In the June 1, 2009 issue of The New Yorker, Atul Gawande has one of his usual fine articles about physicians and healthcare, this one about the influence of physicians on healthcare costs. McAllen, Texas has extremely high costs. El Paso (in the same state, though some hundreds of miles away) has relatively low costs. Physicians in McAllen order more tests and order more procedures.
And the higher costs translate, not into better outcomes, but into similar or slightly worse outcomes. After all, every procedure and every hospital stay increase risk. I think it's worth some effort to stay out the hospital. It's Dr. Stork vs. Dr. Log.
The Dartmouth Atlas has been studying this issue for years. Different areas have wildly different utilizations for various procedures. With utilization comes higher cost.
Gawande points out that neither single payer or consumer-based models are likely to save us. I agree that making someone pay a higher percentage of the cost of their emergency cardiac bypass isn't going to affect things at all, though do think a louder consumer cost signal has appeal.
But the real issue here is culture. Each area has its own physician culture. Physicians seem arrogant to the rest of us, but between themselves they are intensely conformist. The seek approval constantly. After all, think of those premeds at school. These are people who always want an A, and the way to get the A is the give the right answer. Like many complex professions, there is an extended time of apprenticeship, where they learn not only the business, but the culture and expectations. One doctor trains another.
There's also a lot of habit involved. Referral patterns tend not to vary. A solution used once will be used again. Drug company reps have always taken advantage of this. A drug prescribed once will tend to be prescribed by default for that condition. The day is just too busy, and the problems too various and complex, for a reevaluation of all the basic facts every time.
Note: this is not all doctors, and not all of the time. But we all tend to underestimate the power of our situation in our decision-making. Culture and habit are incredibly powerful. Changing a place like McAllen is not just a matter of changing some regulations. It means changing a culture. That can be quite a job.