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Is the Mayo Clinic a Model Or a Mirage? Jury Is Still Out.
Duplication Wouldn't Be Easy, Critics Say

By Alec MacGillis and Rob Stein
Washington Post Staff Writers
Sunday, September 20, 2009

ROCHESTER, Minn. -- The Mayo Clinic looms out of the prairie here like the mecca it has become, a world-renowned medical complex that is often cited by President Obama as his model for national heath-care reform.

"Look at what the Mayo Clinic is able to do. It's got the best quality and the lowest cost of just about any system in the country," Obama said in Minneapolis this month. "So what we want to do is we want to help the whole country learn from what Mayo is doing. . . . That will save everybody money."

Few dispute the prowess of Mayo, which brings in $9 billion in revenue a year and hosts 250 surgeries a day. But a battle is underway among health-care experts and lawmakers over whether its success can be so easily replicated. Before embracing a fundamentally new approach to health care, dissenting experts and lawmakers say, Congress should scrutinize the assumption that a Mayo-type model is the answer.

They point out that Mayo's patients are wealthier, healthier and less racially diverse than those elsewhere in the country. It has few poor patients. It limits the number of procedures it performs per patient, but the rates it charges private insurers and self-paying patients is higher than average, allowing it to thrive despite the lower Medicare spending cited by its supporters.

Armed with their new stature, officials from Mayo and a handful of similar facilities have become determined lobbyists in their own right. They are pushing for an overhaul of Medicare that would reward cost-effective hospitals and doctors, while punishing others.

But if the Mayo model is, in fact, difficult for even the most dutiful hospitals elsewhere to mimic, such an overhaul could set up many providers nationwide for failure -- and a big loss of funds.

"It's not [Mayo's] model. It's their patients and money. If you have the money, you can attract good staff, good doctors, good nurses," said Richard A. Cooper, a professor of medicine at the University of Pennsylvania. "You are going to force hospitals to find ways to avoid taking care of poor people just because they are going to be penalized because poor people cost more."

Mayo and other oft-cited model facilities also are lobbying against one of Obama's favored provisions: a government-run insurance plan, or public option, which would work against these hospitals' financial position.

"What they want to do is leverage their high-quality delivery systems to keep as much of a private delivery system as possible," said Gerry Shea, the AFL-CIO's chief health-care negotiator.

Mayo and the other model centers -- which tend to be in the Upper Midwest, Mountain West and Pacific Northwest -- have gained their current stature because of Dartmouth University research showing that they spend less per Medicare patient than their counterparts elsewhere, including in Miami, Los Angeles, New York and much of Texas and the South. Many experts have seized on the data to conclude that the key to reining in health-care spending is to emulate Mayo -- a large group practice in which physicians are on salary and have less incentive to perform unnecessary procedures than physicians paid on a "fee for service" basis.

"These communities are able to control utilization [of health care] without harming patients," said Don Berwick, head of the Institute for Healthcare Improvement.

Mayo officials say their model dates to the clinic's founding in the late 19th century by brothers Charles and William Mayo, still known around the campus simply as "Charlie and Will." As their clinic grew, it became known for its quality and the brothers' insistence that doctors work on salary.

That, Mayo physicians said, has drawn doctors more committed to their professional obligations than to making high salaries by racking up procedures. "I didn't go to medical school to be the hardest-working guy in the room. I went to medical school to take care of patients," said cardiac surgeon Thoralf Sundt.

'In the Same Direction'

The emphasis on cost-effectiveness permeates the clinic. A single physician is assigned to coordinate each patient's care. A "clinical practices" committee preaches cooperation so that, for instance, vascular surgeons, neurosurgeons, cardiologists and radiologists agree on who would treat a carotid artery problem in the most cost-effective way.

The ethic is clear on the surgical floor, where schedules are organized so that patients spend as few days as possible waiting in Mayo hospital rooms. On a recent morning, colorectal surgeon Robert Cima assembled his 10-person team to review his four operations that day to ensure things would go smoothly. Nurses and other staff members tend to stay at Mayo for years, which also helps teamwork. "They know how I do it," Cima said. "Everybody knows what is going on."

