Grand Junction’s Healthcare System

A model of low cost, high quality care

GRAND JUNCTION — This Western Colorado city of just over 53,000 delivers some of the best healthcare in the nation, at the lowest cost. And nearly everyone has health coverage.

Getting results like this across the nation could solve much of the nation’s healthcare problems, resulting in a healthier population, and saving $700 billion a year.

Grand Junction’s success gained notoriety when an article this summer in the New Yorker magazine focused on the opposite extreme: McAllen, Texas, where healthcare is ranked the worst in the country and the costs are nearly the highest. Grand Junction won a brief mention as an example of the other end of the spectrum.

Scientists seeking healthcare comparisons look to Medicare, the government health insurance program for the elderly, to find easily comparable statistics. 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. As a result, bevies of health-policy experts have been poking around Grand Junction to determine whether the system can be replicated. 

Yes, it can, say doctors, insurance executives and patients.

The will has to be there, though. That means community and insurers must put patient welfare first, well ahead of shareholder profits, they say.

In Mesa County, population 120,000 and where Grand Junction is the major city, doctors and insurers have focused on providing quality care to all. High quality has driven costs down, not up. 

Len Nichols, a health policy economist with the New America Foundation who favors healthcare reform, calls Grand Junction “a great example for the nation.”  He says providers here have found a way to stem “the natural impulses of excessive competition and the medical arms race.”

“They have an impressive combination of commitment to the community, plus incentives” to boost quality and keep costs down, Nichols says.

Fostering health and forestalling disease

At its essence, the Grand Junction system emphasizes primary care. Advocates believe it fosters health, and forestalls disease, saving skyrocketing costs when people wait too long to see a doctor.

That philosophy plays out from birth to death. The focus is on prevention of problems like premature births; on management of chronic issues so people don’t end up in the hospital; and on patient comfort when death is near and inevitable.

It’s the opposite of the system experienced by many Americans today, and advocated by some in the healthcare debate. They argue that if patients must pay significantly, they’ll go to the doctor less, and that will keep costs down.

There’s also serious peer review when doctors order unusual numbers of expensive tests and procedures. Proposals for such oversight in the congressional healthcare reform bill ran into significant opposition from people certain it would be conducted by government bureaucrats.

Phil Smith had to return home to Grand Junction to find a health care system that could ease his back pain with exercise -- when physicians elsewhere proposed killing a nerve or surgical fusing of bones in his spine.

In Grand Junction, real people like Phil Smith and Kay and Bob Fiegel have found better results choosing the less expensive solution

For Smith, it was physical therapy exercises that eased his back pain, not spine surgery. For the Fiegels, it was being able to make the decision to move their dying son Ryan from expensive hospital care meant to extend life, to the city’s elegant yet nonprofit hospice last spring. They say they found better care for both Ryan and themselves — without pressure from anything like the so-called “death panels” that some warned last summer could become commonplace under healthcare reform.

This is also a city where doctors don’t push patients into the most lucrative treatment for themselves. Doctors don’t get rich here. In fact, finding a $1 million-a-year salaried doctor in the area is as tough as finding an overused MRI machine, say the advocates of the system.

“Grand Junction has high-quality doctors who could make lots more money elsewhere, but they’ve chosen to live here and be an important part of the community,” says Kay Fiegel.

“They have an impressive combination of commitment to the community, plus incentives” to boost quality and keep costs down. – Health economist Len Nichols

Right time, right place

The day President Barack Obama signs health-care-reform legislation is not the day America’s problems disappear — certainly not the day that healthcare costs start plunging, or quality suddenly improves, say advocates of the Grand Junction model.

To blunt exploding medical costs, incentives have to be in the right place. And they aren’t now, and won’t be simply because Congress and the President agree on a bill, says Dr. Michael Pramenko, a family physician in Grand Junction. Local action is required as well.

“If there isn’t someone to say, ‘Hold on a second, is that test really needed? Does that procedure really need to happen?’ nothing is going to change,” says Pramenko, who is also the incoming president of the Colorado Medical Society. “The biggest economic stimulus America could have would be if we could control the inflationary curve of health care.

“Any business person will tell you that their biggest fear is the escalating cost of health care. They would rather have their money being reinvested in their businesses instead of in health insurance,” he said.

Cutting excess health costs, Pramenko says, would produce “a bigger economic boom than any federal stimulus.”

Steve ErkenBrack, CEO of the nonprofit Rocky Mountain Health Plans, which controls about 40 percent of the Mesa County market, agrees.

“What needs a lot more fleshing out is the focus on cost-effectiveness,” ErkenBrack said. “That is not in any kind of detail yet, and really can’t be in an Act of Congress. But it is absolutely the next step that has to happen, to declare victory down the road.”

