“There are basically two problems with the Dartmouth group’s approach. One is methodological and the other is ideological. Although they are quick to point out that they have published 100 papers, these are based on only a few methodologies—and each is flawed. I’ll get into what’s wrong with their methodology later.

But even if they were right, they’re burdened with another problem—ideology. It’s not unusual for policy research to be burdened in this way. In the case of Dartmouth, it’s to an extreme. And, worse, through Peter Orszag, director of the Office of Management and Budget, their ideology has become the cornerstone of health care reform.

It was John Wennberg and his associate, Elliott Fisher, who led Orszag and others to believe that studies of geographic variation prove that doctors and hospitals over-treat and over-charge, to no benefit. And it was they who proposed the 30 percent solution, claiming that the money needed for health care reform was easily available—no new taxes would be required (as President Obama had promised).

If only health care were “more efficient,” the nation could save 30 percent of health care expenditures, $700 billion annually. And to create that “efficiency,” all that was needed was to force all providers to function like the Mayo Clinic (which cares predominantly for white, middle-class patients) and to utilize more primary care physicians (which Mayo doesn’t).

That’s what I call the sin of commission—the tragedy of misleading the process of health care reform. There’s a second sin—the sin of omission, or obfuscation. It’s not simply that the Dartmouth work on geographic differences is methodologically wrong and its conclusions incorrect, nor simply that its policy implications misdirected health care reform. It’s that there is another explanation for the geographic differences, which has to do with differences in the distribution of poverty.

So all the while that they talked about saving money by reducing wasteful geographic variation (by providing less care where it’s actually needed), the fundamental needs of the poor and the large added costs of caring for them were ignored.

It’s actually worse. Poverty was denied, because it couldn’t be both ways. Either the Dartmouth group was right and the high costs in some areas were because of too many specialists and hospitals doing too many unneeded things, or this higher spending was due to the added costs of caring for the poor. The truth is that it is the latter.

Therefore, the only way to really save money is to make a long-term commitment to ameliorating the high health care costs that are a result of poverty and other social determinants of disease. Not that there aren’t inefficiencies. But physicians have been dealing with inefficiencies as long as I’ve been a doctor—which is 50 years—and certainly before that.

As medicine evolves, there are always more inefficiencies to deal with, but as fast as we deal with them, new ones emerge. So constant diligence is necessary. But is medicine more efficient than in 1960? You bet it is. And is poverty a bigger problem for health care spending now than it was then? You bet. We seem to know how to make things more efficient. But as a nation, we aren’t very good at reigning in poverty. It just grows.”

 Read more on the WSWS Web page.

More damning even than Peter’s analysis was Elliott Fisher’s reply: “Dr. Fisher agreed that the current Atlas measures should not be used to set hospital payment rates, and that looking at the care of patients at the end of life provides only limited insight into the quality of care provided to those patients. He said he and his colleagues should not be held responsible for the misinterpretation of their data.” Really? It was someone else’s interpretation? OK, Elliott, you’re not responsible. Just stand in the corner.

Peter is not the only leading epidemiologist to debunk Dartmouth in recent days. There’s also the report this week from the U of Wisconsin and RWJ by Pat Remington (another leader), showing that people who have the poorest health (and, therefore, the highest health care costs) live in the poorest counties (see my blog report and an earlier discussion of poverty and health care). And there’s the recent paper by Ong and Rosenthal (co-authored by Jose Escarce, editor of HSR, the leading health services research journal), showing that, when all care is measured (not simply end-of-life care, as measured by Dartmouth), hospitals that provide more have lower mortality, which was confirmed in the current issue of Medical Care by Barnato and associates at the U of Pittsburgh. When it rains, it pours.

What’s doubly important about the death of the Dartmouth Atlas is that it was the cornerstone of health care reform. Right from the start, Peter Orszag, director of OMB and the administration’s architect of health care reform, accepted Dartmouth’s ideological principles that health care spending was driven by doctors and hospitals who over-treated and over-charged, to no benefit. The funds for health care reform were readily available by simply getting rid of geographic differences. That alone would save 30% of health care spending ($700B). And that could be accomplished by making everything look like Mayo (white, middle class and efficient) and by having more primary care physicians (which Mayo doesn’t). And best of all, it could assure that no new taxes would be needed, just as President Obama had promised. 

The problem is that it didn’t make sense. Voters knew it, even if they didn’t know the methodological details. And the CBO figured out. And congressmen had to scramble to find ways to pay for health care reform without actually paying for it, because it was supposed to be for free – the 30% solution said so, and folks all over Capitol Hill cited it.  And now the spiral of hypocrisy has finally unraveled. Like Madoff’s investments, the Dartmouth Atlas was shadows and mirrors. But this time, the price tag is more than the $50B that Madoff cost. It’s the likely loss of health care reform. But don’t worry, Elliott. We won’t blame you.

The lesson is that poverty is geographic, poor health tracks poverty and expenditures track poor health. If we’re going to do health care reform again, let’s get it right. No more ”30% solution” this time. But a lot of attention to the links between poverty, health status and health care spending.

Who would be most hurt? The map below shows the amount of DSH paid by Medicare on behalf of poor patients in the various counties, expressed as DOLLARS per POOR POPULATION (individuals below the poverty level). Note: orange is the most, dark blue is next, pale blue is least. Areas with the densest concentrations of poverty, such as in the south, northeast and California, receive the most, and they will lose the most. The northwest and upper-Midwest win again. Of course, the Dartmouth Atlas tells us that these latter regions are “efficient” and deserve to be rewarded. That’s malarkey! Paying for health care reform on the backs of the poor is poor social policy.

