I assumed that the example was illustrative only, and condensed. I have seen dialogue handled in a similar way, but where the narrative interlude covered somewhat more than a simple declaration. Obviously, in as simple an exchange as the example, the mode switch does disrupt the flow. Moreover, the preceding and following literal dialogue is devoid of tension or subtext (at least, in the absence of other context cues). So the real potential of switching mode is not exhibited in the example. It is also possible that the Billingham's book used mode switches for no good reason. I'm not familiar with his writing. I'll make a bold assertion that no writer makes good writing choices all the time; hopefully they make enough good choices to tip the scales the right way. But the point, as far as I'm concerned, is that mode switches can be used to advantage. Contrasts in style are generally effective in intensifying the impact of the opposing style choices. You may choose to never employ this particular contrast between conversational modes. But keep it in mind anyway. It never hurts to have a few tricks in reserve in your writing toolbox.
I'll narrate quotes instead of using quotation marks for a few reasons. Generally, to de-emphasize the importance of what was said (it's not too important that Mike is doing fine thanks for asking), or to emphasize the words of one character over another. Sometimes I even try to subjugate one character, in a sense, by taking away his voice. Maybe this author was doing something like that.
