Healthcare Business Models: Mayo Model Losing to McAllen?

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Healthcare Business Models: Mayo Model Losing to McAllen?

An article in the New Yorker asks: Why does the border town of McAllen, Texas, spend more per person on health care—an average Medicare enrollee there costs $15,000 per year—than any U.S. city besides Miami? The author blames across-the-board overuse of medicine, which stems from the fact that our health care system “pay

[s] doctors for quantity, not quality. This overuse isn’t just expensive—it’s less effective. In an odd way, this news is reassuring, the author notes: Providing better health care will also save money.

This is a disturbing and perhaps surprising diagnosis. Americans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse. For example, Rochester, Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which is eight thousand dollars less than the figure for McAllen.
Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state, the lower that state’s quality ranking tended to be. In fact, the four states with the highest levels of spending—Louisiana, Texas, California, and Florida—were near the bottom of the national rankings on the quality of patient care.

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By | 2017-05-04T04:07:12+00:00 May 28th, 2009|health care, health insurance, Mayo Clinic, Medicare|0 Comments

About the Author:

Michael is Managing Partner & CEO of No World Borders, a leading health care management and IT consulting firm. He leads a team that provides Cybersecurity best practices for healthcare clients, ICD-10 Consulting, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, Insurance Fraud, payor-provider disputes, and consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $4 billion in healthcare mergers and acquisitions. Education: UC Irvine – Economics and Computer Science, University of Southern California – Business, Stanford Medical School – Biomedical Informatics, Harvard Law School – Bioethics.

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