Did Obama read Atul Gawande? - part 3

UPDATE: Orzag hones in on doctors' incentives

First Peter Orzag, then Obama, and now the New York Times editorial board are making a manifesto of Atul Gawande's powerful demonstration that a major driver of healthcare inflation is doctors' financial incentive to prescribe unnecessary procedures (and often invest in the providers, such as medical imaging centers).

Adopting Gawande's tale of two healthcare markets, Orzag wrote in his blog on June 8, We need to reform the health care system so that it rewards the right kind of innovation – the Mayos, not the McAllens. Yesterday the Times picked up the thread

A glaring example of profligate physician behavior was described by Atul Gawande in the June 1 issue of The New Yorker. (His article has become must reading at the White House.) Dr. Gawande, a Harvard-affiliated surgeon and author, traveled to McAllen, Texas, to find out why Medicare spends more per beneficiary there than in any other city except Miami.

None of the usual rationalizations put forth by doctors held up. The population, though poor, is not sicker than average; the quality of care people get is not superior. Malpractice suits have practically disappeared due to a tough state malpractice law, leaving no rationale for defensive medicine. The reason for McAllen’s soaring costs, some doctors finally admitted, is over-treatment. Doctors perform extra tests, surgeries and other procedures to increase their incomes.

and drew the conclusion:

There is disturbing evidence that many do a lot more than is medically useful — and often reap financial benefits from over-treating their patients. No doubt a vast majority of doctors strive to do the best for their patients. But many are influenced by fee-for-service financial incentives and some are unabashed profiteers.

To be fair, doctors are victims as well as perpatrators of our healthcare system dysfunction. They waste insane amounts of time and resources fighting with insurance companies to get paid. And they're driven by the constant hair-trigger threat of malpractice lawsuits (and malpractice insurance profiteering) to order unnecessary tests and procedures. You might say that defensive medicine, and the "entrepreneurial spirit" that Gawande found infecting some medical communities, are the yin and yang of wasteful healthcare spending in the U.S.

Gawande may be emerging as the Jacob Riis of 21st centure healthcare. And perhaps, when we're ready, of cruel and unusual punishment as well.