In the June 1, 2009, issue of The New Yorker,¹ surgeon-journalist Atul Gawande, MD, MPH, introduces the world to two US cities that, when contrasted with one another, expose the wide gulf in the cost of US health care delivery and outcomes: McAllen, Texas, and Grand Junction, Colorado. According to 2006 Medicare Part A and B data compiled in the Dartmouth Atlas of Health Care,² average Medicare spending per enrollee in McAllen approaches $15,000, nearly twice the national average of $8,000; in contrast, Medicare spending per enrollee in Grand Junction rests at just under $6,000, more than 25% below the national average. What, Gawande wonders, makes these two midsize cities so different when it comes to health care spending?
In examining McAllen’s swollen costs, it is easy to point an accusatory finger at imaging. Gawande relates one McAllen surgeon’s assertion that overutilization is at fault, with McAllen-area physicians racking up extra charges by ordering unnecessary tests and procedures. “Compared with patients in El Paso and nationwide, patients in McAllen got more of pretty much everything—more diagnostic testing, more hospital treatment, more surgery, more home care,” Gawande writes. “In 2005 and 2006, patients in McAllen received 20% more abdominal ultrasounds, 30% more bone-density studies, 60% more stress tests with echocardiography, 200% more nerve-conduction studies to diagnose carpal-tunnel syndrome, and 550% more urine-flow studies to diagnose prostate troubles.”¹
Gawande’s findings raise a question: How does Grand Junction, which has achieved some of the highest Medicare quality-of-care scores in the United States,³ maintain excellent patient outcomes without overutilizing high-cost medical services, including imaging? The answer began to take shape in the 1970s, with the establishment of a nonprofit HMO, Rocky Mountain Health Plans (RMHP), and the Mesa County Physicians Independent Practice Association (MCPIPA).
Defining the Mission
RMHP was established in 1974; a few years later, area physicians founded MCPIPA. The two organizations worked together toward a shared goal: creating a physician compensation system that would equalize health care access for Medicaid, Medicare, and commercial patients, thereby removing the incentives tempting physicians to cherry-pick the most lucrative patients.
Bob Ladenburger says, “There’s no magic at work here.” Ladenburger is president and CEO of St Mary’s Hospital and Regional Medical Center, the larger of two hospitals in Grand Junction, which has a population of around 100,000. “Grand Junction has a population that supports a strong medical community, and it has a collaborative spirit among the community and its health care providers that has existed since the establishment of the IPA and RMHP. Our compensation system incentivizes providers to look at the cost of health care and at what makes the most sense from a quality and cost perspective.”
The relationship between MCPIPA, which today has more than 200 physician members (including 12 full-time radiologists) constituting an estimated 90% of Mesa County physicians, and RMHP, which serves 177,000 beneficiaries in Grand Junction and the rest of Colorado, was established primarily to enforce this mission. MCPIPA members benefit from the negotiating clout of the organization, which enables them to receive higher reimbursement from RMHP and other payors than they might if they were negotiating on their own; they are also reimbursed at similar levels for all patients.
Kevin Fitzgerald, MD, chief medical officer at RMHP, explains, “There’s no delineation of care patterns from the perspective of physicians taking Medicare and Medicaid. If they’re a part of RMHP in Mesa County, they take those patients.” RMHP maintains its nonprofit HMO status today, and is managed by Rocky Mountain Health Management Corp.
The physician-incentive program established between MCPIPA and RMHP rewards IPA physicians for lowering systemwide costs while meeting or exceeding quality benchmarks. RMHP reserves 10% to 15% from each MCPIPA physician’s professional reimbursement; the amount withheld is placed in a savings account until the end of the year. “If the health system comes out ahead at the end of the year, the physicians receive a bonus paid out of those savings,” Fitzgerald says. “The system has to be in a positive position financially before they will receive that incentive fund.”