Doctors and Dollars

Hospitals may be using financial incentives to inflate 'care' to drive revenue

When Lynn McIntyre had lingering abdominal pain this summer that seemed to be getting worse over several weeks, she decided it was time to see a doctor near her home in Houston, Texas.

“I thought I had a severe bladder infection and went in thinking I would get an antibiotic or something and leave that day,” McIntyre, 54, told LifeZette. “Seventeen days later, I finally made it home.”

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It turns out McIntyre, who has a degree in exercise physiology from Texas A&M, did have a serious condition. She had diverticulitis, an inflammation in the colon that can cause perforations and, in her case, a bladder infection.

Surgery was necessary, but the overall experience left the career fitness director dizzy over the procedures that kept her in the hospital for so long.

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“I was over-examined and over-treated,” said McIntyre, recalling at least eight doctors who had a hand in her treatment. “There were so many different doctors covering my case, I can’t explain that. It’s going to be interesting to see what shows up when we get the bill.”

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McIntyre said her primary urologist and gastrointestinal surgeon are employed by the Houston-area hospital system where she was treated, underscoring a growing concern over medical conflicts of interest.

Critics say hospitals are paying private practitioners to direct patients to their facilities and possibly overprescribing treatment to drive revenue.

Are hospitals paying private practitioners to direct patients to their facilities and possibly overprescribing treatment to drive revenue? Several recent studies and high-profile court cases indicate that is indeed the case.

Researchers at Stanford University published findings in August that show a hospital’s ownership of a private practice “dramatically increases the probability” that patients under the care of those doctors choose the hospital that owns the practice.

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“As hospitals and physician practices consolidate, we need to pay attention to both the potential benefits of consolidation and the potential downsides,” Laurence Baker, a Stanford professor and lead researcher in the study, told LifeZette. “While larger, more integrated organizations may be able to improve quality, they need not necessarily do this, and our research suggests this is a concern worth taking seriously.”

The inference is patient care could be taking a back seat to profit motives of hospitals and the doctors they employ. Improper financial arrangements between hospitals and physicians are against federal law, and the government is cracking down.

Congress enacted the Stark Law in the early 1990s to limit doctors’ patient referrals to facilities in which they have a financial stake, either in compensation or ownership. The law is named for the sponsoring lawmaker, Congressman Pete Stark, D-Calif. The statute is applied when doctors are paid above fair-market value for their services, or when compensation is tied to patient referrals.

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In September , the North Broward Hospital District in South Florida paid $69.5 million to the federal government to resolve allegations it violated the Stark Law and the False Claims Act. The Department of Justice case was instigated by a physician-whistleblower who was recruited by the hospital system but turned down the offer when his lawyer advised him that the arrangement is against the law. The North Broward District was not required to admit any wrongdoing, and the whistleblower is entitled to more than $12 million of the settlement.

In similar cases this year, another Florida hospital group settled with the government for $85 million and a South Carolina health care system was ordered to pay $237 million after a jury trial.

“Improper financial rewards given to physicians in exchange for patient referrals corrupt medical decision-making and inflates health care costs,” special agent Shimon R. Richmond of the U.S. Department of Health and Human Services said in a government media release. “Our agency will continue to root out such behavior from our health care system.”

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