You go see Doctor Ron Dalyappel about some pain in your wrist. He recommends that you go to a sports medicine clinic run by a Doctor Maureen Tennyshews. But Doctor Dalyappel didn’t tell you that Doctor Tennyshews was his sister.
Should you care?
The U.S. Government Accountability Office thinks you should. Since 2012, the agency has focused four reports on the high costs of what is known as physician self-referral – when physicians send patients to places where they or a family member have a financial stake. The reports say that such MDs are following their own financial interest – not necessarily the best interest of their patients. And they say this trend is driving up healthcare costs and potentially putting patients at risk from unnecessary services.
The reports are not as easy to find, so here are the links:
You can read more than 200 pages of details, and you should. A good start, though, is to read the recent commentary in JAMA by two health care experts who know a lot about health care costs and quality: Dr. Eli Adashi of the Warrant Alpert Medical School; Dr. Bob Kocher of the Venrock Venture Capital firm; Schaeffer Center for Health Policy and Economics.
The reason there is still debate and no clear-cut law banning or expressly allowing self-referral, is because of loopholes in federal laws and the absence of state laws in many cases.
The GAO reports examined Medicare data from 2004 to 2010. Here are three key findings:
1. Self-referrals are costing taxpayers a bundle and posing serious risks to patients. In 2010 alone in merely one healthcare service – advanced imaging – MDs who self-referred “likely made 400,000 more referrals, than if they were not self-referring.” The cost of those additional referrals to Medicare? $109,000,000. “To the extent these additional referrals were unnecessary, they posed unacceptable risks, particularly in the case of CT scans, which have been linked to an increased risk of cancer.”
2. The pace of doctors referring patients to places where they have a financial stake is increasing more quickly than the old-fashioned kind of referral to an independent health care provider. The GAO found “the number of self-referred MRI services increased over this period by more than 80%, compared with an increase of 12% for non-self-referred MRI services.”
And doctors who self-refer tend to recommend extra care more frequently. If doctors have a stake in a MRI service, they recommend it about twice as frequently as providers who do not self-refer. The GAO reported that its analysis suggests “that financial incentives for self-referring providers were likely a major factor driving the increase in referrals.”
3. Once a doctor starts to self-refer patients, they ramp up quickly. The GAO looked at physicians treating prostate cancer patients and how many of those patients they referred to Intensity-Modulated Radiation Therapy. When doctors did not have a financial stake in IMRT, they referred fewer patients – about 37%. When they switched, that fraction grew to 54%.
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We sincerely thank investigative reporter William Heisel for his excellent research,