The health of the entire community

So how does Mesa County do it?

The system has its roots 30 years ago, when nearly all the primary care doctors and most of the specialists formed an Independent Physicians Association. The goal was to be accountable for the health of the entire community, and the group sought a sympathetic insurer — and found it — in Rocky Mountain Health Plans.

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 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.

As a result, low-income patients on Medicaid are twice as likely to get preventive care — 88 percent to 40 percent — as in other systems in western Colorado, according to an RMHP study.

Another key component of Mesa County’s success at improving health while lowering costs can be found in its care for people with chronic diseases.  Caring for such illnesses — cancer, diabetes, heart disease, chronic lung disease and the like — currently accounts for more than 75 percent of all American health care spending, according to the Robert Woods Johnson Foundation.

Medicare spending over a two-year period for people with these chronic diseases averages $60,000 nationally, but is only $21,000 in Mesa County, according to the Dartmouth Atlas.

The authors of that study found the biggest variation was the amount of care — hospitalizations, use of intensive care and diagnostic tests. For example, in their last six months of life, people who died of a chronic disease spent an average of 6.5 days in a hospital in Grand Junction, compared to 19.4 days in Manhattan.

All that extra spending doesn’t buy longer life or better quality of life. In fact, those in regions with the highest costs have slightly shorter life expectancies and less satisfaction with their care than those in low-cost regions such as Grand Junction. “When it comes to managing chronic illnesses, greater use of hospitals and physician labor doesn’t result in additional health; the problem is waste and over-use in high-rate states, regions and hospitals,” the study found.

The study also determined that amount of care rose with the number of specialists and hospital beds in an area.

Dr. Risa Lavizzo-Mourey, president and CEO of the Robert Wood Johnson Foundation, says the report “demonstrates the need to overhaul the ways in which we care for Americans with chronic illness.”

“The extent of variation in Medicare spending, and the evidence that more care does not result in better outcomes, should lead us to ask if some chronically ill Americans are getting more care than they or their families actually want or need,”  Lavizzo-Mourey says. She emphasized that overutilization is a huge cost driver, not just for Medicare but for all of health care.

Hospice aids comfort, lowers cost

Grand Junction also cuts costs at the end of life.

In McAllen, Medicare patients spend more time in the hospital. Their doctors see them there more often, and diagnose them with more problems, according to Dr. Elliott Fisher of the Dartmouth Atlas study group. As a result, inpatient costs are double in the last two years of life: $45,000 in McAllen and $21,000 in Grand Junction.

That’s in large part because many patients move to hospice care in Grand Junction, both at home and in an elegant, Mission-style building with fireplaces, with the atmosphere of a luxury club and 13 beds in rooms the size of small apartments.

Typically when a cure is no longer possible, the hospice provides care to ease symptoms and pain. By emphasizing this palliative care over costly but futile care, the hospice found that patients actually live longer and in less pain. And that also cost far less money.

Of course, Medicare pays $3,000 more per patient for hospice in Grand Junction than in McAllen — but it saves $24,000 per patient on hospital care.

The community created Grand Junction’s nonprofit Hospice and Palliative Care Center of Western Colorado with $15 million it raised from grants, state money, corporations, businesses and individuals. An annual fundraiser nets about $1 million a year for operating costs. Each of the spacious, hardwood-floored hospice rooms is named for a sponsoring local business or health agency.

There, patients live an average of 22 days, versus the 12 days of the national average of people in hospice.

The starkest contrast is in home-health care for Medicare patients in the last two years of life. In Grand Junction, the costs average $390. In McAllen, it’s $4,565. Many of the home-health-care facilities are owned by doctors.

Prenatal care for all

Another key factor is a community commitment to guaranteeing full prenatal care to all pregnant women, whether they have insurance or not. Low-income women who qualify for Medicaid can find a regular doctor to take them.

As a result, Dr. Amy Bratteli sees pregnant women on Medicaid in her regular clinic. She can check them for problems like infections and pregnancy-related diabetes, which can cause damaging and expensive problems for newborns.

One chilly morning, Bratelli pushed on the belly of Ashley Unverferth to check the position of her soon-to-be born baby. As the physician placed a microphone on her belly, the sound of a pumping heart filled the room. “That’s the baby, a very healthy baby!” she told the 27-year-old mother of two.

Unverferth, who gets her health insurance from RMHP, had no idea that her doctor and her insurance premiums were combining to help ensure every pregnant woman in Grand Junction could get the same pre-natal care she was receiving. But she was pleased to hear it.

