While we’re on vacation, we’re re-posting content from earlier in the year. This post was originally published on January 27, 2011.

By Liz Borkowski

Atul Gawande’s latest New Yorker article, “The Hot Spotters,” is a must-read for anyone concerned about the out-of-control growth of US healthcare costs (and that description should apply to everyone in this country). It’s about possible solutions to the problem of the highest-cost patients, who account for a disproportionate share of healthcare spending but often aren’t getting the kind of care that could really improve their lives. Gawande visits several organizations that are testing out ways to deliver better, more cost-effective care to patients with multiple chronic conditions and high medical bills, with some promising results.

Figures from the Kaiser Family Foundation illustrate what the issue is:

• 1% of the US population accounts for 21.2% of total healthcare spending
• 5% accounts for 47.7%
• 10% accounts for 63.3%

So, if we could reduce costs for the 10% of the US population that accounts for more than 60% of our country’s healthcare spending, we could make significant progress toward at least slowing the rate at which healthcare costs are growing. Some people end up in the high-cost category because they’re diagnosed with cancer or have a severe trauma, but many are people who have multiple poorly controlled chronic conditions.

Once a patient has developed multiple problems – say, obesity, diabetes, and heart disease – the risk of health crises increases. Several of the patients Gawande mentions in his article are regulars in their local ERs and ICUs (a key reason their expenses are so high), and while their hospital visits might stabilize them, they rarely address the underlying problems. Managing chronic conditions often requires coordinating an array of tests and medications performed and prescribed by different doctors, and complementing them with exercise, healthy eating, and other healthy behaviors. Some patients have enough education, time, and other resources to handle these tasks, but many don’t. Some are dealing with disabilities, homelessness, and other serious challenges on top of their health problems. This article focuses on the individuals and organizations that are trying to provide this kind of help to some of the sickest patients.

Gawande visits the Special Care Center in Atlantic City, an experiment launched by the casino workers’ union and a local hospital and run by internist Rushika Fernandopulle. The insurers pay the center a flat fee to manage patients’ care, and the patients pay nothing for unlimited access to the clinic. The staff includes a social worker and eight “health coaches” as well as physicians and nurse practitioners. Health coaches – who come from diverse backgrounds and previously held jobs in retail, service, and other non-healthcare sectors – communicate regularly with patients to coordinate their care and encourage adoption of healthy behaviors. A comparison between Atlantic City casino workers who use the clinic (and accounted for one-third of the unions costliest 10% of members) and a similar group of Las Vegas casino workers who don’t have access to this kind of intervention found that the Atlantic City workers in the program experienced a 25% drop in costs. Gawande met one patient, Vibha Gandhi, who illustrated how the program is achieving such savings:

She was fifty-seven years old and had joined the clinic after suffering a third heart attack. She and her husband, Bharat, are Indian immigrants. He cleans casino bathrooms for thirteen dollars an hour on the night shift. Vibha has long had poor health, with diabetes, obesity, and congestive heart failure, but things got much worse in the summer of 2009. A heart attack landed her in intensive care, and her coronary-artery disease proved so advanced as to be inoperable. She arrived in a wheelchair for her first clinic visit. She could not walk more than a few steps without losing her breath and getting a viselike chest pain. The next step for such patients is often a heart transplant.

A year and a half later, she is out of her wheelchair. She attends the clinic’s Tuesday yoga classes. With the help of a walker, she can go a quarter mile without stopping. Although her condition is still fragile–she takes a purseful of medications, and a bout of the flu would send her back to an intensive-care unit–her daily life is far better than she once imagined.

“I didn’t think I would live this long,” Vibha said through Bharat, who translated her Gujarati for me. “I didn’t want to live.”

I asked her what had made her better. The couple credited exercise, dietary changes, medication adjustments, and strict monitoring of her diabetes.

But surely she had been encouraged to do these things after her first two heart attacks. What made the difference this time?

“Jayshree,” Vibha said, naming the health coach [who previously worked at] Dunkin’ Donuts, who also speaks Gujarati.

“Jayshree pushes her, and she listens to her only and not to me,” Bharat said.

“Why do you listen to Jayshree?” I asked Vibha.

“Because she talks like my mother,” she said.

I won’t summarize the whole article – you should go read it for yourself. One important point is that the new healthcare law authorizes changes to Medicare and Medicaid payments to encourage providers to develop mechanisms for providing this kind of coordinated, prevention-focused care (medical homes and accountable care organizations). Our current fee-for-service system encourages a greater quantity of care but not necessarily higher-quality care, so changing the way we pay healthcare providers has the potential to lower costs while improving quality. Gawande’s article suggests we can achieve this kind of win-win outcome for the highest-cost patients.

The article also hints at some other lessons that are important to bear in mind when considering how to get healthcare costs under control:

Cost-sharing is a blunt instrument. Gawande visited Verisk Health, a company that advises employers on ways to reduce their healthcare spending, and learned about the results of an analysis they ran for an information-technology company. The company hoped that by raising co-payments it could discourage employees from seeking unnecessary care, but health costs kept rising. Verisk found that many of those who accounted for high costs were early retirees who had multiple chronic conditions and started putting off preventive care when co-payments rose. Yet if co-payments are low or non-existent, people may use care they don’t really need (and which could put them at risk of other problems – e.g., radiation from unnecessary CT scans).

Execution matters: It’s clear from the article that the people who are trying to provide radically different care to the sickest patients are passionate and dedicated. The center in Atlantic City put a great deal of effort into hiring health coaches who could connect with the patient population. I suspect the staff involved in these efforts are pouring huge amounts of time and energy into their work, and that they have charisma to inspire others (patients, new staffers, funders) to join in. Can their efforts be replicated nationwide? I think they can be, at least to some extent – after all, the healthcare field is full of smart, dedicated, hardworking professionals. But if replication is sloppy, huge potential savings will become smaller actual savings.

One person’s loss is someone else’s income: All the inefficient care patients are getting is putting money in someone’s pockets, and those recipients have a vested interest in seeing the system stay the way it is. Gawande notes that some of the Atlantic City patients’ doctors were resistant to working with the new system. Paying doctors for quality rather than quantity would address this issue, but how do we get there from here?

Someone has to bear the risk: In the Atlantic City example, the insurers (the union and self-ensured hospital) have shifted risk from themselves to the Special Care Center: they’re now paying a flat fee for their sickest patients, and the Center is hoping those payments will cover what it spends on those patients. Now that the Center is bearing the risk (and a potential reward), it has a powerful incentive to keep costs low through care coordination and preventive care. They have confidence in their system, but they could easily suffer financial losses if a few patients don’t respond well to the model. But it’s understandable that not all provider groups will be eager to take on such risk.

Saving money by providing more efficient care to the sickest patients isn’t an easy fix, and won’t by itself solve our problem with ballooning healthcare costs. But figuring out how to do it – and do it everywhere – is worth the effort.