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Grand Junction’s Low Health Spending

By October 11, 2010Commentary

Grand Junction, Colorado is an area that has relatively low per capita health spending, for Medicare, Medicaid and privately insured individuals, by a variety of measures and on a case mix adjusted basis.  At the same time, Grand Junction’s quality appears to be better than many areas.  For example, Medicare spending is about 24% lower than the national average; it has only 60% as many coronary-artery bypass surgeries for Medicare beneficiaries and only 61% as many inpatient days during the last two years of life.  Expenses for Medicaid beneficiaries are 37% of the Colorado average, which is especially impressive given that other counties have healthier Medicaid populations.  It also scored above average on many measures of preventive care and other quality items.

Understanding what features of the local health system account for the lower spending could help policymakers and other regions work on lowering their spending, while not adversely affecting quality.  A New England Journal of Medicine Perspective evaluates why Grand Junction’s spending is lower.   (NEJM Article) Several decades ago the Grand Junction physicians formed their own health plan which has the majority of the market share in the area.  The primary care doctors placed themselves at risk for overall costs, which has led to a higher concentration of primary care providers and fewer specialists and expensive facilities and equipment.

The seven factors listed as critical to Grand Junction’s low cost status include primary care doctor leadership; risk sharing by doctors; equal payment mechanism for all third-party patients; regionalization of services; limits on supply of expensive resources; paying primary care physicians for hospital visits and good end-of-life care.  There may be difficulty replicating all these features in larger metropolitan areas, but they do suggest avenues for change that might help reduce spending.  And it doesn’t appear that quality suffers; in fact it may be better.  But Grand Junction also appears to have very enlightened physician leadership; it is not clear this would be true in other regions.

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