As result of this system, at Rocky Mountain Health Plans, 96 percent of the pregnant women eligible Medicaid received pre-natal care, compared to just 55 percent who were in other plans, according to a report last year on health outcomes in western Colorado.

County-wide, 98 percent of pregnant women receive some prenatal care. The result: Mesa County cuts Colorado’s 8.9 percent of babies born with low weight to 7.3 percent, saving a fortune on expensive intensive-care for newborn, according to a report from Colorado Department of Health.

Care for uninsured

Pregnant women and other patients who do not have incomes low enough to qualify for Medicaid often still don’t have money to pay for healthcare. Grand Junction takes care of these people in the Marillac Clinic.

Marillac receives more than $1 million of its $7.5 million annual budget from St. Mary’s Regional Hospital. It’s a great investment for the hospital, which is right next door to the clinic and which doesn’t have to pay for these patients to receive expensive non-emergency care in its Emergency Room. Instead, these patients are transferred to the clinic.

“Many of these patients wouldn’t be able to pay us in the emergency department,” says St. Mary’s CEO Bob Ladenburger. “So we don’t have that bad debt or charity care to write off.”

That literal proximity aids the collaboration that is key to the Grand Junction system, say doctors, nurses, and health officials. Not only are the hospital and Marillac adjacent, but a few blocks away, the hospice is across a parking lot from two of the city’s largest family physician practices.

It is the simple act of talking to one another that makes the Mesa County model work so well. “It’s kind of how we do things here,” says Terri Walter, a nurse who is senior vice president for quality at the Hospice and Palliative Care Center of Western Colorado. “Collaboration is comfortable here, nice and warm and cozy.”

Specialists vs. primary care

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, he said.

“Thinking about patients pays nothing to physicians, but doing to patients pays well — in most of the rest of America,” says West. Doctors “are paid too much for procedures — surgeries, radiology studies, chemotherapy, endoscopy and diagnostic tests — and far less for bedside and office care to patients.”

“We have just one cardiology group, 10 cardiologists in it,”  Ladenburger says. “They’re culturally conservative. They’ll do cardiac caths when they decided they’re needed,” but only when they’re needed.

The rules established by the physicians’ association and by RMHP “have led to better efficiency and better quality and certainly have kept prices down,”  he adds.

The fact that RMHP is a nonprofit is also key, he said. “In a shareholder-driven system, that money (saved) would have gone back to the shareholders instead.”

The constant peer review also is counter-intuitive for patients who want the most drastic treatment immediately.

Take back pain.

Some primary care physicians automatically refer a patient to a specialist or recommend an MRI. More expensive? Yes. Better medicine? Not usually, say advocates of the Grand Junction system.

Try some ice, lay off of it for a few days, try to lose a little weight.

If a patient needs medication — or if he or she suggests one recently seen in a TV ad — the primary care physicians first try to see if a generic can work at perhaps $5 a month rather than $60 for a brand-name medication.

Crucial to measuring quality and maximizing efficiency is a transparent look at all the data.

For that, Grand Junction has a region-wide electronic medical records system. “It allows us to see the data immediately from St. Mary’s (Hospital) or anywhere else. It means there is less repetition of tests, and it’s going to drive down health care costs over time,” Pramenko said.

It also means doctors’ peers can see what they are doing.

“At the end of the day, they can see that they may be giving 10 times as many MRIs as their peers,” says Rocky Mountain Health Plans CEO ErkenBrack. “Decisions should be made by the doctor and patient, period. But those decisions ought to be reviewed. Not in terms of Patient X — because there may be a good reason that any particular patient needs some treatment out of the norm — but in terms of practice patterns.”

In McAllen, many doctors turned out to be owners of the surgery centers, home health agencies, and testing facilities. Sending patients for more procedures even outside the office was lucrative.

In Grand Junction, Pramenko thinks RMHP’s dominant size has been essential — a contradiction for healthcare reformers who believe more competition is the answer.

“As it is, it’s hard to ignore what Rocky says,” Pramenko notes. “They are a big force. Fortunately for us, they are a friendly force.”

Not that there aren’t plenty of debates about how much specialty care is needed.

“It sounds like we all go tripping down the yellow brick road with no disputes, and that is not the case,” says ErkenBrack. “At the end of the day, it’s not easy to get buy-in from anybody.

“But we’re having the conversation — with the hospice, the home health people, everybody. It’s really a matter of looking at things and talking to each other. Saying, ‘This is what I need to make this work.’  And it’s also a matter of listening, to understand that other points of view have to be considered.”

Healthier populations cost less

One critic, healthcare blogger Daniel Gilden, calls the Grand Junction advantage an illusion. He says the area has lower costs primarily because it has much less serious chronic illness than residents of the flip side of the spectrum, McAllen.

