Online Insights

Editor's note: This is an excerpt from Michelle Ponte's July 27 online column, "Midwestern Town the Anti-McAllen, TX, for Medicare Costs."

Doctors in McAllen, TX, became part of the growing national furor over rising healthcare costs since being paraded before the public as "one of the most expensive healthcare markets in the country"—second only to Miami—costing the government $15,000 per Medicare beneficiary in 2006.

McAllen doctors say The New Yorker article didn't take into account the extreme poverty in the area or that many patients had comorbidities by the time they had their first medical encounter. In recent weeks, President Obama also has singled out high spenders like McAllen, while praising the efficiency and care coordination in places like the Cleveland Clinic and the Mayo Clinic in Rochester, MN.

He might also want to take a look at the town of Winona, MN, where Medicare costs are about two-thirds less than those in McAllen, says Mike Allen, CFO of Winona Health, a nonprofit integrated system in a region that boasts the state's lowest Medicare beneficiary rates.

Allen says, according to the same Dartmouth Atlas of Health Care data from which the McAllen numbers were cited, spending per Medicare beneficiary in Winona's hospital service area was approximately $4,900 in 2006. The state averaged $6,600 in the same study, under the national average of $8,300.

"We're the anti-McAllen," says Allen. He believes the region's coordinated care approach is a significant driver in lowering costs. He credits the Mayo Clinic, just 50 miles down the road from Winona, as a major cultural influence on providers in the state and across the Midwest. Many providers in the state and area are integrated, he says, pointing to Gundersen Lutheran Health System in LaCrosse, MN, and the Marshfield (WI) Clinic.

"Costs are lowered through care coordination and integrated healthcare systems where physicians work in the same organizations," he adds, noting that nearly all of Winona Health's physicians are employed by the system. "We also have less duplication of tests in this area."

Still, Allen is skeptical that anything meaningful will come out of a healthcare reform bill that rewards low-cost, high-quality providers, mainly because of politics.

Politically, says Allen, it's easier and faster to just cut payment levels for all providers instead of segmenting out the low-cost, high-quality, producers. "Of course, that's not a very well thought out strategy. Anybody can do that."

—Michelle Ponte