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This is FRESH AIR. I'm Dave Davies, in for Terry Gross.

One of the criticisms of the health care reform bill enacted last year, is that it expanded coverage without doing enough to control rising health care costs.

Our guest today, surgeon and journalist, Atul Gawande, says there are hopeful signs that costs can be contained, not by cutting back but by providing more intensive service to chronically ill patients who incur huge costs with long stays in hospital rooms and intensive care units.

Gawande is a practicing surgeon at Brigham and Women's Hospital in Boston. He's also an associate professor at the Harvard School of Public Health and a staff writer for the New Yorker. His 2009 article on high health care costs in McAllen, Texas, was recommended by President Obama to members of his domestic policy staff.

Guwande's piece in the current issue of the New Yorker, on those who focus on patients with the highest medical costs, is called "The Hot Spotters." He spoke to us from the Harvard Medical School. You may hear some extraneous noise in the background.

Well, Atul Gawande, welcome back to FRESH AIR. Let's talk about this physician, this young physician in Camden that you write about who has done some innovative things on cutting health care costs. And he really began by looking at where the hot spots of health care spending were in Camden. What did he do?

Dr. ATUL GAWANDE (Surgeon, Brigham and Women's Hospital): It's a fascinating story. Jeff Brenner is this family physician who had been a citizen member of a police reform commission and started looking at emergency room visits the way police look at crime assaults.

He started asking: Where are the people who have the most emergency room visits and hospital visits, and why is that happening? Just like you might look, a police chief might look at crime and say: What are the neighborhoods where the greatest amount of crime are, and let's put our resources there.

And so he collected data from emergency rooms in the three main hospitals in Camden, looked to see what's the trouble here. And what he found was that most of the costs were concentrated in just a handful of people.

He found two city blocks, for example, that had about 1,000 people living in them, and they accounted for $200 million in health care costs over five years. He dug in a little further and saw that there was a low-income housing project and a large nursing home there and that you could imagine diving in to make changes.

He could imagine. He said to himself: Now, wait a minute. Our numbers are showing that one percent of the people using the Camden health system accounted for 30 percent of the costs. One percent in Camden was about 1,000 people. That's about half the size of a primary care physician's office panel, the number of patients they were seeing.

And he said: I can do something about this. And so he decided to try to attack this problem, address the problem of cost - not so much because he cared so much about cost, but because he was convinced about another thing - which is the idea that the most expensive people in the city were likely getting the worst care.

DAVIES: Yeah, why would you think those that were getting all of those tests and all of that treatment were getting bad care?

Dr. GAWANDE: The story will vary from city to city. But in the city of Camden, it was a story of poverty. Camden's a poor city. They have a lot of people who are in and out of insurance. They go to the emergency rooms as a primary place of care. And the sickest among them really do badly.

When he tackled this, he decided to start, just one-by-one, taking care of the people who were in that top percentage of costs. And his patient number one that he encountered, was a man who was spending basically more than six months out of the year in the hospital. He was 560 pounds. He had a alcohol, and it turned out, a cocaine addiction. He had congestive heart failure that left him disabled from his cardiac condition, bad diabetes. And when he caught up with him, he was in an intensive care unit with a tracheostomy and a feeding tube and a bad gall bladder infection. He basically...

DAVIES: Let me interrupt you, if I can, here because this is a fascinating piece of this story. This physician, Jeffrey Brenner, decides, I guess for his own reasons, he wants to take care of, you know, the toughest patient, almost, he can find in Camden - the one who's getting terrible care, generating lots of costs. How does he do this? He goes to the doctor and says give me your toughest case?

Dr. GAWANDE: Yeah, so the first way you do it is you try to look in the data and say who are the most expensive and try to track them down. But you have to jump through all kinds of hoops.

You'd have to get hospital permissions and legal permissions to pull the names out of the database and approach them. So instead, he said, let me just go to the docs and say: Who's your hardest, hardest, worst-of-the-worst, as he put it, patients? And let me see them. And they were more than happy to hand over patients like this man.

