Page last updated at 08:31 GMT, Tuesday, 7 July 2009 09:31 UK

Texas town's healthcare puzzle

By Katty Kay
BBC News, McAllen, Texas

Radiology room at the Doctors Hospital at Renaissance, McAllen, Texas
McAllen hospitals have state of the art equipment

In the country that reveres the free market, competition is supposed to drive quality up and costs down.

But not in healthcare - and not in McAllen, Texas.

In the past 15 years, this sleepy town has reinvented itself as a boom place for modern medicine. Wherever you look there are hospitals, clinics, and laboratories.

In the same period the cost of healthcare has soared faster here than anywhere else in the country.

The 'McAllen problem'

McAllen, on average, now spends $14,946 (£9,263) on healthcare for every patient enrolled in the government's Medicare scheme, almost double the national average of $8,304 per Medicare enrollee.

Patients in McAllen certainly receive more tests and treatment for their money. Research by the Harvard doctor Atul Gawande for a recent New Yorker article found that critically-ill elderly patients in McAllen received 50% more specialist visits than in another Texan town, El Paso, which is some 800 miles (1,200km) away.

Doctors in McAllen ordered 20% more abdominal ultrasounds, 30% more bone density studies and 550% more urine-flow studies to look for prostate problems, Dr Gawande reported.

But the extra dollars and extra tests do not appear to translate into better care. Hospitals in El Paso - which has a similar population, but spends just $7,504 per Medicare patient - recently performed better than McAllen hospitals on 23 out of 25 health indicators.

Thanks to Dr Gawande's New Yorker article, the crisis in McAllen has even caught the attention of President Obama: the puzzle of why some places spend so much on treatment without providing better healthcare is apparently known in the White House as the "McAllen problem".

So what exactly is causing the problem?

We spoke to Dr Lester Dyke, a McAllen heart surgeon. He believes the fusion of business and medicine here has gone too far, and that profit rather than patient need drives many decisions.


Dr Dyke: Hard to avoid crossing the line between medicine and business

President Barack Obama says the road to reform begins with rewarding doctors and hospitals for quality instead of quantity. He has praised the performance of several non-profit hospitals for providing excellent care at low cost.

But at McAllen's newest hospital, staff believe they have an alternative model.

The Doctors Hospital at Renaissance makes a profit but is physician-owned.

Critics say this creates a conflict of interest and that staff at the hospital are under pressure to increase output by ordering unnecessary tests and referring patients to fellow investors.

The hospital rejects such allegations and insists that because doctors, not bureaucrats, run the hospital, decisions are made on a clinical rather than financial basis.

State of the art

The Doctors Hospital is undeniably impressive.

During a tour of the neo-natal intensive care unit we saw Justin. He was born at just 25 weeks gestation and weighed barely more than 1lb (0.45kg).

Now, he was sleeping soundly inside an incubator. The latest technology, expert doctors and a high nurse-to-patient ratio helped save Justin's life. It was a story repeated in every part of the hospital we were shown.

Patients with expensive private insurance have long expected such standards. Yet at the Doctors Hospital just 16% of patients have private coverage.

The remainder are uninsured or on federal programmes for the poor and elderly, so most of the cost of the high standard of care at the hospital is actually being paid by the government.

But can America afford to subsidise such high quality care for the poor and uninsured, or should healthcare be rationed?

We may tell a patient there's no medical need to send out a nurse again. But they'll find a doctor and agency that doesn't care about that
Tara Sabal
Manager, Health Care Unlimited

Dr Carlos Cardenas, the chairman of the hospital's board, refuses to consider rationing: "To have the availability of something and not make it available to some would be to say it's OK for you to have it but not for others to have it."

I press him on whether America can really afford it. He talks about efficiencies and savings, but concedes: "I don't know the answer... but what we're doing here is a step in the right direction."

Doctors and hospitals are only one part of a $2.4tn puzzle.

There are huge vested interests in the system - drug companies and private insurers - who want Americans to carry on consuming as much medicine as possible, even though too much medicine can sometimes be harmful.

Every year, for example, approximately 100,000 Americans die from complications with surgery, far more than the 40,000 that are killed in car accidents annually.

But moves to treat patients away from hospitals and in the home are also open to abuse and sky-rocketing costs.


Once again McAllen is an example of excess.

We visited McAllen resident Samuel Sanchez. He is recovering from a stroke, so a nurse from homecare agency Health Care Unlimited visits regularly to help with his rehabilitation.

Tara Sabal, who helps run the firm, says that in the past decade the number of agencies in the region has exploded.

They depend on doctors to refer patients to them - and sometimes offer incentives to secure those referrals.

Health Care Unlimited refuses to play the game, but Ms Sabal describes the kind of sweeteners other agencies offer doctors.

"Monthly stipends, that range... from $1,000 to $5,000 up. Cars for their wives, private tuition for the children. Lunches at whatever restaurant they want to go to. Anything from material to monetary," she says.

Ms Sabal is frustrated by the lack of regulation and oversight. "The government's not coming to those agencies... and saying: 'I want to see how you spend your money.'"

A baby lies in the neo-natal intensive care unit at the Doctors Hospital at Renaissance, McAllen, Texas
New technology saved baby Justin's life at the Doctors Hospital at Renaissance

The abuse does not stop with referrals, Ms Sabal insists. Patients are not discouraged from demanding more and more treatment because doctors have a financial incentive to sign the prescription. Since almost all patients here are on Medicare, once again the government picks up the bill.

"We may tell a patient there's no medical need to send out a nurse again. But they'll find a doctor and agency that doesn't care about that. So the patient gets what they want in the end - but maybe it's not what's best for them."

In America, customers are king - and patients have that mindset too. Mention rationing and critics scream "socialised medicine".

But what McAllen shows is that more care does not necessarily equal better care.

The White House says both suppliers and consumers of healthcare need to learn this lesson.

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