McAllen's Medical Care Pig Trough

McAllen, Texas, Medicare Trough
McAllen, Texas, Medicare Trough

7-30-09 McAllen, Texas Doctor-owned Hospital Raises $500 Thousand to Fight Reform

A front page article in today's NY Times exposes the anti-reform campaign by Doctors Hospital at Renaissance in McAllen, Texas. The Democratic Senatorial Campaign Committee collected nearly $500 thousand, mostly from doctors and others affiliated from the big for-profit hospital in Edinburgh, adjacent to McAllen. Another event sponsored in 2007 by prominent McAllen developer, Alonzo Cantu raised $800,000 for the Democratic House Campaign Committee. House Speaker, Nancy Pelosi attended this fund raiser and cut the ribbon at at the new women's center at the hospital. Cantu is an investor in the for-profit hospital and a member of its board of directors.

The Profit Motive is Driving Up Health Care Costs

I was inspired to create this Hub by an article in this week's New Yorker by Dr. Atul Gawande, a professor of surgery at Harvard Medical School, and by his appearance today on NPR's "On Point." Dr. Gawande is one of the brightest and most articulate authorities on health care issues in this country.

Dr. Gawande went to McAllen, Texas, where Medicare costs are $15,000 per year per person which is double the national average and triple the cost in other communities and at places like the Mayo Clinic in Minnesota where, in contrast to McCallen where the profit-seeking medicine is the rule, physicians are on salary.

In McAllen, doctors own some of the hospitals and profit handsomely from unnecessary surgery, tests and procedures. Other doctors brazenly demand payments from hospitals for referring their patients. These demands for payments reportedly ranged from $100,000 to $500,000 per year. Other physicians own imaging centers and other test facilities which give them an incentive to order unnecessary and costly tests. One medical student called in to On Point with an anecdote about a doctor who ordered that a colonoscopy be performed on a terminally ill patient. This examination served no purpose other than to increase the medical facility's revenue.

According to Dr. Gawande there is currently a battle in health care between profit seeking medicine which emphasizes quantity of care over quality of care and traditional patient centered medicine. According to Dr. Gawande, profit centered medicine does not produce better results for patients because of complications resulting from unnecessary diagnostic examinations and surgery. He cited gall bladder attacks which routinely result in unnecessary surgery in some medical venues in contrast to other hospitals surgery is deemed necessary in only 8 percent of gall bladder attacks.

A caller to On Point argued that medical malpractice lawsuits are partly responsible for the excessive costs in McAllen. Dr. Gawande replied that the doctors with whom he spoke told him that malpractice lawsuits had declined greatly as a result of a Texas law capping medical malpractice judgments at $250,000. Gawande didn't deny that malpractice judgments are a factor. However, in his opinion, for profit medicine is the major driver of excessive health care costs in McAllen and other communities, not malpractice judgments and insurance costs.

Dr. Gawande recounted a conversation over dinner with six McAllen doctors. Some of them expressed surprise when Gawande pointed out that in 1992, the average cost per individual in McAllen was $4,891, almost exactly the same as the national average, but by 2008 costs had increased by nearly $10,000 to nearly double the national average and double the cost in El Paso, a similar border community. Gawande gave the McAllen doctors the Medicare cost data for McAllen which showed that McAllen patients got more of nearly everything, more diagnostic testing, more hospital treatment, more surgery, more home care as follows:

--almost 50 % more specialist visits;

-two-thirds more likely to ten or more specialists in a six-month period;

-20% more abdominal ultrasounds;

-30% more bone-density studies;

-60 percent more stress tests with echocardiography;

-200% more nerve-conduction studies to diagnose carpal-tunnel syndrome;

-550% more urine-flow studies;

-1/5th to 2/3rds more gall bladder operations, knee replacements, breast biopsies and bladder scopes;

-2-3 times as many pacemakers, implantable defibrillators, cardiac bypass operations, carotid endarterectomies, and coronary artery stents; and

--Medicare paid for five times as many home-nurse visits.