In the transplant ward, 10 physicians, nurses and other staff members gathered for an hour that day to review patients. If Brooks S. Edwards, director of Mayo's transplant center, had a concern about potential infections, he could turn to the infectious-disease specialist in the room. "We're all rowing in the same direction," he said.

Mayo officials argue that smaller hospitals with fewer resources can follow suit. Gundersen Lutheran in La Crosse, Wis., for example, is known for its efforts to limit intrusive procedures at the end of life. Hospital chief executive Jeff Thompson cites one example of how its salary model keeps spending down: The hospital performs few Caesarean deliveries because its obstetricians are not worried about the number of cases they can get to and thus can wait out labor.

Staff members at the Marshfield Clinic, a network of 45 facilities in northern Wisconsin, have improved tracking of high blood pressure and other chronic conditions, saving Medicare $23 million this year. Under a pilot program, the hospital can keep $13.8 million of that savings.

"I'm skeptical of people who say, 'Only a few can do what Mayo does,' " said Mayo neurologist Mike Harper, who oversees its clinical practice. "It's not just our culture -- you can change culture overnight with the right incentives."

Demographics as Factor

It is a disparate group of skeptics that is taking on the Mayo mystique: federal health policy analysts, medical administrators and lawmakers in districts that would be hurt by the proposed Medicare reforms, and an informal network of health-care experts.

They agree that some communities milk Medicare with wasteful spending. But much of the low spending at Mayo and some other facilities, they say, is largely because they are dealing with a population that has fewer health-care needs: The Upper Midwest, for instance, has less poverty and lower rates of diabetes.

"If 98 percent of our patients were middle-class Scandinavians and no one was poor, we'd have low costs, too," said Cooper, from the University of Pennsylvania. "What happens is a poor person goes home and they don't have the support available that the average middle-class person has, and so they get readmitted at an astronomical rate."

Cooper and others note that Mayo's other facilities, in Jacksonville, Fla., and Phoenix, have total spending rates that are roughly proportional to those in other hospitals in those areas. And across the Upper Midwest, per-patient spending is low, including at centers where doctors are not on salaries.

Mayo's clientele is even more selective compared with other Upper Midwest hospitals. Its Rochester flagship accepts Medicare patients from outside Minnesota only if they are willing to pay a personal premium beyond normal Medicare coverage, a practice that screens out some who cannot afford to pay more -- and attracts patients deeply invested in their own care.

Even in Rochester, a city of 85,000, Mayo serves a higher-income echelon than the town's other hospital, Olmsted Medical Center. Just 5 percent of Mayo's hospital patients receive Medicaid, an exceptionally low figure, compared with 29 percent at Olmsted, where officials say they do more to help people in the community apply for Medicaid.

Officials at Mayo and the other model centers reject the argument that their cost figures are explained mostly by demographics. Gundersen's Thompson points to the high rates of smoking and drinking among many Wisconsin residents. "The stereotype that we're all bachelor Norwegian farmers out there working till we're 95 isn't exactly right," he said. Gundersen vice president Kathy Klock chimed in, "Have you ever been to Packers stadium?"

And Mayo chief executive Denis Cortese played down the screening effect of the Medicare premium and said he was untroubled by the low rates of Medicaid patients at the clinic. "Why don't they come? I don't know," he said.

To counter the doubters, Elliott S. Fisher, the Dartmouth professor who oversees the Medicare research, published a piece in the New England Journal of Medicine stating that poverty and health status accounted for only about a third of the spending disparities among communities. "Yes, there are pockets of poverty," he said in an interview. "But despite claims to the contrary, that does not explain most of the differences across the United States."

