[This article has been revised and updated. An earlier version stated that hospital developer Alonzo Cantu had held a “fundraiser” for Houston Mayor Bill White. A more accurate term would have been “event.” We regret the imprecision.]
This summer’s national debate on health care reform has brought into focus the manifold factors that drive medical costs ever upward. Texas has not escaped scrutiny. The June 1 issue of the New Yorker featured a story headlined “ The Cost Conundrum” by Atul Gawande, who uncovered the astonishing fact that the costs of treating Medicare patients in McAllen are twice the national average. Gawande, a surgeon and associate professor at Harvard Medical School, concluded from an analysis of Medicare data that “the primary cause of McAllen’s extreme costs was, very simply, the across-the-board overuse of medicine.”
His article featured a long passage about Doctors Hospital at Renaissance, in Edinburg, highlighting its business model as a physician-owned facility: “It has a reputation (which it disclaims) for aggressively recruiting high-volume physicians to become investors and send patients there. Physicians who do so receive not only their fee for whatever service they provide but also a percentage of the hospital’s profits from the tests, surgery, or other care patients are given. (In 2007, its profits totaled thirty-four million dollars.)” He raised the question of whether this business model gives “physicians an unholy temptation to overorder.”
Since the publication of the story, the issue of potential conflicts posed by physician-owned health facilities has taken center stage in the national health care debate. The story has even been cited by President Obama as an example of how health care costs have spiraled out of control.
But it is not just doctors who are