Gawande Nails It on Healthcare Costs

By  |  June 5, 2009 | 

I just finished reading Atul Gawande’s June 1st New Yorker piece – it’s the Talk of the Health Policy Town – on healthcare’s “Cost Conundrum.” Like most of Atul’s work, the article is lyrical, powerful, insightful, and correct.

As you’ve probably heard, Gawande profiles the town of McAllen, Texas, whose healthcare costs are nearly double the national average. He swats away the usual explanations (our patients are sicker, more obese, more addicted, more Mexican; our lawyers are nastier; our quality is better…) to unblinkingly zoom in on the real culprit: a culture in which providers’ greed trumps the patients’ interests. He contrasts McAllen’s healthcare culture with that of El Paso, just 800 miles up the border, a town with similar demographics but whose healthcare costs are exactly half as high. He also describes the Mayo Clinic, which manages to deliver the best healthcare in the country, perhaps the world, at a fraction of McAllen’s costs.

His main point is that policymakers need to focus less on who pays (i.e., should there be a “public plan”?) and more on creating physician-led accountable entities that manage the dollars and possess the wherewithal and incentives to make rational choices about how to organize care – the ratio of primary care docs to specialists, the number of MRI scanners, the algorithm for the workup of chest pain or gallstones. Atul understands that we can’t snap our fingers and change culture, but that culture will change when structure and incentives are lined up correctly.

The article is both hopeful and depressing. Hopeful because it says that in order to save healthcare costs from bankrupting America, we don’t need to look to Germany, or Denmark, or Canada for inspiration – the models for how to deliver high quality care at a survivable cost are already here, in the good ole’ U.S. of A. We simply need to create a policy landscape that either forces McAllen’s providers and healthcare organizations to become more like El Paso’s (or better yet, Mayo’s) or makes their businesses unviable if they don’t.

Depressing, because in the absence of vigorous federal action, the docs and administrators in El Paso are more likely to start behaving like those in McAllen than the converse. Why? If the healthcare pie begins to shrink, we can expect physicians and communities that have been less profligate to become more entrepreneurial (“why am I being so careful while those other guys reap all the profits?”), not more circumspect.

We won’t have another window to fix healthcare in this generation, and so we’d better take advantage of this one. As I’ve mentioned before, the Obama administration’s game plan is to drive our system toward the optimal quadrant of the two-by-two quality vs. cost matrix: high quality at reasonable cost. This direction is undeniably correct, but the whole thing can feel a bit bloodless and wonky when budget director Peter Orszag explains it. Gawande’s article puts a human face on the issue of cost variations, which makes it an essential read for anyone who cares about healthcare, policy, politics, or the future of our nation.


  1. menoalittle June 6, 2009 at 4:17 am - Reply


    The cardiac surgeon in McAllen observed, “We took a wrong turn when doctors stopped being doctors and became businessmen”. I ask, what was the genesis of this transformation. The answer is not as simple as greed.

    Gawande opines about approaching the fix; “This will by necessity be an experiment. We will need to do in-depth research on what makes the best systems successful”, an all encompassing comparative effectiveness evaluation of health care delivery to get the sweet spot of the right box of the two by two, if you will. The number of new delivery approaches is scant and ideas for others are pedantic as intimated by Gawande. Politics and big business interests are an impediment and this includes, but not limited to, the Leapfrog Group and the HIMSS membership. Look what Six Sigma has done for GM. The highest priorities of medical care are more comparable to those of the military than of GM or Motorola.
    Survival, injury, and mental health tip the balance. And we see that “intolerable” (according to the US Army’s Surgeon General’s Congressional Testimony) HIT systems are also and impediment, here:

    Unfortunately, the health care system evolved to where it is over decades and it will take that long to get it out of the worst quadrant. To understand the powerful forces that created the current crisis, Economics 101 and Economic History 101 is requisite. Speaking of economics, the Mayo clinic could do it even cheaper if they did not repeat most tests that had been done at outside facilities.

    It has been interesting to see the evolution of CMS thought on concierge care delivery, itself an organization (albeit small) of maximum accountability. CMS went from attack to adoption, at least partially. There is a CMS program that now pays doctors more to provide care to patients with complex multiple co-morbid conditions. Pure concierge care and this variant ought to be part of the comparative effectiveness evaluation.

    The question for the creative Gawande is how to instill the pride of accountability and the Oath back in to the noble profession.

    Best regards,


  2. Bob Wachter June 13, 2009 at 5:17 am - Reply

    Atul Gawande gave a talk to graduating students at the University of Chicago’s Pritzker School of Medicine, and the indefatigable Maggie Mahar covered it in her blog. Atul’s appeal to the students to “join in the battle for the soul of medicine” is inspirational and well worth reading.

  3. bgj 4 transformation July 9, 2009 at 4:27 am - Reply

    Yes, yes, it is good to hear others in healthcare speak to the need to see health care reform as a bigger issue than who pays. We have to start the reform with the end in mind and find a way to transition from our current model of care delivery to the one we design for our future all the while making sure there is still a way to make a living in this industry.

    Thanks for th link to Atul Gawande’s piece.

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About the Author: Bob Wachter

Robert M. Wachter, MD is Professor and Interim Chairman of the Department of Medicine at the University of California, San Francisco, where he holds the Lynne and Marc Benioff Endowed Chair in Hospital Medicine. He is also Chief of the Division of Hospital Medicine. He has published 250 articles and 6 books in the fields of quality, safety, and health policy. He coined the term hospitalist” in a 1996 New England Journal of Medicine article and is past-president of the Society of Hospital Medicine. He is generally considered the academic leader of the hospitalist movement, the fastest growing specialty in the history of modern medicine. He is also a national leader in the fields of patient safety and healthcare quality. He is editor of AHRQ WebM&M, a case-based patient safety journal on the Web, and AHRQ Patient Safety Network, the leading federal patient safety portal. Together, the sites receive nearly one million unique visits each year. He received one of the 2004 John M. Eisenberg Awards, the nation’s top honor in patient safety and quality. He has been selected as one of the 50 most influential physician-executives in the U.S. by Modern Healthcare magazine for the past eight years, the only academic physician to achieve this distinction; in 2015 he was #1 on the list. He is a former chair of the American Board of Internal Medicine, and has served on the healthcare advisory boards of several companies, including Google. His 2015 book, The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age, was a New York Times science bestseller.


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