One of the six doctors said, "Maybe the service is better here." Another attributed the disparity to "malpractice." "McAllen is a legal hell," a cardiologist agreed. Everyone thought the lawyers in McAllen were worse than elsewhere. This puzzled Gawande because several years ago Texas passed a law capping pain and suffering awards at $250,000. He asked, "Didn't the lawsuits decrease?" "Practically to zero, " the cardiologist admitted whereupon the general surgeon finally said, "We all know these arguments are bullshit. There is overutilization here, pure and simple." Doctors, he said were racking up charges with extra tests, services and procedures.

According to Dr. Gawande, there is currently a battle going on between what he calls traditional patient-centered medical care and profit-centered health care as he found to be the case in McAllen where doctors own for profit hospitals, imaging centers and other medical facilities and base their decisions too often on their own financial interest rather than what's best for the patients. In one sense his conclusion provides hope because there is plenty of room to reduce or stem the increase in health care costs. This will require action to reduce over-utilization costs whatever form Obama's health care reform program takes. Curbing over-utilization will not be easy for Medicare, for a universal single-payer system or for private, for-profit health care insurance companies. But the opportunity for huge savings is there and must be tackled without delay.


Up to 30 % of Medicare Spending is Wasted


Doctors and the Cost of Care

Pubblished: June 13, 2009

As the debate over health care reform unfolds, policy makers and the public need to focus more attention on doctors and the huge role they play in determining the cost of medical care — costs that are rising relentlessly.

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Times Topics: Health Care Reform

Doctors largely decide what medical or surgical treatments are needed, whether it will be delivered in a hospital, what tests will be performed, and what drugs will be prescribed or medical devices implanted.

There is disturbing evidence that many do a lot more than is medically useful — and often reap financial benefits from over-treating their patients. No doubt a vast majority of doctors strive to do the best for their patients. But many are influenced by fee-for-service financial incentives and some are unabashed profiteers.

All Americans are affected. Those with insurance are struggling to pay ever higher premiums, as are their employers. If the government is going to help subsidize coverage for the millions of uninsured, it will need to find significant savings in Medicare spending, at least some of which should come from reducing over-treatment. In the long run, if doctors can’t be induced to rein themselves in, there is little hope of lasting reform.

A glaring example of profligate physician behavior was described by Atul Gawande in the June 1 issue of The New Yorker. (His article has become must reading at the White House.) Dr. Gawande, a Harvard-affiliated surgeon and author, traveled to McAllen, Texas, to find out why Medicare spends more per beneficiary there than in any other city except Miami.

None of the usual rationalizations put forth by doctors held up. The population, though poor, is not sicker than average; the quality of care people get is not superior. Malpractice suits have practically disappeared due to a tough state malpractice law, leaving no rationale for defensive medicine. The reason for McAllen’s soaring costs, some doctors finally admitted, is over-treatment. Doctors perform extra tests, surgeries and other procedures to increase their incomes.

Dr. Gawande’s reporting tracks pioneering studies by researchers at Dartmouth into the reasons for large regional and institutional variations in Medicare costs. Why should medical care in Miami or McAllen be far more expensive than in San Francisco? Why should care provided at the U.C.L.A. medical center be far more costly than care at the renowned Mayo Clinic?

After adjusting for differences in health, income, medical price and other factors, the Dartmouth researchers’ overall conclusion is that the more costly areas and institutions provide a lot more tests, services and intensive hospital-based care than the lower cost centers. Yet their patients fare no better and often fare worse because they suffer from the over-treatment.

The Dartmouth group estimates that up to 30 percent of Medicare spending is wasted on needless care.

Although most experts think the Dartmouth research is essentially right, a few believe that other factors, including the health of individual patients, play a bigger role. Even if the over-treatment is less than the Dartmouth researchers believe, their findings point to areas and institutions where Medicare should be able to coax or push physicians to behave more prudently, for all their patients.

