When Doctors are Owners, Surgery Goes Up

More and more physicians are owners in surgi-centers, imaging facilities and GI labs.  Some have labeled these ownerships as the "triple dip" because the doctor collects a professional fee as well as the facility profits and the investment value.  A study by John Hollingsworth, MD, a Robert Wood Johnson Clinical Scholar,  shows this creates a potential conflict of interest.  The study showed doctors that invested in outpatient surgery centers performed on average twice as many surgeries as doctors with no such financial stake.

The study looked at all patients in Florida who underwent 5 common procedures including cataract excision, colonoscopy, knee arthroscopy, myringotomy (placing tubes in the ear), and carpal tunnel release.  They compared surgery use among the owners and looked at before and after they acquired the ownership.  They also compared with physicians who didn't own a facility.

They found the physician investors operated on twice as many patients as the non-owners.  They also increased their surgeries after they became owners in the enterprise.

Dr. Hollingsworth reports that the number of surgery centers has increased nearly 50% over the last decade and physician investors is the big driver.  Physicians have a stake in 83% of these facilities.  The physicians who own surgi-centers say they provide better service, have improved room turn-over times, avoid the hospital bureaucracy and have more control over their practice lives.

Since surgery and procedures are large drivers of rising health costs, isn't it time to take a good look at these relationships?  I know doctors who make more on their facility investments than they do practicing medicine.  In California, hospitals are eager to partner with physicians in these investments because the hospitals know the business will leave them if they don't.  Fifty percent of something is better than 100% of nothing and the doctors control the patient care business.  But these centers can also cherry pick the healthiest patients and the easiest surgeries with the most profit margin.  Because they operate under different rules, they do not have to accept uninsured people or take Medicaid payments.  They use the local hospital for those surgeries.

The incentives seem pretty screwed up to me.

Reference: Health Affairs, Vol 29, No. 4, April 2010


Healthnut said…
Thanks for sharing! Indeed these are scary doctors.
lifestyleliving said…
This is pretty messed up! Isn't there a healthcare reform happening? One of my future goals is to have a Wellness Clinic and these are not the practices I would do. It seems immoral eh. Yeah, I would assume profits would be smaller, but at least I'd sleep better at night.
I agree that ownership begets utilization. The fee-for-service (FFS) system is under attack for similar reasons. Is strict salaried medicine truly the antidote as many advocate? While there are excesses, private practice and FFS still deliver a higher level of service to patients, in my experience. (I've been on salary and FFS in my career.) Call up a medical large organization with where all docs are on salary and then call a private practitioner, and see which one attends to your medical issue more expeditiously. I agree that financial conflicts that promote excessive care need to be curbed. But, income can also increase performance, as it does for many other occupations.
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