosis, and in his excellent new book, “Less Medicine, More Health,” he explains the phenomenon this way: we’ve assumed, he says, that cancers are all like rabbits that you want to catch before they escape the barnyard pen. But some are more like birds—the most aggressive cancers have already taken flight before you can discover them, which is why some people still die from cancer, despite early detection. And lots are more like turtles. They aren’t going anywhere. Removing them won’t make any difference.

The forces that have led to a global epidemic of overtesting, overdiagnosis, and overtreatment are easy to grasp. Doctors get paid for doing more, not less. We’re more afraid of doing too little than of doing too much. And patients often feel the same way. They’re likely to be grateful for the extra test done in the name of “being thorough”—and then for the procedure to address what’s found.

Walmart wasn’t providing this benefit out of the goodness of its corporate heart, of course. It was hoping that employees would get better surgical results, sure, but also that the company would save money. Spine, heart, and transplant procedures are among the most expensive in medicine, running from tens of thousands to hundreds of thousands of dollars. Nationwide, we spend more money on spinal fusions, for instance, than on any other operation—thirteen billion dollars in 2011. And if there are complications the costs of the procedure go up further. The medical and disability costs can be enormous, especially if an employee is left permanently unable to return to work. These six centers had notably low complication rates and provided Walmart a fixed, package price.

Two years into the program, an unexpected pattern is emerging: the biggest savings and improvements in care are coming from avoiding procedures that shouldn’t be done in the first place. Before the participating hospitals operate, their doctors conduct their own evaluation. And, according to Sally Welborn, the senior vice-president for benefits at Walmart, those doctors are finding that around thirty per cent of the spinal procedures that employees were told they needed are inappropriate. Dr. Charles Nussbaum, until recently the head of neurosurgery at Virginia Mason Medical Center, confirmed that large numbers of the patients sent to his hospital for spine surgery do not meet its criteria.

Michael Taylor was one of those patients. Disk disease like the kind seen on his MRI is exceedingly common. Studies of adults with no back pain find that half or more have degenerative disk disease on imaging. Disk disease is a turtle—an abnormality that generally causes no harm. It’s different when a diseased disk compresses the spinal cord or nerve root enough to cause specific symptoms, such as pain or weakness along the affected nerve’s territory, typically the leg or the arm. In those situations, surgery is proved to be more effective than nonsurgical treatment. For someone without such symptoms, though, there is no evidence that surgery helps to reduce pain or to prevent problems. One study found that between 1997 and 2005 national health-care expenditures for back-pain patients increased by nearly two-thirds, yet population surveys revealed no improvement in the level of back pain reported by patients.

There are gray-zone cases, but Taylor’s case was straightforward. Nussbaum said that Taylor’s MRI showed no disk abnormality compressing his spinal cord or nerve root. He had no new leg or foot weakness. His pain went down both legs and not past the knee, which didn’t fit with disk disease. The symptoms were consistent with muscle spasms or chronic nerve sensitivity resulting from his previous injuries. Fusing Taylor’s spine—locking two vertebrae together with bolts and screws—wouldn’t fix these problems. At best, it would stop him from bending where it hurt, but that was like wiring a person’s jaw shut because his tooth hurts when he chews. Fusing the spine also increases the load on the disks above and below the level of fusion, making future back problems significantly more likely. And that’s if things go well. Nussbaum recommended against the surgery.

Six years ago, in “The Cost Conundrum,” I compared McAllen with another Texas border town, El Paso. They had the same demographics—the same levels of severe poverty, poor health, illegal immigration—but El Paso had half the per-capita Medicare costs and the same or better results. The difference was that McAllen’s doctors were ordering more of almost everything—diagnostic testing, hospital admissions, procedures. Medicare patients in McAllen received forty per cent more surgery, almost twice as many bladder scopes and heart studies, and two to three times as many pacemakers, cardiac bypass operations, carotid endarterectomies, and coronary stents. Per-capita spending on home-health services was five times higher than in El Paso and more than half of what many American communities spent on all health care. The amount of unnecessary care appeared to be huge.

What explained this? Our piecework payment system—rewarding doctors for the quantity of care provided, regardless of the results—was a key factor. The system gives ample reward for overtreatment and no reward for eliminating it. But these inducements applied everywhere. Why did McAllen succumb to them more than other medical communities did? Doctors there described a profit-maximizing medical culture. Specialists not only made money from the services they provided; many also owned stakes in home-health-care agencies, surgery and imaging centers, and the local for-profit hospital, which brought them even bigger returns from health-care overuse.

The test of health-care reform, I wrote, was whether McAllen or El Paso would become the new norm. Would McAllen’s costs come down or El Paso’s go up? Now that it has been five years since the passage of the Affordable Care Act, I thought I’d find out. I returned to the economist Jonathan Skinner, of the Dartmouth Institute for Health Policy and Clinical Practice, who had provided the earlier analysis of the Medicare data, and worked with him to get a sense of what recent data reveal. As it turns out, the cost of a Medicare patient has flattened across the country, El Paso included. U.S. health-care inflation is the lowest it has been in more than fifty years. Most startling of all, McAllen has been changing its ways. Between 2009 and 2012, its costs dropped almost three thousand dollars per Medicare recipient. Skinner projects the total savings to taxpayers to have reached almost half a billion dollars by the end of 2014. The hope of reform had been to simply “bend the curve.” This was savings on an unprecedented scale.

The passage of the Affordable Care Act, in 2010, created opportunities for physicians to practice this kind of dedicated care. The law allows any group of physicians with five thousand or more Medicare patients to contract directly with the government as an “accountable-care organization,” and to receive up to sixty per cent of any savings they produce. In McAllen, two primary-care groups, with a total of nearly thirteen thousand patients, formed to take advantage of the deal. One, as it happens, was led by Jose Peña, the Doctors Hospital at Renaissance internist. Two years later, Medicare reported that Peña’s team had markedly improved control of its patients’ diabetes; patients also had dramatically lower emergency-room visits and hospital admissions. And the two McAllen accountable-care organizations together managed to save Medicare a total of twenty-six million dollars. About sixty per cent of that went back to the groups. It wasn’t all profit—achieving the results had meant installing expensive data-tracking systems and hiring extra staff. But even after overhead doctors in one group took home almost eight hundred thousand dollars each (some of which they shared with their mid-level staff). It was proving to be a very attractive way to practice.

The medical system had done what it so often does: performed tests, unnecessarily, to reveal problems that aren’t quite problems to then be fixed, unnecessarily, at great expense and no little risk. Meanwhile, we avoid taking adequate care of the biggest problems that people face—problems like diabetes, high blood pressure, or any number of less technologically intensive conditions. An entire health-care system has been devoted to this game. Yet we’re finally seeing evidence that the system can change—even in the most expensive places for health care in the country. ♦

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