The Most Expensive Health Care in the World

In an excellent article for The New Yorker, Atul Gawande investigates health care in McAllen, Texas, “one of the most expensive health care markets in the country.” Gawande traces the high costs to overutilization and a culture of entrepreneurship among McAllen’s doctors. Lester Dyke, a cardiac surgeon in McAllen, told Gawande, “We took a wrong turn when doctors stopped being doctors and became businessmen.” Gawande advocates collaborative, accountable-care organizations, like Minnesota’s Mayo Clinic, and concludes that unless American health care moves away from the McAllen model and toward the Mayo model, “McAllen won’t be an outlier. It will be our future.” [%comments]

Nick Robinson

"Gawande traces the high costs to overutilization and a culture of entrepreneurship among McAllen's doctors"

How does that work out then?

Demand exceeding a supply and that supply limited by barriers to entry perhaps?

Even here in the UK doctors, particularly General Practitioners and consultant surgeons, have always been very entrepreneurial and are in many ways private-sector suppliers to the NHS. We're trying to hand more business-like powers to the doctors, not less, and are moving away from the collaborative model described. On the basis of this report, that's a little worrying.


Imad Qureshi

Great article and I can relate to it. I recently had an acid reflux problem and went to see a Gastroentrologist. He had over 30 years of experience and did an endoscopy to rule out. I am only 30 years old and I think endoscopy was an overkill for on and off acid reflux symptoms. But then I wore my economist hat and told my wife "where is he going to make more money? prescribing Protonix or endoscopy?" He did exactly what was best for him. I didn't care because insurance was paying for it.


>>“We took a wrong turn when doctors stopped being doctors and became businessmen.”

Give me a break! All the empirical evidence suggests that this is just wrong.

What if this was worded: "We took a wrong turn when life expectancy nearly DOUBLED in the past century, and nearly EVERYONE survives a heart attack, compared with close to 0% not that long ago."

This is what annoys me about these people who want to take us back into the dark ages. Is it the best system possible? No. Is it the best system in the world? BY FAR.

Joel M

Imad Qurieshi raises a good point, but leaves out the other reason for the test: You might sue if the doctor missed something rare. That's a problem easily solved, such as it is in Canada with Judges deciding malpractice rather than juries, they are more likely to rule on evidence than emotion.

And for Hantra you are missing the point totally. The US system is by most measures one of the weaker in the world. The wonders of life expectancy are shared, and in fact are even better in most other Western countries which spend far less on health care, cover more people and enjoy a healthier life. No one is saying to take us back to the dark ages, only that we need to improve our system to provide cost & health incentives to doctors and patients. Right now, we have neither.


I am a Canadian citizen. I lived and worked in the US for a year. A colleague said to me, "Is it true how awful health care is in Canada?"

hahahahahahahahahahahahahaha! Are you kidding me?

Health care in my state was pathetic. Don't dare say that in Canada what we don't pay for health insurance we pay in extra tax. I made exactly 50K in the US. My employer paid a significant amount of my health insurance and I paid the rest. That being said, my NET pay was LOWER in the US than when I made 47K in Canada in the previous year. I also had to pay $25-$50 out of pocket for every doctor visit, every prescription, etc.

Many people I knew in the US went to the doctor for what seemed like only spite. "I pay high premiums so why shouldn't I go."

Here is the answer to the wait time question. It is not a simple queue. Urgent problems = urgent care. In the US, fatter wallet = better care. Call us communists or socialists or whatever you want. What we are is fair.

Hantra - have you ever lived outside the US? What are you basing your "best system in the world" conclusions on?



Is someone actually claiming that the US system is the "best system in the world" based on life expectancy and survival rates? Among developed countries, the US has low life expectancy.


Joel you're right. I probably missed the point. If implementing a system like Mayo was even being discussed in DC, then I'd be all for it.

My problem is, the "solution" they're clinging onto is federal government run health care. That's probably why I tend to react negatively every time someone talks down the current system. As flawed as it is, it runs much better than the DMV, Social Security, government education, government owned car companies, etc. . .



The conclusions upon which I am basing that statement are simply that as health care goes, ALL of the innovation in drugs, medical care, you name it, come from the United States.

- In the past 35 years, Americans have won more Nobel prizes for medicine or physiology than all other countries COMBINED.

- Of the top 10 best selling drugs in the world, 8 were made by companies headquartered in the United States.

- Of the top 10 most useful medical techniques or devices (as deemed by physicians), 7 are from the United States.

* from the 2004 Economic Report of the President

When the last ounce of profitability is sapped from our current system, who will innovate then? Government? That's laughable.

David Fischer

How does increased competition lead to increased costs? If more doctors are competing for business, shouldn't that reduce costs?



Those conclusions you cite are about medical science, not the quality of healthcare.



Healthcare is defined as:
–noun Also, health care.

1.the field concerned with the maintenance or restoration of the health of the body or mind.

2.any of the procedures or methods employed in this field.