When President Obama speaks at the annual meeting of the American Medical Association on Monday he will need all of his persuasive powers to bring doctors into the campaign for health care reform. Doctors have been complicit in driving up health care costs. They need to become part of the solution.

Comments 34 comments

JS Meister 7 years ago

Ironic, isn 't it, that McAllen is located in the poorest county in the U.S.. bI have worked there over many years on public health research and action. KIt is a rural county whre everyone is poor exdcept the landowners and doctors.

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Yes it is ironic. And the difference between McAllen and El Paso is amazing.

Thanks for your comment.

ColdWarBaby 7 years ago

"For Profit" is the entire story.

This is capitalism at its finest. Only profit matters and how it is made is not a concern as long as it's made.

Single payer, everyone in, no one out.

End of discussion.

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

I agree. We already have a good single-payer system called Medicare. Not perfect but in my experience it does work. IMHO, Medicare should be extended incrementally over 5 years or so until everyone is covered, starting first with prenatal care, children, the indigent, low income people, the unemployed and so forth until everyone is covered. This would give everyone affected--private health care companies, doctors, hospitals, employers, et al, time to adjust. Perhaps a crumb could be thrown the the private health care insurance companies by letting them offer "Medigap" coverage or perhaps pet health care insurance.

Wiz 7 years ago

Who will guard the guards?

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Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Ha! Bring Cheney back a la "Weekend at Bernie's."

ColdWarBaby 7 years ago

That sounds like a decent plan Ralph. Too bad you're not the one making the decision.

Iðunn 7 years ago

cold war baby already said it. for profit drives up costs? who knew? ALL OF US

ahpoetic profile image

ahpoetic 7 years ago

What does a 50 year old man without insurance do when very, very sick? Does America care about those who pay taxes for 50 years?

nicomp profile image

nicomp 7 years ago from Ohio, USA

The US has the best health care in the world. The delivery system needs to be tweaked, but giving over 17% of the economy to the feds will make delivery problems much worse.

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

The U.S. has the most expensive and inefficient health care system in the world. And it ranks the lowest in the industrialized world in terms of results--life expectancy and infant mortality.

The U.S. ranks 45th in life expectancy--

Peggy W profile image

Peggy W 7 years ago from Houston, Texas

Hi Ralph,

One of the things being studied is exactly what you pointed out in this hub. Why some areas give excellent medical care and keep costs lower compared to others who do the opposite. We need to learn from the best...and adapt this to what the entire country does.

One problem not yet discussed is why more people who are studying to become doctors are not choosing to specialize in what is most practice. Well...guess what...surgeons and other specialties make more money than the family practice guys! Greed?

Guess we know the answer. Where are the days when a person studied to become a doctor to help humanity...not just to get rich?

As this hub pointed out, the bad doctors who have money as their prime motivation are at fault for much of this mess.

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Thanks for your comment. We can agree on that.

nicomp profile image

nicomp 7 years ago from Ohio, USA

How ironic that many people demand socialized medicine while at the same time complaining about the excesses of current government programs such as Medicare.

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Well, the McAllen experience shows that a government single payer system is not a panacea for reducing the rate of increase of health care costs. Medicare needs to do a much better job of controlling costs.

Peggy W profile image

Peggy W 7 years ago from Houston, Texas

Amen to that.

MD 7 years ago

There are a lot of decisions doctors have to make and psychology plays into it. I have never seen a Doctor sit around and say, how can I make more money off this. Most tests we order get paid to someone else- and the whole point of the GRUELING DEMORALIZING residency training we went through was to make us take the patient's needs on over our own (too bad the public got rid of that). I think if MDs are over utilizing tests, its out of fear (perhaps pyschological) of not doing enough, which has been the AMERICAN MENTALITY for the past 30 years.

