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The State of the Nation's Health

Manhattan. More likely, politicians will search for ways to encourage providers in high-cost regions to emulate their peers in Minnesota.

Re-examining reimbursements
It's worth noting that Minnesota's providers don't just naturally practice more conservative medicine—it's learned behavior. "In the latter part of the 1980s, the Minneapolis-St. Paul region was at the national average for using medical resources," recalls David Durenberger, a former U.S. Senator from Minnesota. But then, in the heyday of managed care, Minnesota's providers learned how to manage resources and "utilization fell to 17% below the national average," says Durenberger, who now chairs the National Institute of Health Policy.

"Managed care actually worked in about 15% of the country," adds Durenberger, who is also a member of MedPAC. Now, he suggests, "we need to turn to the doctors and hospitals that have been successful in offering better quality care for less—and ask them how they do it."

On that point, Dartmouth offers some insights. For one, regions dominated by organized care—whether group practices or integrated health-care systems—tend to be more efficient. "Notable examples are the Mayo Clinic, the primary provider serving Rochester, Minn., and Intermountain Healthcare, an integrated system serving Salt Lake City, Utah," report Dartmouth's researchers. If providers everywhere followed Salt Lake's example, "Medicare reimbursements to hospitals would be cut by 32%, and payments for physicians' visits would fall by 34%."

Although solo practitioners treasure their autonomy, medicine today needs to become "a team sport," says Fisher. One reason is that large group practices are better able to afford the sophisticated information technology that allows providers to share electronic medical records and thus better coordinate care, reduce medication errors, and eliminate redundant tests. By contrast, "physicians in high-use areas, [where care is more fragmented], report worse communication among themselves, . . . greater difficulty ensuring continuity of care, and greater difficulty providing high-quality care," the MedPAC report observes.

These charts show the efficiency of DHMC's Mary Hitchcock Memorial Hospital on two utilization measures, compared to selected other teaching hospitals; the data is from the Dartmouth Atlas of Health Care. Jack Wennberg says that although DHMC does well on many measures, institutions "don't get paid to do well," since the current reimbursement system rewards quantity rather than efficiency. For such institutions to remain efficient, he adds, "depends on maintaining the supply of resources at its current level and not jumping on a bandwagon to increase revenue" by doing more highly reimbursed services. See this article's Web Extras for a video Q&A with Wennberg.

But "requiring all doctors to abandon solo practice for group practice is a political nonstarter," Hackbarth acknowledges. At the same time, "physicians need to be accountable" for the quality of the care they provide. Yet measuring the performance of a solo practitioner is difficult. It's too easy for a few very sick or noncompliant patients to skew the results. Moreover, these days, treating any serious disease usually requires care by several providers, and the quality of that care depends to a large degree on how well they communicate and cooperate with each other.

In his testimony before MedPAC,

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