The Wall Street Journal (March 15, B1) describes a high quality Medical Home at the Westminster Clinic, which is located between two affluent communities (Westminster and Arvada) in the northwest portion of greater-metropolitan Denver, with easy access to the ski-slopes. The combined population of these area is 223,000, 80% of whom are white or Asian, 16% Hispanic and 1.2% black. Household incomes average $63,500, which is 25% above the national average and 40% above Denver’s, and the poverty rate of 9% is less than half of Denver’s. But poor people aren’t allowed into this Medical Home anyway. The practice doesn’t accept Medicaid, which (according to Dr. Hammond, the clinic’s co-owner) “doesn’t pay enough to cover the cost of care.”
So how is it doing? The clinic has installed electronic medical records, offers care coordination and documents its “quality standards.” But with three physicians, two PAs and 20 other staff to care for 6,300 patients, it’s going broke. And that’s with extra support from a foundation that got it up and running, extra fees from patients to cover the overhead (“concierge lite”), which of course poor people couldn’t afford anyway, and extra income from sales from dietary supplements (“but only those backed by evidence”).
We have a crisis in America. There are too few physicians to provide all that is needed and too little money to pay for it. And this can’t be solved by excluding poor people from the system.
We trust primary care physicians to care for us. Why not end this Medical Home experiment and trust them to innovate.
On February 16th, PBS aired a documentary, “US Health Care: The Good News.” It’s a story about coordinated health care, and its message is simple and direct. Health care would be better and cheaper if high-cost cities, like New York, had systems of care that were as coordinated as in low-cost communities, like Grand Junction CO.
Most readers will recognize that this is not a new story. It was THE story during health care reform. Enthusiasm surrounding it led to provisions in the law supporting the creation of new structures, such as medical homes, accountable care organizations (ACOs) and value-based purchasing, which experts believe will reduce spending. Doctors will be paid for better outcomes, and hospitals will be penalized for excessive readmissions. Several private insurers have joined in adopting these strategies.
The Grand Junction story first emerged in a New Yorker article by Atul Gawande in 2009. Soon thereafter, President Obama paid a visit, and with roaring enthusiasm declared, “Hello, Grand Junction! You know that lowering costs is possible if you put in place smarter incentives; now you are getting better results while wasting less money.” The President thought he had found the gold to pay for reform. But it was fools gold. Quality efforts can take the edge off of costs, but the real cost-driver is the severity of illness, and that’s determined mainly by patients’ income and education. Poor people are sicker, and they cost more, especially when they live in ghettos full of other poor people who see no way out and whose children grow up never finding an exit.
Low-costs are not unique to Grand Junction. Costs are low in rural areas across the entire northern tier, a vast expanse that covers one-third of the nation but includes only 6% of the population and less than 1% of the black population. Poverty exists in this region, but except for a few Indian reservations, there are no poverty ghettos. So how does Grand Junction stack up against other communities in this region? It’s about average. And when adjustments are made for the severity of illness, costs in Grand Junction are very similar to those in poor communities in the Deep South.
I have cared for poor patients since I was an intern at the Boston City Hospital 50 years ago. But it was not until I was a medical dean in Milwaukee 30 years later that I studied poverty systematically. Two characteristics of Milwaukee drew me to the problem. First was its high degree of racial and economic segregation, which confines most who are poor, black or Latino to a narrow “poverty corridor.” And second was its high health care utilization, higher than elsewhere in the region and 30% higher than in Grand Junction. In trying to understand why, it became clear that the “poverty corridor” accounted for the difference. Without it, Milwaukee was like other communities in the region, including Grand Junction. Poverty made all of the difference.
Manhattan has proved to be much more complicated but no different. Its health care utilization is almost 50% greater in than in Grand Junction, but it is three times as great in Harlem, and without Harlem, Manhattan and Grand Junction are almost identical. As in Milwaukee, poverty made all of the difference. In fact, utilization is even lower than in Grand Junction in the largely-affluent area along Central Park and south to Greenwich Village. So, if the President wants a model for the nation, here it is. But, of course, that’s ridiculous. The reason for low utilization in there has nothing to do with care coordination and everything to due with the absence of poverty.
Nonetheless, viewers who watch the “Good News” story should be impressed that systems with better coordinated care are better and probably cheaper, possibly by as much as 10%, although a recent report from the Congressional Budget Office pegs that number lower. But the untold story is even more important. It’s that poverty, which is uncommon in Grand Junction, is a major breeding ground for poor health, and that poverty ghettos, like those in Milwaukee’s inner city and in Harlem, are cauldrons of high health care spending.