Regardless, everything I mentioned above would be dramatically impacted by a healthcare system with zero competition, and arbitrary cost caps. And since the techniques, and meds are used to improve healthcare, then we can safely assume that healthcare will not improve at the same dramatic rate we have enjoyed for the past 20-30 years. (if we see the aforementioned government healthcare system implemented)


Maybe y'all should step outside of your ivory tower long enough to read about what happens in the real world. Have a look at this:

As always, the government is trying to address an impossibly complicated situation, made more difficult by its own previous actions, by trotting out an idea that makes for a good sound bite.

By the way, I highly recommend WhiteCoat. He's quite entertaining.


Having worked for a for-profit hospital in Brownsville, TX for 3 years in the mid 90s with a primary focus on cutting costs and improving patient outcomes, it only took a non-second to discover I was going to be at war with most physicians. Their primary goal was to make money. The system, especially Medicare which I whole-heartedly support, is unfortunately designed to assist unscrupulous physicians in their pursuit of the American dollar.

Gawande's very important expose of the situation in South Texas touched on one of the most significant reasons for high outlier costs - culture. And I don't mean the culture of the population. There is a very large concentration of foreign physicians practicing there who openly admit to coming to America to make as much money as possible, not terribly different from domesticates. However I saw a significant difference in what some were willing to do to make that money.

A comparative study of physician practices between these 2 groups could be very telling, and possibly dangerous.


Matthew R.

Go to the post office on a Saturday. That's the future of US healthcare. Just because our current system has problems doesn't necessarily mean that a change (even a change we might believe in) will improve it. We can definitely make it worse -- yes we can.

I would argue that the problems we face are largely a result (or exacerbated by) government intervention, and lack of free market incentives. If I see healthcare as "free" to me, or as something for which I've already paid whether I use it or not, then of course I won't care about costs or usage.

The best example of free market health care I see is lasik eye surgery -- virtually no insurance or government programs pay for this under any circumstances, so people pay out of pocket. What has happened? Exactly what my Econ 101 textbook predicts: costs went down, quality went up. People are very careful with their own money, not so careful with other people's money.

The free market cannot completely solve all societal problems. Nevertheless, it can certainly take a big bite out of many them. The free market has been the greatest engine of wealth creation in the history of the world. Why don't we harness it?


Steve in Pennsylvania

A few years ago, a new medical partnership opened a new family practice in my town. They cared for everyone from infants to the elderly.
The office also had a convenient pharmacy on premises that was owned by the doctors. Anyone see any potential conflict of interest there?
I'd like to game the system so doctors get paid more for keeping people healthy, but figure out how to prevent them from having any financial interest in selling devices or drugs that people need to get healthy.
In my dream world, enterprising doctors can invent new devices, procedures and medicines that help people lead better lives, but as soon as the new methods are approved they must sell them and have no financial interest in prescribing them.


I agree with Hantra that even though Canada has a better output per $ in health, it depends heavily on innovations that are done in the US.

If the US becomes like Canada we will lose a lot of our health innovations. Because the Canadian system is excellent at optimizing the value of current technology state to the benefit of its citizens.

While the US is like a huge innovation laboratory to the benefit of the rest of the world:

- US pays disproportionate amounts of drug development costs
- By 'over-using' latest tests, procedures, etc, they create an incentive and competition in the medical devices field
- Same for medical procedures, quality of care for patients

I am a Canadian and love our health care system, but I would be very disappointed if the US moves to such a system.


Somebody please explain why health-care should be a for-profit industry?

One thing which Gawande noted in his article which has not been discussed here is the fact that Mayo and all the other lower-cost entities he visited are ALL NON-PROFITS, where earnings are pooled and everyone gets paid a salary instead of piecemeal.

From my moral perspective, the right to receive medical care is a basic human right, and the main problems with today's US health-care system all stem from the fact that most of it is for-profit instead of non-profit.

Imad Qureshi

mfw13: would you become a doctor if you were paid like a clerk? Would companies innovate and bring new drugs to markets if there were no profits? When was the last time someone spend 10 years to develop a new drug and then distributed it at low cost and did not applied for a patent? In Canada, government has collective bargaining power in terms of drug prices. This brings drug prices down. If this happens in US then we'll see fewer new drug developments.


Yes I fact I was pre-med in college but decided to become a teacher instead. There are many many people in the world who choose their careers because they want to help society even though they could make much more money doing something else.

While the profit motive does have a place in health-care (such as in drug development as you point out), it should not have a place in care delivery.

People should become doctors because they want to heal the sick, not get rich, and people should be able to receive whatever health-care they need irregardless of their ability to pay.


mfw13--Really, who are you to say why people should become doctors? It's great if someone is altruistically motivated, but if someone is equally motivated by money and provides excellent care, why does their motivation matter to you.

What you have just described, "..where earnings are pooled and everyone gets paid a salary instead of piecemeal" is plain ol' communism. If someone wants to spend 15 years and hundreds of thousands of dollars earning the M.D. tag, I have no problem at all with paying them for their talent, knowledge and skill.

Health care only became a "right" in the popular consciousness about 15-20 years ago when it became apparent that our system was broken. Up until then, back when everybody had an 80-20 plan, it was a service that people shopped around for. People had skin in the game then and so they cared who they saw and how much they paid. Bring it back.