Medicare Costs in Rural America: A case of reaping what we haven't sown?

This guest column is by Donald Frey, MD. Dr. Frey is Professor and Chair of the Department of Family Medicine at Creighton University in Omaha, Nebraska, and an expert in rural primary care. He is also the accomplished author of the fiction book "Medicine: a Novel"

The recent New England Journal of Medicine article by Elliot Fisher describing the latest data release from the highly respected Dartmouth Atlas Project[1] underscored what many have known for some time—Medicare costs are soaring.

The study compared state and regional growth in Medicare costs between 1992 and 2006. But in addition to the overall rise in costs, the continued marked variance among costs across all states/regions was particularly disturbing. These cost discrepancies, as in previous studies, were independent of patient severity and disease status. In some instances, states that had previously been low on the cost index had jumped significantly. Others showed relatively moderate increases. None showed cost reductions.

The figures for Nebraska are particularly interesting. Sitting squarely in the center of the country, Nebraska has two metropolitan areas (Omaha and Lincoln) and a large region of rural and frontier counties. In 1992, Nebraska was at the top of the heap when it came to efficient use of Medicare dollars, ranking 51st out of 51 states and territories in Medicare costs per enrollee.

But something funny happened on the way to the 2006 survey. Costs per enrollee skyrocketed 5.3 % and Nebraska soared to 39th in Medicare spending. Interestingly, the greatest cost increases were in the most rural portions of the state.

What happened? The authors offered very little in the way of specificity. Undoubtedly, further analysis of these data may result in significant insights into why costs are rising more rapidly in specific areas as opposed to others. But at present, it is important to note what the extensive earlier work of the Dartmouth Atlas project has already shown.

Repeatedly, the Dartmouth researchers have shown the positive correlation between the percent of state physician workforce comprised of primary care physicians and lower costs and improved outcomes. States with higher concentrations of specialty physicians tended to have higher costs and poorer outcomes. Such findings are right in line with the international data generated by Dr. Barbara Starfield at Johns Hopkins.

All of this would be consistent with Nebraska's status in 1992. At that time, Family Medicine was the backbone of health care delivery in the state, particularly in rural areas. Even in the metro areas of Omaha and Lincoln, primary care was readily available and widely utilized. Four residency programs, all with a strong rural component, produced 32 residency graduates per year, many of whom remained in state to practice following graduation.

But in the ensuing years, Nebraska's urban centers began investing heavily in developing overlapping and competing subspecialty services. The number of medical students entering Family Medicine plummeted, and urban hospital systems found that a cost effective way to cover their primary care needs was to loot rural areas of their physicians. Rural communities began to experience increasing difficulty meeting their workforce needs. Some towns saw workforce reduced by more than 50%, with some 4-5 doctor communities reduced to only 2 Family Physicians.

Physicians in these communities suddenly found themselves overwhelmed. Local systems that previously were highly organized with respect to call coverage, division of labor, procedural practice, etc., were now finding it impossible to continue providing the same level of service in the face of such huge demand simply for basic care. Thresholds for referral began to lower. In order to manage the most basic community needs, cases that previously would have been readily handled locally by community Family Physicians had to be referred out to regional centers. These centers, specializing in more intensive—and more costly—care, began to manage these patients instead.

As the demand for more intensive (and more lucrative) care increased, urban health system recruitment of sub-specialists intensified, with an all-too-willing crop of medical graduates flooding local sub-specialty training programs, compromising even further the availability of Family Medicine graduates to "backfill" rural areas.

The result? Care that was more costly, further removed from the community, with no discernable improvement in quality.

Whether changes in workforce alone can fully explain Nebraska's explosion in Medicare costs is certainly open to question at this time. Hopefully, further analysis of state-wide Medicare costs, along with comparative data from other states will more fully illuminate this issue. In the meantime, given the exhaustive data regarding primary care and Medicare costs already produced by the Dartmouth Atlas project, the notion that Nebraska's significant rise in Medicare costs could be best explained by a statewide shift away from primary care remains a disturbingly plausible possibility.

If this is the case, rural states like Nebraska, where Family Medicine has traditionally provided a greater percent of overall care, may turn out to be harbingers of even greater increases in overall healthcare costs for the nation, as even those states that traditionally have relied less on primary care for health care delivery shift an even greater percent of their workforce to sub-specialties.

Regrettably, the influential Association of American Medical Colleges (AAMC) remains steadfast in its opposition to restructuring residency training positions to reflect the growing national need for Family Physicians, instead advocating for an increase only in total medical school student enrollment, with the seemingly blind-faith position that “the market” will drive graduates to where they are needed most.

An unregulated market that’s supposed to make everything work out fine? Certainly sounds familiar in 2009.

If the planned expansion of medical school enrollment by 30% occurs as planned, along with a continued insistence that market forces will auto-correct physician workforce, the work by Fisher, Starfield, Wennberg, Shi, and so many others[2] would predict that health care outcomes in this country will actually worsen because of the AAMC’s actions. If this occurs, it will reflect a perverse twist on one of the oldest principles of agriculture known to everyone here in Nebraska—rather than reaping what we sow, the outcomes we inherit will instead be due to what we haven’t sown.

[1] http://content.nejm.org/cgi/content/full/360/9/849

[2] Many of these articles are previously referenced on this blog. See especially December 11, 2008.