Unfortunately, providers and insurers know this already – they always have. They know that the poorest patients have the poorest outcomes and the most readmissions and that these patients cost double or triple. So the best way to save money and boost performance is to avoid caring for them. That’s what providers do when they relocate to the suburbs or create barriers to access or simply close their doors.
So the untold story is that there are immense social and economic consequences associated with the high health care costs of poverty. Addressing them will be painfully difficult, all the more so if they are not acknowledged and discussed. Solutions will require changes both within the health care system and in the social infrastructure beyond. But most of all, it will demand attention to the root causes of poverty. That’s why the untold story must be told.
`A New Year and, finally, the truth. Geographic variation is not “unexplained,” as we were led to believe throughout health care reform. It is due to differences in income, poverty, illness, and demographic characteristics. The New York Times has made it official. In its editorial today about the federal government’s decision to allow states to set the standards for health care benefits, it quotes Secretary Sebelius’ earlier statement that such a change is warranted because of “differences among the states in demographics, economics, patterns of illness and the way medicine is practiced” (see Hilly Terrain, below for more). This is a sea change. Acknowledging the fact that geographic variation is not simply about practice variation but, rather, that it also reflects demographic and economic factors may finally allow consideration of the core issues of poverty and income-inequality in the development of coherent health care policy.
There is a romantic view of America as a homogeneous nation – a nation that is flat. But the real America has high peaks of affluence and deep valleys of poverty and a varied landscape of health care spending. It is a hilly terrain of income inequality.
The Affordable Care Act was based on homogeneity. Not only would its provisions be disseminated equally, but smoothing the peaks and valleys of health care utilization would liberate the funds necessary to finance it. Under reform, Newark would come to resemble Grand Junction CO, and Mayo would be the model for Manhattan. No longer would Los Angeles, home to the nation’s largest concentration of poverty, consume more resources than Green BayWI, where poverty is infrequent. Regional variation in income and poverty could be ignored all together. The problem is “practice variation,” and health care reform will fix that.
Of course, the US is not homogeneous, and poverty cannot be ignored. In fact, the principal cause of geographic variation in health care utilization is geographic variation in poverty. And now the hilly terrain of health care is coming more sharply into focus. Over the course of a few short days, from December 15th to 18th, that message sprung from three separate sources.
First was an observation in the New England Journal by David Blumenthal, the most qualified member of the Obama health care team and the first director of its health information effort. Dr. Blumenthal noted that “good legislation does not guarantee successful implementation. Never before had a country as large, complex, politically decentralized and diverse as theUnited Statesattempted to create a nationwide electronic health information system.” The nation is too varied.
On the same day, the Wyden-Ryan plan for Medicare was announced. While defined contribution plans, including this one, have the potential to skew benefits away from the poor, a Wall Street Journal editorial endorsing it correctly noted that one of its benefits is that “it relies on local information and adjusts with the behavioral and organizational responses that will vary from region to region.”
And the very next day, HHS Secretary Sebelius announced that the Obama administration would no longer insist on defining a single uniform set of essential health benefits for the nation because “coverage that works inFloridamay not work inNebraska.” The New York Times observed that “the move would allow significant variations in benefits from state to state.
The consistent message is that there is a great deal of geographic variation in America. Its hilly terrain includes peaks and valleys of costs, outcomes, preferences, poverty and needs. Reforming health care in an imagined nation of sameness must give way to reforms for an economically and demographically varied nation, and real solutions must be sought not only within the system but within the structure of the terrain in which our patients live.
Kocher and Adashi’s commentary in the Jan 26th JAMA accurately and tragically cites the Accountable Care Act as follows: “With respect to hospital readmissions, the common strategic thread that runs through the ACA is incentivized coordination of care across transitions. As such, this policy tack considers that hospital readmissions (the avoidable byproduct of fragmented and ill-incentivized health care delivery) will respond to payment reform.”
It is true. The ACA does blame “ill-incentivized health care” for excess readmissions, ignoring the reality that readmissions are most strongly associated with poverty (an ill-advised social condition). Misidentifying causal factors leads to faulty conclusions, and faulty conclusions breed faulty regulations and payment incentives. And so it is in the ACA. Thanks to Kocher and Adashi for illuminating this outrage.
The message resonating from the Wall Street protesters is that income inequality doesn’t work. And among the developed nations, theUSis the most unequal. This distinction does not come without cost. The greatest, of course, is the social cost borne by those who are poor. But what the protesters may not fully realize is that another is the high costs of health care. This is because the costs of caring for the poor are much greater. And together with the rising numbers of poor patients, they are crushing the health care system.
