Health Reform and the Dartmouth Atlas

Posted on October 6, 2009 by | 59 Comments

One of my problems with the whole health care debate is that, for the most part, it has focused on the redistribution of wealth. One reason the Donkey Clansmen have had such a hard time getting a health care “reform” passed is that they offer a zero sum game. For every winner, there is a loser. There is no “win-win.” There is only “I win-you lose.” That’s tough to ram through Congress.

The health care debate would be far more enlightening if we reframed the debate to discuss root causes: lagging productivity and quality of the health care system. The Obama administration, to its credit, does include productivity- and quality-enhancing measures in its legislative package, but the Obaminators seem far more preoccupied in extending health care to the uninsured than figuring out how to make the system more efficent. If the Elephant Clan wanted to gain more traction with the American people, it would pick up the productivity and quality theme, but it done so only intermittently, much to its misfortune.
The beauty of building reform around productivity and quality is that it allows win-win solutions in which everyone can share. There are two institutional thought leaders — largely ignored, sadly — that have thoroughly explored this theme. One is the Institute for Strategy and Competitiveness, at Harvard University; in particular professors Michael Porter and Elizabeth Olmsted Teisberg (a faculty member of the Darden School). Their analysis focuses on the failure of the structure of the health care delivery system and how incentives need to be changed. I hope to write more about them in the future.

The other thought leader is the Dartmouth Institute, publisher of the Dartmouth Atlas. The Atlas project notes that the cost of providing health care to Medicare patients varies enormously across the United States — from more than $14,000 per Medicare enrollee in Miami, Fla., to $5,300 per Medicare enrollee in Honolulu. States the Dartmouth Atlas website:

Patients in high-cost regions have access to the same technology as those in low-cost regions, and those in low-cost regions are not deprived of needed care. On the contrary, the researchers note that care is often better in low-cost areas. The authors argue that the differences in growth are largely due to discretionary decisions by physicians that are influenced by the local availability of hospital beds, imaging centers and other resources-and a payment system that rewards growth and higher utilization.

Virginians can take some pride in the fact that the Old Dominion is one of the lowest-cost pockets of health care in the eastern U.S. Take a look at the map above: Wisconsin and upstate New York are the only comparable zones of low health care costs east of the Mississippi. (To see how individual Hospital Referral Regions in Virginia perform compared to others in the nation, view the interactive map.) The cost of Medicare per enrollee is less than $7,000 across most of the state. Even in the Arlington region, with its high wage and salary levels, the cost edges up to $7,200 — far lower than the cost up a few miles north in Baltimore.

Clearly, Virginia hospitals and physicians are doing something right. And just as clearly, Virginians should not be made to suffer for the sins of health care delivery in other states.

The Dartmouth Atlas supports the claims of those who contend that much of American health care spending is wasted. How do we reform the system to bring down soaring costs? “An Agenda for Change” proposes the following:

  • Promote the growth of organized systems of care.

  • Require informed patient choice and informed decision making.

  • Promote the training of primary care physicians and fund training programs that teach community-based care in treating chronic illness.

  • Fund a federal science policy that builds the scientific basis for cost-effective care.

The Dartmouth Institute bases its recommendations on hard empirical data, not ideology. I’m not persuaded that the atlas afficianados have the full answer, but they have a very big piece of the answer. I only wish that someone in Washington were listening.

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