Map by Matthew Cooper

“President Obama got his priorities mostly right. The deficit, compared with what it could have been, is $120B. That’s a lot of money. But it’s not too much at a time of economic weakness, when deficit spending is needed to put Americans back to work.”

“Medicare and Medicaid will cost $788B; that should be another reminder of why the country needs health care reform.”

The fundamental question about health care spending is, therefore, what does it mean for jobs?  Approximately 15 million people work in health care, and that doesn’t count jobs at the 140 companies that specialize in constructing health care facilities or 56,000 pharmacies or the dreaded health insurance companies, nor does it include all of the jobs of people supplying goods and services to the 18 million folks engaged in health care in these various ways.  But a more important question is, where is the job growth? The answer is health care. Over the past decade, the growth in health care jobs has equaled the total growth of jobs. Many are high-skilled, but many are entry-level jobs that help to move people out of poverty. So we had better be careful in measuring the impact of health care. Quite apart from its beneficial effects on well being, it just may be the engine of the economy.

What do Miami, Birmingham and Los Angeles have in common, and what do Rochester MN (home of Mayo), Grand Junction CO, Green Bay WI and Portland OR have in common. One thing is poverty. The maps below show the density of poverty in each (light green shows census tracks with 20-40% poverty and red shows tracks with >40% poverty).Miami, Los Angeles and Birmingham all have poverty ghettos. There certainly is poverty in the other cities, but not in ghettos. The dense poverty ghetto in central Los Angeles includes more than 2 million poor people.

So is it “better controls” or less poverty that results in lower spending. The first has a certain appeal, and we do seek better ways of doing things, but the latter is what’s really driving spending higher, and nowhere more vividly that in Los Angeles. Poverty is expensive, and ghetto poverty is really expensive. To paraphrase Mr. Brokaw, until you begin to solve the problem of poverty, health care reform is not going to work.

A reallocation of resources to lower-cost states has been endorsed by members of Congress from states with lower Medicare spending who believe that, by receiving less from Medicare, their states are currently being penalized for being “efficient.” However, it is not efficiency that accounts for their lower spending. It is less poverty and better health status.

The map shows (in blue) the ten states represented by members of Congress who have publicly endorsed reallocation plans based on geographic differences. Six neighboring states with similar characteristics are lightly shaded. On average, the Medicare spending in these 16 states is 20% less than in the rest of the country.

The “low-cost” states cover almost 40% of the land mass of the US but encompass only 14% of the population and only 3% of the African-American population. While they include many prominent cities, there are no major urban centers with the dense zones of poverty, as are found in Chicago, Los Angeles and New York. Nor are there broad bands of poverty, as are found in Louisiana, Mississippi, Alabama and southern Texas. Yet it is in “poverty ghettos” and broad “poverty regions” that health status is poorest and health care spending is greatest.

 We must not confuse the added costs of caring for the poor with inefficiency in health care. The greatest “inefficiency” is poverty. The US will never slow the growth of health care spending unless it addresses the special needs of its most disadvantaged citizens. Health care reform should assist the hospitals and physicians who care for them. Unfortunately, a number of sections of the current bills do just the opposite.

Hospital readmissions. Section 3025 of the Senate bill (Hospital Readmissions Reduction Program) and its companion Section 1151 of the House bill (Reducing Potentially Preventable Hospital Readmissions) would penalize hospitals that have higher rates of readmissions. While increased rates may reflect substandard care in some hospitals, the more common reason for higher rates is more patients who have complex diseases processes and little social support, most of whom are poor. Indeed, when fully adjusted for severity of disease, most inter-hospital differences in readmission rates disappear.

Value and efficiency. Because providers in counties where poverty is prevalent have higher per-beneficiary spending, they would be classified as “inefficient” under Section 1123 of the House bill (Payments for Efficient Areas), while providers in the 20% of counties that have the lowest Medicare expenditures would receive a 5% bonus. In like manner, Section 3001 of the Senate bill (Hospital Value-Based Purchasing Program) would reward hospitals that have lower per-beneficiary costs for certain defined conditions (acute MI, congestive health failure, pneumonia, etc.), although it is known that expenditures for such conditions are much greater among low-income patients. I am hopeful that the Senate bill will not include the Finance Committee’s call for penalties for physicians whose resource use is in the highest decile, which would mainly affect those whose practices include poor patients with multiple comorbidities.

IOM study of geographic variation. The same logic pattern that has been applied to readmission policy and to “value-based purchasing” exists in Sections 1159 and 1160 of the House bill, which instructs the Institute of Medicine to develop payment policies based on geographic differences in health care, with the assumption that differences in the Dartmouth Atlas are relevant to cost containment. Yet MedPAC has shown that, even without adjusting for income, much of the variation disappears with adjustment for health status. But even though the bill instructs the IOM to consider income and other social determinants, there are no standards that can be applied nationally to adjust adequately for these factors. On the other hand, there are partial remedies for their effects, such as the wider use of interpreters and transitional care coordinators, as Section 1151(8) of the House bill proposes to support. 

Efficiency and value are important goals, but variation in their geographic distribution is principally a reflection of variation in poverty and the prevalence of disease. That should not be a surprise. We all know that poverty varies geographically, and we know that the care of the poor is expensive. If health care costs are to be constrained, it must be through addressing the needs of low-income patients; not through penalizing the providers who care for them.

Respectfully,