I mean, you know, this was a man who, you know, he's homeless, living in a welfare motel when he's discharged. You know, if you're in the hospital that much, you don't keep your home. He has drug problems. He doesn't turn up for his appointments.

And, you know, here's this doctor, Jeff Brenner, saying: I'll help you with these folks. In fact, I want to help take care of them, and I think we can do a great job.

And so they did. They would find their most difficult of the difficult, and then when he'd look back in the data to see where they are in the cost map, these were, indeed, some of the most expensive patients in the city.

DAVIES: So let's talk about this one gentleman. You said he tracked him down in the intensive care unit, where he spends a lot of the year. Then what happens?

Dr. GAWANDE: So Jeff Brenner described it as just being like a medical student for a while. He'd go and spend an hour a day just sitting and trying to figure out what made the guy tick. As he got better in the intensive care unit and started getting out into the regular floor of the hospital, and then into a rehab facility, they neared the point where he was going to be discharged.

And the minute he goes out, you know, it's back to that world where there could be cocaine, there could be drugs, alcohol, he'd be homeless, he would lose, you know, any kind of basic care that would keep him going. And instead, he began providing that care.

He got a nurse practitioner, in addition to himself, who agreed to help pitch in. And she started visiting him every other day, at home, just to make sure his blood pressure was being checked and under control, and he was doing the right things by his diabetes.

He got a social worker to work with him and make sure that, you know, he got the Medicaid he qualified for. So he had steady insurance, and some of the specialists he needed would actually see him.

And probably the most important thing was simply working on him the way a primary care doctor works on people who have gotten into a rut in their lives. He said, you know, probably the most important thing that he did was just tried to care about him. And he worked on things like: How are we going to get you to stop smoking? How do we introduce value into your life again?

He pushed him to rejoin the church that he used to go to, that he didn't go to anymore. It turned out, he learned about him, that he was a line cook in his former life, before he got so sick, and that he knew how to cook. And so, you know, he said, start cooking for yourself so that you're getting back in the habits and eating better.

And slowly, it took three years, but I spoke to the patient, and he's not had any more of those catastrophic intensive care unit stays. He has lost 220 pounds. When he falls down, he does not have to call 911 to get up. He is off of cocaine for three years, alcohol for two years, smoking for a year.

Sometimes, because of his heart failure, he does go back to the hospital, but it'll be a day or two at a time instead of weeks and weeks. And his costs have dropped dramatically, while the quality of his care has been just turned completely around.

DAVIES: So part of it is, kind of, helping repair the social and moral infrastructure of his life. And then part of it is medical, right? I mean, you need people to make sure that he is getting his blood sugar tested regularly and that his medications are coordinated so that the medical care is more coordinated, and he's living a healthier lifestyle, which sounds terrific.

But it's - we're not going to get doctors to volunteer to do this very often. What does it take to fund that kind of effort? Well, how did they do it in Camden? They actually expanded this to get more patients, right?

Dr. GAWANDE: Yeah, so, you know, it didn't work. I mean, Jeff Brenner is something of a saint. He was ending up taking patient after patient, like this man, being very successful, lowering their costs by double-digit percentages, improving the quality of care until the point he had more than 300 patients enrolled under wing with a team of the nurse practitioner and the social worker and other folks, got some temporary grants from foundations. But it was - you know, he struggles from year to year, about whether his organization can even survive.

What he is recognizing is that in the current health care system, you're not paid to keep people healthy. The main mechanism that the health care system manages through is you have 20-minute office visits, maybe 30 minutes, and you have emergency room visits. Those are - you know, Americans make a billion of these kinds of visits a year. And that's how things get done.

If you're a complex patient, with this kind of range of problems, it doesn't fit into that world. It needs a whole kind of a project manager, a whole team to take you under wing and see you through this course of illness. And so what he's started creating is the system as it should be.