The Cost Question

Driving across the Upper Midwest, clinics owned by Mayo, Gundersen and Marshfield pop up as reliably as signs for convenience stores. Over time, the three facilities and several others have carved out quasi-monopolies in Wisconsin, Minnesota and northern Iowa, with each hospital surrounded by affiliated clinics in smaller towns. The centers and their admirers say the country should organize itself into similar regional networks to improve coordination and efficiency between primary-care doctors and hospitals.

But such regional dominance also gives the networks pricing power, meaning any savings could be canceled out by higher rates the networks could charge insurers. A 2005 study of federal employee insurance by the Government Accountability Office found that Wisconsin cities such as La Crosse were charging insurers the highest rates. Mayo also charges high rates for the many people paying out of pocket. It draws so many wealthy patients from abroad that it has set up a concierge area to help translate and to exchange currencies; a Middle Eastern sheik has built a hotel, the tallest building in town, to house patients from overseas.

Those charges, to insurers and private patients, raise questions about whether the Dartmouth data capture the full cost picture. The models' leaders say they charge their private payers so much because they are vastly underpaid by Medicare's regional formulas. But many experts see it the other way around: If Mayo did not have such a large payroll and such gleaming facilities, its costs would be lower and Medicare would come closer to covering them.

"We agree that [the models] practice good, parsimonious care," said Len Nichols, a fellow at the New America Foundation. "What they don't show is that they're giving us the lowest imaginable cost they can get. And they won't do that until they're forced to."

In his office high above Rochester, Cortese disputes the notion that Mayo is anything but lean to the bone. "Our costs are our costs," he said. "It costs us a certain amount to hire our cardiologists, our radiologists, all our services. Everything we've got here is what we have to pay for."

Stepped-Up Lobbying

Mayo has cultivated an apolitical image over the years, but with health-care reform looming, it recently banded with Gundersen and Marshfield to promote the "high-value" model they all follow. To supplement Mayo's lobbyist in Washington, Cortese started making frequent trips to the nation's capital.

In July, Mayo and a dozen other institutions fired off a letter that made Washington take notice. Under Gundersen's letterhead, the institutions opposed the "public option" in the House Democrats' bill. They also called for an overhaul of Medicare rates to reward "high-value" centers -- paying hospitals based not on the number of procedures, but on their cost-efficiency and health outcomes.

Republicans seized on the letter, noting that the public option was opposed even by hospitals Obama had praised as models. "I'm surprised he holds these groups up because you knew they were going to oppose what he was trying to do," said Rep. Paul D. Ryan (R-Wis.).

The White House was not happy, as Cortese found when he went to meet with the administration's health reform czar, Nancy-Ann DeParle, shortly after the letter was sent. "I guess they got the feeling we undercut" them, he said.

But instead of freezing Mayo out, Cortese recalled, "They said, 'Tell us exactly what you want.' I said, 'You really want me to tell you exactly what we ought to be doing?' And they said yes."

Since then, the legislation has been heading in Mayo's direction. The White House has sent signals that a public option is expendable. In the House, lawmakers agreed to add to the bill a three-year study, with a requirement that its findings be implemented, of shifting Medicare payments to a "value index," under which cost-efficient hospitals would be paid the most. And last week, Senate Finance Committee Chairman Max Baucus (D-Mont.) released a health-care reform bill that includes many of Mayo's ideas for high-value incentives.

Mayo's momentum has the skeptics worried. Cooper and others say the better way to reform Medicare is to pay for outcomes in a way that takes socioeconomic factors fully into account and to improve the health of the poor before they get on Medicare.

Still others question whether mandating the Mayo model will result in savings for the taxpayer if the money cut in some areas is simply used to reward others. "These cuts will NOT go to tax or cost reductions," wrote Rep. Michael E. Capuano (D-Mass.) to his colleagues. "Every penny of these cuts will be sent to OTHER states."

Mayo officials, however, recoil at the suggestion that their lobbying is solely driven by self-interest.

"Our focus is on the needs of our patients," said Jeff Korsmo, the clinic's policy director. "There are people trying to position us as anti-reform, but we wouldn't be doing this if we weren't for reform."

Stein reported from Washington.

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