As for Dr. Gawande's article- I think if you pick a place in the country that is off the Bell Curve for charges/per resident, then you SHOULD EXPECT to find some UNUSUAL practices patterns- its statistics- but I would expect those are UNUSUAL practice patterns and not the norm. IF we take the road that physician is to blame for the cost- then you can sure EXPECT to find yourself in the uncomfortable position of hearing : Listen- its probaly nothing, every once in a while this symptom turns out be cancer or some preventable catstrophe- but usually not- In order save the millions of dollars we need too, so that everone can get care, YOU are not going to get this expensive test (MRI, ECHO you name it). OH AND BY THE WAY, DON'T SUE ME if you happen to be the one, cool? (OF COURSE NOT, because in my experience, patients drive a lot of the unnescary test). I give that option frequently to patients, and guess what, unless they have to pay for it themselves, they chose the test. But I have had other patients call back and complain for getting build for tests- when they are responsible. I could go on, the hypocrisy is amazing.

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

McAllen is the highest or nearly the highest cost community for Medicare in the country. That's why Gawande went there to study their medical care. He concluded that the main reason why McAllen costs Medicare so much is that the doctors own the hospitals and testing facilities and share in the profits from tests, procedures and hospital stays. Do you disagree with his conclusion. Down the road, El Paso, a community with similar demographics costs Medicare much less, and Mayo, where doctors are on salary, costs even less. However, according to Gawande "for profit" medical care is supplanting traditional patient centered care in this country. If true, this will exacerbate the problem of skyrocketing costs.

I concluded from Gawande's article that there is quite a bit of room for Medicare to reduce its costs by not paying for unnecessary tests, procedures and hospital stays. I'm sure that this will not be easy. However, we can't go on forever the way we are going with double digit cost increases every year.

I wonder why you would let patients "choose the test." My primary care doctor doesn't order unnecessary tests, so far as I can tell, and I don't ask for them, especially ones like CT scans that involve a lot of radiation. And I don't see him unless a condition persists beyond a reasonable period. I'm fortunate to have Michigan Blue Cross-Blue Shield Medi-gap coverage which is quite good.

Thanks for your comment!

ledefensetech profile image

ledefensetech 7 years ago from Cape Girardeau, MO

Ralph your argument doesn't hold water for one reason. Do you know what's missing in this scenario? The patient. Your claim is that for-profit is what is driving the costs up, but that is incorrect. It's Medicare that is driving costs. The doctors in McAllen have learned to "game the system" and get much more tax money sent their way. That is a failure of Medicare, not the free market.

This is exactly the sort of thing that happens when you remove the individual from the economic equation. This is exactly what happens when you use medical insurance to cover routine care. Medical insurance should be like any other type of insurance. Reserved for catastrophic illness and surgery. If people knew what the cost of things were, they'd spend more time talking to their doctors and taking part in their treatment rather than their doctors talking at them and ordering stuff done that their patients don't understand.

One thing I don't think you've considered is that Medicare is abused in McAllen because so many people are on Medicare and Medicaid in that county. Since the major source of funding for medical care is Medicaid, that's why the system is gamed more there than say, New York. If we expand that system to cover everyone, we can expect the same kinds of abuses from all doctors to the system.

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

The argument isn't really mine. It's Atul Gawande's the most astute analyst/commentator I've seen. My last comment on the Forum stated that better Medicare cost controls are needed. Apparently you didn't read the Gawande article. He points out that down the road in El Paso where the mix of paitents is quite similar to McAllen but where the doctors don't own the facilities, the costs are greatly lower. And Medicare costs are still lower at Mayo Clinic. Better cost control is needed in the entire medical "non-system." That is one of the goals of the proponents of reform. Attempting to reason with a doctrinaire libertarian like you is a waste of time. Whatever the issue is you come up with the same answer whether it fits or not.

I don't disagree with your statement that medical care insurance should be for catastrophic incidents. Medicare doesn't quite fit that notion, but it doesn't provide first-dollar coverage. It pays 80% and the patient pays 20% (or his Medigap insurance if he chooses to add that coverage).