DAVIES: And so his organization has these 300 patients. Is he the primary care physician for these 300 folks?

Dr. GAWANDE: No, he has not been. Even his organization still hasn't had the funds to have a clinic staff of doctors. They visit at home. They go to the patients' houses. They can order tests and get things squared away, and then they coordinate with their doctors because that's currently the way that they can do it.

But I visited another system that he's on the advisory board for in Atlantic City that has been able to create it and get actual money from the insurers to be able to pay for it. And it has been able to take it, not just to 300 patients, but to 1,200 patients who represent the top five percent of costs for the casino workers in Atlantic City.

DAVIES: We're speaking with Dr. Atul Gawande. We'll talk more after a break. This is FRESH AIR.

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DAVIES: If you're just joining us, our guest is Dr. Atul Gawande. He is a staff writer for the New Yorker magazine. He's also a practicing surgeon and an associate professor at the Harvard School of Public Health. He has a new piece in the New Yorker about cutting medical costs by providing intensive care to chronically ill patients.

So let's talk about the Special Care Center in Atlantic City, which is a clinic set up specifically for the toughest patients, those that are chronically ill. Who established this and why?

Dr. GAWANDE: Yeah, this was just so interesting. The union for the casino workers have a health fund that started this, along with the hospital, and both of them were facing problems that the costs of their employees' health care had gone beyond what they could afford.

For the unions, they negotiate contracts that are often for total compensation, meaning the wages plus the benefits, and since the workers vote every year on how that total compensation gets divvied up between wages and benefits, the workers have, every year, voted that they do not want to cut their health care benefits.

But because those costs rise so much, they haven't seen a pay increase in years, apparently. So they were desperate to have something that would actually bring those health care costs down without simply cutting them off for themselves.

But interestingly, the hospital was also facing a similar problem that their own employees' health care costs were going up so high that they wanted a solution for it and put in with the union to create this really interesting experiment, which is kind of like Jeff Brenner is producing, only doing it for the casino workers and hospital employees.

DAVIES: And this is a clinic, not for all of the casino workers and hospital employees, but those who are the sickest, right?

Dr. GAWANDE: Yeah, the design of this is really interesting. You cannot get into the clinic unless you are in the top 10 percent, basically, of the health care costs that their health funds have. When you are enrolled in the clinic, there are no bills.

The clinic is just paid a flat, monthly fee for every patient they take care of for providing whatever services are needed, to give them good service and improving care.

DAVIES: And they're paid this flat monthly fee by the benefit fund of the union and the hospital, right?

Dr. GAWANDE: That's correct. So, one of things that means is that the whole staff, that all of us have to have in medicine, who handle insurance paperwork and that kind of thing, disappeared. So that cost was lopped off the top.

Then the second thing was that by having that kind of a - they call it a retainer-based payment, if they aren't providing good services, the patients will walk. They will simply leave and take their retainer to somebody else, go back to their regular physicians.

So that led them to focus intensely on service for these patients, service to make sure that they are creating health goals for every patient, creating a staff that can help them achieve it.

They have one person on staff, for example, whose sole goal - not sole goal - but they are fundamentally responsible for ensuring that there is a strategy for every patient in the clinic to quit smoking, and they've reduced smoking among their population of, especially among the heart disease and lung disease patients, by two-thirds. Which is, you know, massively beyond what you see in general clinics in the United States.

And they've just tackles sort of problem after problem: How do I keep my cardiac patients on their main medications, their cholesterol-lowering agent? How do I control their high blood pressure? They have a whole staff that, in fact, is invented for it.

DAVIES: And they had this category of health care coaches who, if I read this right, they are not recruited among people with a medical background, right?

Dr. GAWANDE: Yeah, so the doctor that the health fund pulled in to run the site is a doctor named Rushika Fernandopulle. And Dr. Fernandopulle ended up on a mission when he was a young physician, that went to the Dominican Republic, and he saw community workers in action. I guess they call them promotoras(ph).

