"Denial" and "Behavioral Bias" in the Debate Over Causes of High Health Costs

Some physicians, hospital administrators, and legislators appear to have succumbed to a behavioral bias.

Jason Sutherland, Ph.D., Elliot Fisher, MD, and Jonathan Skinner, Ph.D., Dartmouth Institute for Health Policy and Clinical Practice, “Getting Past Denial – The High Cost of Health Care in the United States, “ New England Journal of Medicine, September 24, 2009

It took me a while to figure out what the Dartmouth authors meant by “Getting Past Denial.” They never say explicitly what they mean. In effect, the Dartmouth policy wonks are saying fee-for-service incentives move doctors to “do more”to maximize profits.

In another article in the same NEJM edition, Arnold Relman, MD, former editor of the New England Journal, says it more directly, “Most doctors are paid on a fee-for-service basis, which is a strong financial incentive for them to maximize the elective services they provide (“Doctors as the Key to Health Care Reform,” NEJM, September 24). Opines Relman, what we must do to bring down costs and improve quality, is "pay group physicians a salary for providing patients with the best, most cost-effective care, within the limits of a publicly determined budget.”

Another direct talker is Richard “Buz” Cooper, MD, professor of medicine at the University of Pennsylvania and a senior fellow in the Leonard Davis Institute of Health Economics at Penn. Cooper has openly and directly challenged the Dartmouth premise - namely that regional cost differences in the 30% range stem from overuse of “discretionary resources” by specialists and subspecialists in high spending regions.

Cooper maintains levels of sickness, socioeconomic and cultural differences, and cost of doing business in different sections of the country must be taken into account and that Medicare spending is not representative of health care spending as a whole.

Cooper has issued three reports to this affect, one in association with academic colleagues,

• One, “Physicians and Their Practices Under Health Care Reform: A Report to the President and The Congress,” prepared on behalf of The Physicians’ Foundation, and distributed to members of Congress, the White House, and the media, on September 8, 2009 (available at www.physiciansfoundation.org)

• Two, “Regional Variation and the Affluent-Poverty Nexus, Journal of the American Medical Association, September 9, 2009

• Three, “Wrong Turn on Health Reform, “ Washington Post, September 11, 2009.

The differences between the Cooper and Dartmouth positions are important because Peter Orzag, Obama’s budget director, has bought into the Dartmouth argument that erasing regional differences could reduce “waste” by 30%, and generate enough savings to cover the uninsured.

You may not be aware of the Cooper-Dartmouth debate because Dartmouth has chosen to cloak its differences with Cooper and followers through euphemistic language and not mentioning Cooper by name. This is an academic put-down. In other words, the Cooper counter is not worth mentioning.

A perfect example of the Dartmouth approach is in full display in a September 24 NEJM article “Getting Past Denial – The High Cost of Health Care in the United States. “

The Dartmouth authors never mention Cooper. Indeed, they never explicitly say what they mean by “Getting Past Denial,” although one can infer what they mean when they when they talk of overuse of “discretionary resources ” by doctors “who have succumbed to behavioral bias,” whatever that means. I would argue “behavioral bias” effects everyone, wonks as well as practitioners. As George Orwell famously said, “ no one is genuinely free of political bias.”

From their figures and tables, however, what Dartmouth means is clear. After admitting that health status and income may be minor Medicare factors, they move to their statistical "Quintile" argument.

In one figure, “Quintiles of Care Intensity,” a colorful bar graph shows that “regional factors” have 5 to 20 times more impact than health, income, and race on costs in annual per capita regional Medicare spending from the least to most intensive quintiles.

In a table, the Dartmouth triumvirate shows these differences as one moves from intensity quintiles 1 to 5: impatient days per beneficiary, 1.4 to 2.1 days, up 50%; physician visits per beneficiary, 10.7 to 14.5 days, up 35%; MRI use per 100 beneficiaries, 16.6 to 21.9; CT scans per 100 beneifciaries, 46.9 to 61.4, a 31% increase.

The Dartmouth authors conclude, “We should recognize that so much discretionary care is provided in the United States that we would easily expand coverage without increases in taxes or rationing care – as long as we couple coverage expansion and broadly implementing successful reforms in payment and delivery systems.”

Presumably these reforms entail progressing towards integrated salaried group practices operating on a capitated basis without fee-for-service incentives , through they never say so. That would be too direct and impolite. Instead readers are subjected to a high-level hatchet job questioning the integrity and motives of physicians in high-spending Medicare regions.

Dr. Richard Reece is author, blogger, speaker, and reform observor. Dr. Reece’s latest book, Obama, Doctors, and Health Reform (IUniverse.com) is available at amazon.com, barnesandnoble.com, and booksamillion.com for $31.95 (hardcover), $21.95 (softcover), and $6.95 (electronic). For information on speaking fees and arrangements, call 860-395-1501.