Unbiased Analysis of Today's Healthcare Issues

What’s Going on in Grand Junction?

Written By: Jason Shafrin - Apr• 19•12

Grand Junction has been lauded as one place that offers some of the best healthcare in the nation, at the lowest cost.

“Grand Junction ranks near the top in Medicare’s Composite Quality of Care index, with a score of 91. That’s 21 points higher than McAllen.

But costs in Grand Junction are among the lowest in the nation, sixth from the bottom among 307 cities.

Medicare spends just $5,873 per year on the average recipient here, compared to a national average of $8,304, according to the Atlas of Health Care published by Dartmouth University. Grand Junction’s costs are well under half the $14,946 average in McAllen, which is second most expensive.”

How does it do it?  One reason is its integrated model for caring for patients.

The doctors told the insurer that they didn’t want to stratify their patients — favoring those with private health insurance, reluctantly treating those on Medicare and Medicaid, the government programs for the elderly and the poor, which pay doctors less than private insurers. In many parts of the country, Medicare and Medicaid patients have trouble finding physicians who will treat them.

So, RMHP [Rocky Mountain Health Plan] said the physicians of Grand Junction did not have to know which of their patients are on which plan. To do this, RMHP pooled the incoming fees for private, Medicare and Medicaid. Then it reimbursed the doctors the same for all their patients.

Uninsured individuals can even get free care.  The local hospital donates a million dollars per year to support care for the uninsured at the Marillac Clinic.

Is this model replicable in other areas?  Unless there is structural change, I would say no.

Implementing this type of system requires a number of institutional attributes.

First, there is a near monopoly by insurers and providers.  Rocky Mountain Health Plan has over 60 percent of the market.  Mesa County Physicians Independent Practice Association represents about 85 percent of the region’s physicians.  Since there are two dominant forces in the market, cost-sharing agreements are feasible.  In the current system, Medicare and commercial patients are subsidizing those with Medicaid or no insurance.  If an insurer wanted to gain market share, it could offer more generous benefits to Medicare or commercially insured individuals.  That strategy may work in certain cases, but if there are significant economies of scale, it is possible that Medicare and commercially insured patients could still receive better care at lower cost than with a smaller, more tailored plan.

The near monopoly in Grand Junction, but implementing monopolies in other cities could mean that everyone receives poor care rather than excellent care.

Second, doctors have to be willing to accept lower incomes, particularly specialists.  Grand Junction saves money by performing fewer procedures, but it is these expensive procedures are what generates high physician incomes.  “Dr. David West, a member of the physicians’ association, says specialists are generally paid two to four times as much per year as primary care doctors, and he thinks that’s too much. In Mesa County, specialists are hired to think, not to run up the procedure count, and that means they give up income to benefit their patients, their community and the family doctors.”

Can Grand Junction be replicated?  Maybe.

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2 Comments

  1. Health Care Analyst says:

    I would be really curious to see the breakdown in demographics between McAllen and Grand Junction. The delivery system is definitely broken, but I think there is more to this story than just the delivery of care in the two places.

  2. [...] his Healthcare Economist post, “What’s Going On in Grand Junction?” blogger Jason Shafrin discusses the phenomenon underway in Grand Junction, Colorado, recently [...]

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