More than individual patient responsibility, fee for service payments to doctors is what is driving up the costs. In order to increase their incomes doctors must bill for more services, procedures, tests, radiologic reports, stents, etc., whether the patient needs them or not. This is especially true in places like McAllen where the doctors own the facilities.

ledefensetech profile image

ledefensetech 7 years ago from Cape Girardeau, MO

You don't seem to understand what the term fee for service means. It's like going to an auto mechanic. When they say you need something done you ask the cost. If they quote you a price you can't afford you look for alternatives. The same thing holds true for medical care. In the case of a catastrophic event like cancer or something like that, insurance takes over.

The problem with "some sort of cost control for Medicare" is that the solution is not between the doctor and the patient as it should be, but between the doctor and Medicare, which leaves out that patient. How can a bureaucrat in Washington, or Austin, Texas, possibly know enough about an individual and their health to make the right decision?

Cost control in the Baccus bill means that doctors are penalized for ordering more than a certain number of tests per patient. Do you really think that a doctor that is trying to figure out what is wrong with a patient is going to pay a penalty for ordering too many tests. No they won't. Instead they'll order the limit of tests they are able. If the tests find a problem, great, the patient gets a diagnosis and, hopefully, treatment. If the doctor finds nothing, well too bad.

My sister recently was diagnosed with ulcerative colitis. It took her several doctor's trips and a dozen or so tests before they found the problem. In a Baccus world, she would have been denied most of her tests and would still be suffering and not know why she was suffering.

The reason those doctors are able to bill for so much and for those tests is because the patient is not responsible for the cost, Medicare or the insurance company is. Since the patient has no input, the patient is left out of the loop and they just accept what they are told rather than question things.

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Ledefensetech, please don't insult me by always saying "you don't understand." FYI I participated in the negotiation of 11 national contracts between GM and the UAW where fee for service was invented. And I've was covered by a fully paid Blue-Cross Blue Shield fee for service plan from 1960 until it disappeared January 1 of this year with the auto bailout.

Please don't assume I don't understand just because I don't agree with your libertarian conclusions.

Please read the linked Gawande article before replying. The reason we can't leave the decisions to the doctors and patients in McAllen is because they are not good decisions, in the main. They are costing double what other comparable areas are costing. And the results for the patients are worse in many cases because too many unnecessary surgeries and other procedures are being performed. And Gawande's study clearly established the reason: FEE FOR SERVICE FOR PROFIT MEDICINE. If Medicare doesn't pay for a particular service, in your libertarian utopia I guess the patient can either pay for it himself or forego the service. Or maybe the doctor will cut the price he would have charged Medicare.

ledefensetech profile image

ledefensetech 7 years ago from Cape Girardeau, MO

We need to get rid of Medicare entirely. Medicare is the reason costs have not been controlled in the healthcare field. Why should a doctor control costs if insurance or the government will pay the cost. At least until it becomes too expensive and the government then is forced to ration care due to the cost.

In a free market, on the other hand, costs cannot get too high because new players either enter the market or doctors price themselves out the market. We're seeing the beginnings of this with Nurse Practitioners and Physicians Assistants taking over many duties that were once the sole province of doctors.

You also have paid no attention to my assertion that the AMA exerts a monopoly over healthcare in the US. Could you be deliberately avoiding the subject?

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Get rid of Medicare? What are you smoking?

Medicare is ONE reason costs have not been controlled, not THE reason. (You have a tendency to exaggerate or focus solely on the great malefactor government.) There are plenty of other reasons why costs are skyrocketing, not the least of which is fee for service, the tax law which encouraged generous employer fee for service health care plans creating an attitude of "Somebody else is paying so why should I worry about the cost of hospitals, drugs, doctors, etc.), for profit medicine as in McAllen, excessive medical malpractice awards, bribery of our doctors and congressmen by drug companies and health care insurance companies, television advertising of prescription drugs, and so forth. The cost problem is much more complicated to blame on Medicare.

In a v=free market, costs cannot get too high--where is the free market? This is highly theoretical and unrealistic. There is no free market in health care nor is there ever likley to be one.