Indeed, a color-coded map of U.S. obesity rates shows all of Colorado as having the fewest weight problems in the country.

“In Grand Junction, there are many fewer low-income Hispanics with combinations of diabetes and heart disease,” than in the Mexican border town of McAllen, Gilden says. “Years of exposure to environmental risk factors, poor diet and limited access to preventive care lead directly to high rates of chronic disease and high health care costs. The high cost of medical care for this population is a side effect of the life-long neglect in key areas related to health maintenance in aging populations.”

Darene Schroeder, a Grand Junction nurse who once worked in Texas, concurs that western Colorado residents are simply healthier. In Texas, “there was a lot of tuberculosis, including multi-drug resistant TB. There’s none here.”

The nurse says that the sickest patients leave the mountain town for specialist care in a big city, or easier breathing at sea level.

“If you are a fairly healthy person and don’t have specialty needs, the system works just fine here,” she says. “But if you have big issues, you are going to move, or you’re going to die.”

Family physician Pramenko concurs that Grand Junction’s population has fewer health problems, and comparisons to McAllen may not be completely fair. But Grand Junction leaders maintain the preventative and comprehensive care they give to almost everyone — including the poor — lowers the risks for high-cost diseases and the cost of caring for the cases they do have. Grand Junction also has lower costs per patient for home health services, the number of tests ordered and other big cost drivers, Pramenko says.

And Mesa County looks good when compared to other parts of Colorado that have similar low levels of obesity and chronic disease. “The numbers do bear out that Grand Junction is well below the average Colorado cost” even when risk factors are considered, Pramenko says.

Health policy economist Nichols say experts from Dartmouth and elsewhere believe that existing health and social factors explain more like 30 percent of the difference in cost, and nowhere near 100 percent.

“That is the first line of defense of providers in high use areas” — ‘My patients are sicker than they look to you’ — but it rarely holds up to sustained and careful analysis,” Nichols says.

FTC problems

Not everyone likes collaboration.

In 1997, the Federal Trade Commission sued the Mesa County physicians’ association, charging it with antitrust violations because it comprised 85 percent of the doctors in the county and was in a position to fix prices in a way to make it difficult for competing doctors and insurers. The doctors argued that their reviews of how medical equipment is used and their quality-assurance programs with RMHP amounted to a clinical integration that made their practices legal.

A year and $500,000 in legal bills later, the doctors won a compromise. The FTC dropped its demand that the 190-member association reduce its primary-care doctor membership, and the association agreed to an order governing its contracting practices, according to Family Practice Management magazine.

“Ultimately, the FTC recognized that, far from being a sinister conspiracy, the relationship between the (doctors and the insurer) had fostered, cost-effective, innovative health care,” the physicians’ attorney, Mark Horoschak, said at the time.

Low costs bring bonuses

The Grand Junction system also saves money because physicians work with Rocky Mountain Health Plans under an unusual system of payment and oversight. The insurer pays doctors about 20 percent less than they would receive for patients with  private insurance. That leaves money on the table at the end of the year.

Because RMHP is a nonprofit, that money doesn’t simply go back to shareholders or into the company’s coffers. Instead, it is a nice bundle that can be shared by the doctors, provided they’ve carved out efficiencies through the course of the year.

“To make sure they’ve done so, there are regularly scheduled peer reviews to see who is choosing quality over quantity, and who is choosing smart over more,” Pramenko says. “Some of that comes from the culture in this town — the belief that more isn’t necessarily better. And we don’t have too many specialists, whereas many big cities do.”

At least once a month, doctors get together and review the data. Doctors A, B and C ordered 7-8 MRIs last week — Doctor C ordered 40. In that scenario, Pramenko notes, you don’t want to be an outlier, not unless you can justify it by proving that you had better results for your patients. If you can’t justify it, then you just cost the system a superfluous 30 or so MRIs at an average cost of $1,400 — a total of $42,000.

ErkenBrack notes the group has been nonprofit from the outset. “The model we’ve created is a vehicle for everyone in the community to get health care,” he says. “We don’t dictate to doctors. But we do force people around the table to have that conversation.”

Why does that matter? It matters to U.S. taxpayers, who are paying about half of all medical costs in America, through government programs such as Medicaid, Medicare and indigent care programs.

And it matters to those with private insurance, whose premiums are some 33 percent higher because of all the charity care and unreimbursed care the system must shoulder.

And in Grand Junction, it also matters to the doctors themselves.

If the total number of MRIs is down where it should be, if most of the patients are prescribed generics, not brand-name drugs, if scores of other potential cost run-ups are handled gracefully, then the doctors in Grand Junction get nice, fat year-end bonuses.