Question

what economic concepts can be included in the cost conundrum article review by Atul Gawande?

Answer 1

Below are four observations from "The Cost Conundrum" on problems and solutions to the national healthcare market, as Gawande ascends to head one of the most closely watched healthcare projects in recent memory:

1. OVERUSE IS THE PRIMARY CAUSE OF EXTREME HEALTHCARE COSTS.

• Gawande cites multiple university studies that found an increase in healthcare spending and treatment did not improve patient health, and in some cases was detrimental.

• "Rich towns get the new school buildings, fire trucks, and roads, not to mention the better teachers and police officers and civil engineers. Poor towns don’t. But that rule doesn’t hold for health care," he wrote.

• One Dartmouth study he cited found high-cost areas were less likely to provide low-cost preventative services to patients, with Gawande observing: "They got more of the stuff that cost more, but not more of what they needed."

2. PHYSICIANS ARE INCENTIVIZED TO REQUEST HIGH-COST TREATMENT OPTIONS.

• Some physicians are oblivious to the financial implications of their treatment options, while others consciously use insurance money to maximize their profits, Gawande’s piece argues.

• This applies to physicians demanding kickbacks for hospital service and negotiating with home health agencies.

• "So here, along the banks of the Rio Grande, in the Square Dance Capital of the World, a medical community came to treat patients the way subprime-mortgage lenders treated home buyers: as profit centers," Gawande wrote.

3. WE SHOULD LOOK TO THE MAYO CLINIC MODEL.

• Gawande cites the Mayo Clinic as the standard for breaking through the financial incentives for physicians to shift focus from patient to profit.

• While admitting it is not an easy task, Gawande said the Mayo Clinic recognized the need to eliminate financial barriers by pooling the system and physicians' money together and paying by salary.

• "Mayo promoted leaders who focussed first on what was best for patients, and then on how to make this financially possible."

• Gawande also points to a similar approach by physicians in Grand Junction, Colorado, who agreed to a system that pays fees so as to discourage choosing between patients based on federal or commercial insurance coverage.

• He added that the early creation of what would become ACOs have produced "enviably higher quality and lower costs," compared to the average American city.

4. THERE’S A "BATTLE FOR THE SOUL OF AMERICAN MEDICINE."

• He compared healthcare delivery to building a house, noting that the task requires "experts, expensive equipment and materials, and a huge amount of coördination."

• "When it comes to making care better and cheaper, changing who pays the doctor will make no more difference than changing who pays the electrician. The lesson of the high-quality, low-cost communities is that someone has to be accountable for the totality of care. Otherwise, you get a system that has no brakes. You get McAllen."

• Gawande said insurers, both public and private, have proven they can't manage the full complexity of medical care and instead suggests turning to local medical communities.

• "The decision is whether we are going to reward the leaders who are trying to build a new generation of Mayos and Grand Junctions. If we don’t, McAllen won’t be an outlier. It will be our future."