You are generous in attributing inattention or deliberate avoidance to every one of your points. I don't feel obligated to respond to everything you say. I noted your point about AMA and respond as follows: I have never been a fan of the AMA. I'm not sure they have a monopoly, but I agree that AMA has exerted too much influence over health care in the U.S. and frequently not in a positive direction.

ledefensetech profile image

ledefensetech 7 years ago from Cape Girardeau, MO

Sure, the problem is complicated but I fail to see how you can excoriate what the insurance companies do and yet support something like Medicare. Medicare is insurance writ large. It still suffers from many of the weaknesses of private insurance.

The only way Medicare can control costs is by reducing the amount of money they pay for procedures. The problem is that sooner or later you get doctors leaving their practice because they can't afford to be doctors anymore. Look at Cuba. Everyone talks about Sicko, but there are doctors who are working as cab drivers in Havana, because they can make more driving a cab than they can being a doctor.

There are better ways to control costs that don't destroy the livelihood of doctors.

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Medicare can and should stop paying for ineffective or unnecessary procedures, tests and drugs. It should make sure it is not paying too high a price for effective and necessary tests and procedures. This is not a simple task.

Health care insurance companies add a great deal of unnecessary cost to the system.

Free Market Results:

ledefensetech profile image

ledefensetech 7 years ago from Cape Girardeau, MO

Fine, I understand that, but how can someone who works for Medicare possibly know which procedures are unnecessary? I'm not a big fan of third party payment for healthcare. It distorts things and keeps people from knowing what they're really getting.

I would like to point out that Enron came into being because in the so-called "deregulation" of the California power industry they placed a price ceiling on what power companies could charge and didn't do anything about the costs of power generation. So there could and were instances in which it was so expensive to generate power that a power company's costs exceeded what they brought in as revenue. Unlike the Federal Government, when a company does that, they go out of business. So yeah, they had to skimp on infrastructure, those were costs that they couldn't recoup because of the price ceiling.

That's not exactly the actions of a free market. In a free market, Californians would have to pay increased costs as they used more and more electricity. This increased costs would have kept demand manageable and by increasing fees as power usage went up, the power companies would have had the capital and incentive to keep infrastructure running because they made money off of it.

You do know, I hope, the effects of the Community Reinvestment Act on the housing market, specifically the subprime market don't you?

Ralph Deeds profile image

Ralph Deeds 7 years ago Author

Yes, and I'm also aware of the failure of Moody and the other bond rating houses, of the cowboys at AIG London, the advantages Goldman got through it's influence on the Treasury Department, the depredations of mortgage companies like Mozilo's Countrywide and of Greenspan's feeding the bubble with low interest rates until it popped and so forth. Your simplistic analysis always comes up with the same villain--the government. Worldwide anarchy would soon ensue if your ideas were implemented.

medical billing education 7 years ago

Thanks for the information, it is very useful, keep writing and you are bound to attract more readers, thanks

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Ralph Deeds 5 years ago Author

New York hospital chief administrator convicted of bribing state legislators.

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Ralph Deeds 5 years ago Author

WASHINGTON — The official in charge of Medicare and Medicaid for the last 17 months says that 20 percent to 30 percent of health spending is “waste” that yields no benefit to patients, and that some of the needless spending is a result of onerous, archaic regulations enforced by his agency.

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Joshua Roberts/Bloomberg News

Dr. Donald M. Berwick testifying before the Senate Finance Committee in November 2010.

The official, Dr. Donald M. Berwick, listed five reasons for what he described as the “extremely high level of waste.” They are overtreatment of patients, the failure to coordinate care, the administrative complexity of the health care system, burdensome rules and fraud.

“Much is done that does not help patients at all,” Dr. Berwick said, “and many physicians know it.”

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Ralph Deeds 5 years ago Author


Republican Tax and Unemployment Bill Would Help Hospitals Owned by Doctors -

The payroll tax and unemployment bill would also repeal and relax limits on doctor-owned hospitals, which tend to raise costs for other insurers.

Ripdaddy 4 years ago

Can someone

Who is willing to help please contact me

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