During the past month, the healthcare reform debate became significantly more concrete.  The June 1st issue of The New Yorker carried an article by surgeon Atul Gawande called “The Cost Conundrum,” which garnered more attention in one week than just about any other healthcare study, large or small, since the Dartmouth Atlas project.

Several of the major daily newspapers reported that President Obama was walking around with copies of the article telling Congressional leaders that it illustrates the problem we must solve.

Dr. Gawande is a staff member at Brigham and Women’s Hospital and the Dana Farber Cancer Institute in Boston. 

In this second of a two-part series on defining works in the healthcare debate, we look at Gawande’s article and its implications for walk-in medicine. 

Article Summary
“The Cost Conundrum” explores why McAllen and El Paso, two border towns in Texas of similar size, location and circumstances, should cost Medicare outrageously different amounts of money.  The article draws data from the Dartmouth Atlas project, which shows McAllen cost Medicare $14,946 per enrollee (second highest in the United States), while El Paso cost $7,504 per enrollee.

Naturally, the physicians of McAllen have reacted with great skepticism and objected to the article very strongly.  But their defense was weak in the face of overwhelming data that pointed to one primary reason for the higher cost:  patients in McAllen receive vastly more diagnostic tests, hospital admissions, operations, specialist visits and home nursing care than in El Paso.  But quality of care is not appreciably better.   By some measures it is worse.  Arguments that McAllen is poorer and unhealthier didn’t hold up (El Paso is virtually identical), nor did arguments about medical malpractice or higher rates of snowbirds (retirees).  In other words, the McAllen physicians were “busted” by Gawande and The New Yorker in what appears to be a defining moment for physicians across the country and for the healthcare debate in Washington.

But this article wasn’t just about the doctors in McAllen gaming the system.  The article pointed to what it is about the U.S. healthcare system that not only creates high-cost areas like McAllen, but more importantly what it is about the system that creates low-cost places like El Paso, Grand Junction, CO, Durham, NC, Rochester, MN, or Seattle, WA.

At a high level, The New Yorker article makes the same point as Clay Christiansen’s book, The Innovator’s Prescription (see last month’s review of the book):  insurance reimbursement favors procedures over outcomes.

“Providing health care is like building a house,” Gawande says.  “The task requires experts, expensive equipment and materials, and a huge amount of coordination.  Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet, and a carpenter for every cabinet.  Would you be surprised if you got a house with a thousands outlets, faucets and cabinets at three times the cost you expected, and the whole thing fell apart a couple of years later?”

But he doesn’t dwell on the insurance system the way Christiansen does.  Instead he moves on quickly because he thinks focusing on insurance misses the point.  After all, not all regions or systems take advantage of a misaligned insurance system.

After the article received so much attention, Washington Post columnist Ezra Klein interviewed Gawande.   Asked why he focused so much on the provider side of the equation vs. the insurance side, he told Klein, “It’s not that we make all the money. It’s that we order all the money.   We’re hoping that Medicare versus Aetna will be more effective at making me do my operations differently?   I don’t get that. Neither one has been very effective thus far.”

Instead, Gawande turns the focus on people like himself, the doctors who direct care and order services.  And within that focus he introduces a concept from Stanford sociologist Woody Powell:  “the anchor-tenant theory of economic development.”  Powell studied the biotech communities of South San Francisco or Cambridge, Massachusetts, and concluded that just as an anchor store defines the character of a mall, anchor tenants in biotechnology define the character of an economic community.  And furthermore, the anchor tenants that set norms encouraging the free flow of ideas and collaboration produced enduringly successful communities, while those that mainly sought to dominate did not.

This concept, Gawande and Powell believe, applies to other economic communities, including healthcare.  And it goes a long way in explaining how a culture like McAllen can change so drastically.  In 1992, McAllen was almost exactly at the national average.  Within a few years it was among the highest cost communities in the country.  In other words, the economic culture of healthcare in McAllen moved from a focus on putting the patient first to a focus on putting revenue first.

Gawande then turns his focus to what he calls the “positive deviants.”  These would be places like the Mayo Clinic, Geisinger Health System, Marshfield Clinic, Intermountain Healthcare and Kaiser Permanente.  These are systems that have adopted what Dartmouth’s Elliott Fisher calls an “accountable care organization,” one that puts the patient first and actively blunts harmful financial incentives.