And they kind of coached people around maintaining their health. And he thought: We could do this here. And so he hired what I met of eight health coaches, and these are people whose job is, besides the doctor, to work intensively - whether it's with phone calls, visits to the home, email, whatever is the way to work with each of the key patients - on how they're doing with their health goals.

And those health coaches, you know, he interestingly emphasized they don't have to be from health care. He often wanted people who were from retail. One of his best health coaches was a woman who worked at Dunkin' Donuts. Another worked as an assistant manager in a McDonald's. And they knew how to provide service to people and focus on getting results.

DAVIES: So give us an example of what some of the services that the health care coach would provide and how that contributes both to better care and lower cost.

Dr. GAWANDE: There's the simple fact of every day, the team meets, including the health coaches, to go through the list of all the patients being seen that day or during the week, and troubleshoot.

What are the problems? What are the issues? Most of the patients only take a few seconds to run through, but they would be things like: We caught, on the computer system, that this person didn't fill their blood pressure medication. Fine, I'll give them a call. So-and-so didn't turn up for their appointment, we'll go and deal with that. This person has some laboratory results that suggest he's getting into kidney failure. Okay, we'll go - and he hasn't shown up for three appointments. Fine, we're going to go visit him at home and find out what the deal is.

And then it goes to the point where the health coaches are working their way through with the patients. Okay, you have smoking, or you have -obesity is a major issue, or your diabetes and your blood sugar control is where we really have to work.

The doctors and the nurse practitioners set the major goals. They take care of the medical issues. But the additional issues - includes social workers who can recognize this person is homeless and needs to get proper housing or has a problem with infestation with dust mites that are causing asthma for the children who are in the health plan - those kinds of things that normally we don't touch in medicine, or if we do, it's between visits that might occur once every five months, six months. They are able to jump in and try to drive those changes in behavior and in just making the health system work for them.

It was interesting that you describe them as, these health care coaches, as people who are used to saying yes. I mean, if you - whatever the patient needs, you figure out a way to make it happen.

And I'm sure that when people do get their meds checked and do have their prescriptions filled, they're much less likely to end up in the emergency care or the intensive care unit and thereby cut costs, and they will be healthier.

On the other hand, this is a much more expensive set of services to provide than a doctor's office, which just kind of treats you rudely and says, you know, come in here, and we'll get you out of here in 20 minutes. Have they done studies to show how the costs cut, whether this is really saving money?

Dr. GAWANDE: Yeah, so they - the union health fund, which is investing in this, then engaged an independent economist, and he went and compared how these workers were doing to a matched set of people who were in the Las Vegas casino workers union and found that there were, even after taking into account the costs of providing all of this and the fact that these patients were getting more personal care, they're more likely to get their mammograms and their drug costs had gone up, that they had what appeared to be, on average, a 20-percent reduction, reduction, in total costs, not bending the curve, not slightly making the rise lower but actually slashing their costs. And this, in the most difficult and the expensive population.

One of the points you made is that these services are intense. This is outpatient intensive care, in a sense. The - part of the strategy that works here is really borrowing from that crime world that you are deploying to the place with the hot spots, where the statistics indicate you have the people with the most need, and designing medicine around that way, saying that yes, we are going to provide these kinds of services but only intensively to the place we need it.

It's sort of like the intensive care unit within a hospital. It saves lives, it does good, and outside of the hospital, what - when you have a group of people focusing on keeping people out of the emergency room, keeping them healthy enough that they need the hospital much less than they used to, they are not only improving the care for people that are some of the sickest people in a community but also reducing the costs.

DAVIES: Atul Gawande is a surgeon at Brigham and Women's Hospital in Boston and associate professor at the Harvard School of Public School and a staff writer for the New Yorker. He'll be back in the second half of the show. I'm Dave Davies, and this is FRESH AIR.