This notion may seem shocking, since it is generally believed that low-income patients receive less health care. After all, many have little or no health insurance, and most have poor access to primary care. Isn’t it the wealthy whose access is best and who use the most? The answer is yes to the first, but no to the second. Access is better for the wealthy, but they use less because they need less. They have better underlying health, and they have social environments that are more conducive to attaining and sustaining health. It is the poor whose health status is poorest and whose needs are greatest.
That doesn’t mean that the care they receive is always efficient, timely or convenient. Nor that it is as effective as the care received by more affluent patients. Inequality exists throughout. But the principal inequality is in their underlying health status. It is worse among the poor, and only some of the difference can be narrowed, even with the best care.
The reasons are well known. They begin in early childhood with poor nutrition, inadequate education and unhealthy behaviors, often accompanied by physical and emotional abuse. The impact of these early experiences often persists into adult life, where the web of causation expands to include inadequate housing and transportation, poor access to proper foods and weak family and social support systems. Their effects become magnified in dense urban environments, with their complexities, segregation, discrimination and threats to personal safety, and further compounded by chronic unemployment.
It is not surprising, therefore, that the poor have more disease and disability, both physical and mental. Nor should it be surprising that, as a result, they have more and longer hospital admissions, more readmissions, more out-patient visits and higher health care spending. Yet this added care is still not commensurate with their greater burden of illness, and despite it, the gap in life expectancy between poor and rich continues to widen.
One reason many believe that low-income patients receive less rather than more care is that they did receive less forty years ago, both in the US and Britain. It was not until the late 1980s that parity was reached, and health care spending among low-income patients has grown disproportionately ever since. Among Medicare enrollees, the poorest one-fifth now use about 30% more than the richest. This difference is even greater among working-age adults. At the extremes, health care utilization in urban poverty ghettos is more than double the rate of affluent suburbs. Indeed, if utilization throughout such regions were at the levels of their wealthiest enclaves, overall spending would be 25-30% less. This decrement is similar to Sir Michael Marmot’s estimate that about one-third of health care spending in England can be attributed to income-inequality.
Unfortunately, some policy-makers have misinterpreted the increaseutilization by the poor as wasteful care in regions that use more, and this has led to policies that disproportionately penalize providers who disproportionately care for the poor. The reality is that income inequality leads to high health care spending and that this draw on resources is unsustainable, all the more so as poverty rates continue to rise.
Not all who are demonstrating on Wall Street may have specific recommendations, but the message that I get from them is that a more equitable America would work better. That certainly is true for health care. Costs are higher and outcomes poorer in countries where income inequality is greater, and the US is #1. This is not to say that our system doesn’t have other problems, from over-regulation to over-utilization, nor that better ways to care for the poor cannot be found. What it does say is that, no matter what else is done, the US will not be able to afford the high health care costs of income inequality and that the only durable solutions are to deal with its root causes.
The Dartmouth machine has published a rather astounding new paper about the wonderfulness of primary care. The reason that it’s astounding is that it debunks decades of Dartmouth doubletalk and adds to the growing evidence that patients who receive more medical care have better health outcomes. More is more, just as you would expect. Here’s what the Dartmouth team did.
First, using the conventional approach to measuring physician supply (AMA Masterfile), they counted the number of primary care physicians and found no significant correlation with either Medicare spending or mortality. This directly contradicts earlier claims by Shi & Starfield that areas with more primary care physicians have lower mortality and by Baicker & Chandra that areas with more primary care physicians have lower Medicare spending, both of which are widely quoted. But we now know that neither is true. In fact, they never were.
Like the current study, Shi & Starfield had also failed to find a correlation between mortality and the total supply of primary care physicians, both family practice (FP) and general internal medicine (GIM). The correlation they found was only with FPs, although they called it “primary care.” However, as I’ve explained, this correlation exists because FP training programs (and therefore FPs) are more prevalent in the upper-Midwest, where minorities are sparse, poverty ghettos are rare and mortality rates are low. FP supply has nothing to do with it, and we now know that primary care supply doesn’t correlate with mortality. It never did. Ouch!
