Midwestern Town the Anti-McAllen, TX, for Medicare Costs

HealthLeaders Media Staff, July 27, 2009

Doctors in McAllen, TX, became part of the growing national furor over rising healthcare costs. As you may recall, a June New Yorker magazine article, paraded McAllen before the public as "one of the most expensive health-care markets in the country"—second only to Miami—costing the government $15,000 per Medicare beneficiary in 2006.

McAllen doctors have since come out swinging, saying the article didn't take into account the extreme poverty in the area or that many patients had co-morbidities by the time they had their first medical encounter. The story has had a lot of air time with the Medicare cost curve being a central focus for legislators and President Barack Obama, as witnessed in his televised address last week on healthcare reform.

In recent weeks, the President 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 that includes a 100-bed hospital, 50 physicians, a nursing home, and two assisted living facilities. In addition to having the distinction of being named Most Wired-Small and Rural Hospital by Hospitals & Health Networks magazine for the last several years, Winona Health is in a region that boasts the state's lowest Medicare beneficiary rates.

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

"We're the anti-McAllen," says Allen. "Some of the Medicare costs differences can be due to the cost of living and demographics in certain areas, but that doesn't explain costs of two to three times more in one part of the country vs. other areas."

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