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DAVIES: This is FRESH AIR. I'm Dave Davies in for Terry Gross, back with Atul Gawande. He's a practicing surgeon and associate professor at the Harvard School of Public Health and a staff writer for The New Yorker. His latest piece on cutting medical costs and improving care is called "The Hot Spotters."

We've talked about a couple of cases where people have innovated in particular practices with particular groups of patients and seem to have had some success by bringing in extra services to the chronically ill and cutting costs and getting them better care.

You also write about a company that does this on a macro level. I think it's called Verisk, which analyzes health data for companies that are looking to cut costs. Explain what they do.

Dr. GAWANDE: It's sort of a vague name isn't it? And they are in this nondescript office park in a suburb of Boston. But they have contracts for - with businesses mainly, businesses that have their own insurance, so these usually medium-sized to larger businesses. And they are all struggling with their health care costs. They all tend to try to contract with advisers on how to cut health care costs. And Verisk is one of these advisers that are out there. And the typical way these advisers work is they look at their data and they tell them where to change their benefits or how to change their benefits.

So they might encourage them to increase the co-payments on brand-name drugs or increase the payments co-payments on an emergency room visits to try to drive behavioral change. But what this particular company does, is they have a small platoon of doctors that also look through data and try to see the medical story underneath. They look in the hot spots, where look at that one percent that accounts for 30 percent of the cost, the five percent account for the 60 percent, and then begin trying to see the patterns.

I sat down with Nathan Gunn, an internist who is one of these people at the company, and watched him go through the data on one company where he zeroed in on their top user of emergency rooms, which was a 25-year-old woman - maybe she was a secretary there or something like that - who'd had 80 visits to doctors and to emergency rooms for headaches. And by peering in, he was able to see she was not on the right medication for migraine headaches. She would go to the emergency room. They'd give her a CT scan, make sure she didn't have a tumor or an aneurysm. They would give her a shot of morphine or some narcotic, and then that would be that. She was on a mild medication for migraines that clearly wasn't working, but she simply hadn't gotten good care for a hard to treat migraine problem and he could identify how to zero in and help that sort of person.

DAVIES: I was really fascinated at one example that you cite, of where they looked at a company that was trying to cut their health care costs and so they increased co-pays for their employees with the idea that it would make them think twice about getting an unnecessary procedure. Give them skin in the game, as the phrase goes, so that they have an investment in cutting costs. And that what they found was that for the most expensive patients, that actually increased their usage and increased the cost. Why?

Dr. GAWANDE: Yeah. So, well you know, all the company knew was they had been cutting and cutting and that should have lowered their cost. And instead, their cost continued to rise - 10 percent a year, 10 percent a year, 10 percent a year. And so they got Verisk into the game to study what was happening. And diving deep into the data what they saw was the company was really two companies. There were the early retirees that were the predominantly - and a subset of the early retirees, were that five percent that accounted for 60 percent of the cost - and then there were the rest of the employees. And so, those co-payments on the whole, did - it reduced the number of office visits, it reduced the number of hospital visits people made, they didn't visit the emergency room quite as much, they used less drugs. And for the rest of the population, their costs were sort of tottering along without rising but not really falling.

But then they were just climbing massively for this early retirement population. And when the doctors dug into this data they found the story was that these were patients with chronic diseases like bad heart disease and high blood pressure. Some of them had severe mental illness, that was also a concern. And they were going off their meds and then just having disasters happen.

One case being, one that he looked at with me, where - was a man who had stopped his cholesterol medication, had stopped taking, regularly, his heart medication, given the co-pays and everything else. And the next time he's in the emergency room, it's with a massive heart attack. He's now with severe disability from congestive heart failure and over $80,000 in bills in the last year of his care.

DAVIES: Because he couldn't spend a few dollars for medicine.

Dr. GAWANDE: That's right. And so, the policy had backfired on them. And what it made, you know, this whole way of thinking makes you recognize that the that succeeding and controlling health care costs means succeeding in being able to figure out what you want to do for that top five percent of people.