The same for Baicker & Chandra’s claim that areas with more primary care physicians have lower adjusted Medicare spending – about 30-40% lower. The current study shows that this isn’t true. In fact, it never really was. Baicker & Chandra’s claim was based on a statistical shell game that I exposed in Health Affairs. They responded that I was wrong, and Susan-the-Editor (and Dartmouth board member) responded with feminine furry, but it turns out that I was right. As the current Dartmouth study shows, areas with more primary care physicians do not have lower adjusted Medicare spending. Ouch again!
Now for the big story. In addition to using the AMA Masterfile, the Dartmouth team counted primary care physicians a new way. They measured how many primary care services were billed and then converted services into the number of FTE physicians that would, if working full-time, be able to supply them. But forget about the conversion. Stick with the measure. It’s a good measure. It measures services per beneficiary. The Dartmouth team found that areas with more primary care services also had more total clinical services (primary care plus specialty care), and these areas also had more Medicare spending. It is areas like these that the Dartmouth group previously called “high spending areas,” where patients were no sicker and didn’t get any better despite all of that added spending. This gave rise to the mantra about the unwarranted use of supply sensitive service needlessly consuming 30% of the health care budget. But the current study found that patients in the high-spending areas were sicker. And despite being sicker, their mortality was lower. Mortality was lower in areas with more physician services and more Medicare spending. More was more. OUCH!
That’s the exact opposite of Elliott Fisher’s conclusion that more care is associated with higher mortality. According to Fisher and colleagues, this added care is not only wasteful. It’s dangerous. Only a few years ago, David Goodman (senior author of the current study) said, “more physicians will make health care worse.” And Susan-the-Editor said “the greater the amount of health care you provide, the more likely it is to kill you,” somewhat awkward syntax but quite damning. And now the Dartmouth team has shown that more health care is associated with lower mortality. Ouch, ouch and ouch again. Three strikes and you’re out.
So how did the new paper spin these observations? It concluded that “a higher level of primary care physician workforce was generally associated with favorable patient outcomes.” Therefore, medical homes, train more, pay more, bla, bla, bla. But the workforce wasn’t measured. All that was measured was primary care services. And primary care services where greater where specialty services were greater, and these areas had more Medicare spending. The real conclusion is not about primary care. It’s about medical care. Medicare beneficiaries who received more medical care had better outcomes, even when they are sicker. MORE was MORE.
In publishingcthe same conclusion two years ago, I said “let the simple truth that health care quality is better in states with more physicians, both primary care and specialists, sweep away the myths and permit greater clarity as planners work to solve the crisis in physician supply that now confronts the nation.” Possibly this latest study from Dartmouth will allow us to do just that.
The National Institute for Health Care Reform and its research arm, the Center for Health System Change, have published a broad reassessment of Dartmouth’s conclusions that “unexplained” geographic variation is a sign of waste and inefficiency. It concludes, instead, that much of the previously unexplained variation can be explained, that local economic and demographic factors (e.g., poverty) contribute strongly to this previously unexplained variation, and that greater spending often leads to better outcomes. “These findings raise questions about whether narrowly targeted geographic policies can drive critically important system-wide improvements in efficiency and quality of care.”
The full report is available online. The brief summary below, which quotes from it, attempts to capture its major themes.
Geographic Variation in Health Care: Changing Policy Directions by Jill Bernstein, James D. Reschovsky and Chapin White
As the debate in Congress about health care reform began in late 2008, the Congressional Budget Office (CBO) highlighted work from the Dartmouth Atlas project, which estimated Medicare spending would fall by close to 30 percent if spending in higher-cost areas of the country were somehow reduced to the level of low-cost areas. In policy circles, the idea took hold that modifying payment policies in high-cost areas could reduce unwarranted, inefficient spending.
Some sources of geographic variation in health spending are warranted, such as input price and the burden of illness. Moreover, if higher spending produced higher quality, it might be warranted, while ineffective or inappropriate treatments are not warranted. Over time, as research methods have improved, less geographic variation in health care appears to be unexplained, and there is no sound way to attribute the remaining, unexplained variation to any particular cause.
Dartmouth researchers have associated the unexplained portion of geographic variation with the supply of specialist physicians or hospitals, potentially leading to incorrect inferences about the causes of geographic variation—so-called supplier-induced demand. However, recent studies indicate that health status is a more important factor driving variation in spending than previously believed and that demographic and economic factors, as well as the structure of local health care markets, shape patient preferences and provider practice styles in far more complex ways than early analyses suggested. High spending might reflect inadequately measured health status or some other factor, such as poverty.
Growing evidence suggests that failing to adequately address these complexities may overstate both the extent and implications of geographic variation in health care spending and use.