In his interview with the Washington Post, Gawande said, “It’s kind of ridiculous that there haven’t been very many people putting feet on the ground and studying what the positive deviants are doing. There are hundreds of examples out there. They’re not just the Mayo Clinic and not just Grand Junction. Go to Portland, Oregon; Temple, Texas; Pensacola, Florida. These are places that are doing something differently.

“I think the extreme complexity of medicine has become more than an individual clinician can handle,” he continued in the Klein interview. “But not more than teams of clinicians can handle. And part of what’s such a marvel about a place like a Mayo or places like it is that they’ve been able to get teams of doctors and  nurses and nutritionists to work together.”

He concludes The New Yorker article pointing out that we need to follow and reward the positive deviants because, if we don’t, he says, “McAllen won’t be an outlier.  It will be our future.”

Implications for Walk-in Medicine
Many readers may be thinking what does all this have to do with retail clinics and urgent care centers, parts of healthcare that are focused on relatively low-cost acute illnesses or injuries.   There’s no argument that retail clinics, urgent care clinics and even employer clinics represent a small percentage of the $2.4 trillion spent on healthcare in the United States.  And we also must observe that the Dartmouth Atlas study focuses on Medicare spending.

But there are two main points of the Gawande article that have significant implications for walk-in medicine because they will likely be woven into Federal healthcare policy going forward.

The first is the risk of putting revenue generation over what’s best for the patient.

All healthcare entities work within the delicate balance between getting paid fairly for their work vs. focusing too much on the procedures that generate the most revenue.  But this issue is going to receive far more scrutiny not only by CMS but by all insurance companies.   Retail clinics in particular need to think about this as they scramble to introduce new services to offset seasonality.

The second point is Gawande’s assertion that the positive deviants find a way to work together as a tight-knit healthcare community.   Coordination of care is another theme that will be prominent in the Obama administration’s healthcare policies.  And care coordination between walk-in medical centers and the larger healthcare community is not exactly seamless.

Already it appears that the Obama administration is emphasizing this issue in the way it will pay doctors who adopt electronic health records.  It seems that the only EHR systems they will approve are ones that meet strict interoperability standards.  If the same administration is successful in launching a national health insurance program, will coordination of care be a precondition for reimbursement?

Retail clinics in particular have operated very independently, with some operators actually promoting a culture of independence.  But that may prove short sighted.  The large patient populations still receive the majority of their care from within traditional health systems and medical groups.   Working in direct collaboration with these systems not only would fulfill the notion of an “accountable care organization,” but in the long run might help smooth out patient volumes and bring efficiencies to the total “economic community” that Stanford’s Powell describes.

For this reason we are more bullish on Wal-Mart’s long-term prospects with its retail clinic program than we are with the standalone retail pharmacies.  The company is focused on working with hospital systems and is looking to make its partnership agreements more acceptable to these systems.

Additional Information: (click on each to go to the on-line resource)
Part II — The Cost Conundrum by Atul Gawande
Dr. Gawande’s Biography
Full article at The New Yorker online
Interview with Dr. Gawande at The Washington Post online
Dr. Gawande’s recent commencement address at  the University of Chicago Pritzker School of Medicine

In case you missed it, in the last two years the start of the flu shot season has moved up considerably. And the implications for retail clinics are mostly positive. In fact, this could be the best news retail clinics have seen in a long time.

We are all familiar with the predictions of a booming retail clinic industry. But if you think those predictions have ceased, think again.  Merchant Medicine estimates 2,050 retail clinics by the end of 2014.

Of any company we have followed in the retail healthcare space, Solantic seems to hit all the strategic buttons:  stand-alone urgent care centers in high-traffic shopping centers, clinics in Wal-Mart, joint ventures with area health systems, a clinic in the Orlando airport, franchises for physicians, outstanding consumer marketing and a relentless pursuit of customer satisfaction.

Over the long term, it could be that seasonality is the least of a retail clinic operator’s worries. As we noted last month in an article about the long road to breakeven for retail clinic operators, traditional medical practices are taking a page out of the retail clinic playbook and focusing more than ever on patient convenience and consumer marketing. The result is a trend that we call “ConvUrgentCare™,” the merging of convenient care, urgent care and any type of walk-in medicine that involves non-emergent acute medical care.  Today you can see retail clinic techniques crossing over not only to urgent care and emergency care, but also pediatrics, family medicine and work-site clinics.   And these techniques appear to be working to change the game in walk-in medicine.

He has lived in the world of corporate travel management and now the world of healthcare.  Oddly enough, the corporate travel world seems to know a lot more about Hal Rosenbluth than the healthcare world.  But that may be about to change.