DAVIES: You've highlighted a couple of really heartening cases of where people have given better, more consistent care to chronically ill patients, made them healthier and cut costs. I want to look at the big picture of that here. To what extent does the Health Reform Act create meaningful incentives for driving down costs in these ways? Because, you know, you hear the criticism when the bill was passed was that eh, there's not really much here on cost control, a couple of pilot programs here and there. To what extent does the health care reform encourage this kind of stuff?

Dr. GAWANDE: In many ways the health care reform is gambling heavily on this kind of work. It has $10 billion in incentives for innovation centers to develop in communities that are focused on working to improve the coordination of care and reinvent the way that physicians are paid, so that these kinds of organizations can start to form. The puzzle of it is whether these programs can scale successfully. This is the real test. So far, it's sort of like charter schools. They are forming these really striking successful programs. I think we've not paid enough attention to them and understood just what kind of opportunity they represent. And that's part of the reason that I went out to try to learn more about them and write about them.

But the next question that they really face is: okay, you are able to do this for the casino workers program in Atlantic City. You're able to make it work at that scale. Now can you spread it to all of Atlantic City or all of Camden, so that you're actually lowering an entire community's cost?

What we need in health reform for cost control to actually happen is to have the first community or health plan that actually lowers health care cost. Not, you know, just bends the curve a little bit, but actually lowers health care cost. We've never had a community that does it, let alone one that does it by improving the quality of care.

DAVIES: If you have a system in which, by providing better care you spend a little more up front but you cut costs overall, I mean it would seem that would certainly be in the interest of the patients who get better care, of the employers who pay insurance premiums to fund that care, and, you know, insurance companies - who by the care from the providers. Who are the people who are going to resist this? I mean, if you're cutting costs that means you're cutting spending and somebody's ox is getting gored. Is there resistance here?

Dr. GAWANDE: You put your finger on it. The people who will resist are the people who currently benefit from the current system. There is a I thought a kind of telling story in Atlantic City, where the special care clinic there, as it's called, for the high cost patients, had gotten so good at reducing cardiology needs for the patients that the specialists, the cardiology specialists started experiencing a reduction in the number of patients they were having come from this clinic. And a conflict developed.

One patient that was an example that they told me about was a young woman who had had an inflammatory condition of the heart that was able to be taking care of just with inflammatory medications when she was in her 20s, but she had been seeing a cardiologist every three months for an EKG, and every year, for an ultrasound of the heart for two decades. And they were able to recognize, you know, that cost is not really necessary, we're taking good care of you, you're doing really well and we recommend you don't see the doctor. And the doctor then would call the patient at home and say, where are you? You have to come in. This is one of the reasons that you are alive. And the patient, of course, went back because who are you to believe?

The conflict that will mean that if you are successful in being able to help keep people out of hospitals and help keep people healthy enough that you are watching their health and improve, then many of the same tests and specialty visits and operations, there in Atlantic City, the number of operations these patients needed went down 25 percent, even as their health improved, their quality care improved and their service ratings went through the roof.

In Denmark, where a small set of these kinds of provisions were put in place, the number of hospitals have dropped by half over the last decade and a half. And for people here, imagining hospitals going out of business, imagining that if we are actually controlling costs, we are going to see some specialists start to think about going back into primary care, that would be the sign that we're actually succeeding in attacking the health care cost problem.

DAVIES: Well, Atul Gawande, it's been interesting. Thanks so much for joining us again.

Dr. GAWANDE: And thank you.

DAVIES: Atul Gawande is a surgeon at Brigham and Women's Hospital in Boston and associate professor at the Harvard School of Public Health, and a staff writer for The New Yorker. His piece in the current issue is called "The Hot Spotters."

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DAVIES: Coming up, we remember Sargent Shriver who died yesterday at the age of 95.

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