Some policymakers have used the Dartmouth work to assert that “more is not better.” However, a growing body of research supports the opposite conclusion. For example, several recent studies found that patients admitted to higher-intensity, costlier hospitals had better inpatient and post-discharge survival rates. Still other studies indicate greater total spending results in better health status and survival rates.
These findings raise questions about whether narrowly targeted geographic policies can drive critically important system-wide improvements in efficiency and quality of care.
A new paper in the Journal of the American College of Surgeons assesses the likelihood that the combined supply of physicians, advance practice nurses and physician assistants will be sufficient to provide the clinical services that health care reform will demand.
The paper was authored by Michael Sargen, a Penn medical student, Rod Hooker, an authority on physician assistants and other nonphysician clinicians and a member of The Lewin Group, and Buz Cooper, who has published authoritative projections of the physician workforce over the past 15 years. A pre-publication copy of the paper is available online and a summary follows:
Gaps in the Supply of Physicians, Advance Practice Nurses and Physician Assistants
Based on the goals of health care reform, the demand for physicians will continue to increase. As physician shortages deepen, advanced practice nurses (APNs) and physician assistants (PAs) will play larger roles. Together with physicians they constitute a workforce of “advanced clinicians.” The objective of this study was to assess the capacity of this combined workforce to meet the future demand for clinical services.
Projections were constructed to the year 2025 for the supply of physicians, APNs and PAs, and these were compared with projections of the demand for advanced clinical services, based on federal estimates of future health care spending and historic relationships between spending and the size of the health care labor force.
If training programs for APNs and PAs grow as currently projected but physician residency programs are not further expanded, the aggregate per capita supply of advanced clinicians will remain close to its current level, which will be 20% less than the demand in 2025. Increasing the numbers of entry-level (PGY1) residents by 500 annually will narrow the gap, but it will remain >15%.
The nation faces a substantial shortfall in its combined supply of physicians, APNs, and PAs, even under aggressive training scenarios, and deeper shortages if these scenarios are not achieved. Efforts must be made to expand the output of clinicians in all three disciplines, while also strengthening the infrastructure of clinical practice and facilitating the delegation of tasks to a broadened spectrum of caregivers in new models of care.
In a recent op-ed in the San Francisco Examiner, William Dow, a professor of health economics at UC Berkeley, commented on the importance of education as a means of enabling more people to afford health care insurance. In my view, education is important not simply because an educated population can more easily pay for health care. The main importance is that educating children will allow those children and their children to have healthier childhoods, less burden of disease as adults, access to more personal and communal resources to deal with whatever disease they have and less need for health care, and that translates into less health care spending. Let me frame this in terms of the San Francisco Bay Area.
In a series of articles in the Contra Costa Times last year, Susanne Bohan and Sandy Kleffman described the striking differences in life expectancy in poor vs. wealthy ZIP codes in East Bay. Life-expectancy in Walnut Creek (94597) was 87.4 years, but it was only 71.2 years in Sobrante Park (94603), where household incomes are about half and poverty >20%. That’s a gap of 16.2 years. We find that, in addition to a shorter life-expectancy in Sobrante, the inpatient hospital utilization rate is double the rate in Walnut Creek. Poverty is not only tragic. It’s expensive.
Bayview/Hunter’s Point is poor area that’s across the Bay in San Francisco. In an article in last month’s New Yorker about Nadine Burke’s clinic for the poor in Bayview/Hunter’s Point, Paul Tough described the community as “a bleak collage of warehouses and one-story public housing projects.” Like Sobrante Park, its poverty rate is >20%, double San Francisco’s average, and hospital utilization in Bayview/Hunter’s Point is double the rate of San Francisco’s wealthy areas, such as Marina and Twin Peaks.
Now let’s look at education. In Sobrante Park and Bayside/Hunter’s Point, where life is short, health care spending high and poverty prevalent, only 40% of adults completed high school and only 5% achieved bachelor’s degrees. In contrast, in Walnut Creek, Marina and Twin Peaks, where lives are long, poverty rare and spending low, >95% completed high school and 40% have bachelor’s degrees. These high-education areas resemble Japan, where high school completion rates are also >95%, as they have been for decades, and where life expectancy is best and health care spending is least.
So I agree with Professor Dow. While other factors contribute to high health care spending, poverty contributes the most, and if the goal is to control health care spending, we must educate children. Of course, they will need more than good schools. They’ll need safe neighborhoods, adequate nutrition, a nurturing environment and more. But without vast improvements in how poor children grow into adults, constraining health care spending will remain a distant dream.