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Exclusive: Ownership Impacts Surgical Decisions

Tue, 08/31/2010 - 6:49am

Orthopedic surgeons who have an ownership interest in a specialty hospital or ambulatory surgery center are more likely to schedule patients for procedures, a study published in the August issue of Archives of Surgery showed.

Patients of these doctor-owners were significantly more likely to have carpal tunnel surgery, rotator cuff repair or arthroscopic knee surgery than patients whose physicians didn't have an ownership interest in an outpatient facility, according to Jean M. Mitchell, PhD, of Georgetown University in Washington.

“With few exceptions ... frequency of use for each of the orthopedic procedures examined was significantly higher for physician owners compared with physician non-owners,” she wrote. The number of physician-owned specialty hospitals and ambulatory surgery centers has increased in the U.S. since 2000. Federal law bans physicians from referring Medicare and Medicaid patients to centers that the physician has an ownership interest in, and states have similar laws for privately-insured patients.

But the rules don't apply to “whole hospitals”, as specialty facilities are called, or to ambulatory surgery centers, Mitchell wrote. And little is known about the effect of financial incentives on the frequency of outpatient surgery. So Mitchell assessed five years of claims data from a large private insurer in Idaho. She chose Idaho partially because it has almost equal numbers of physician-owned ambulatory surgery centers and competing general hospitals, along with four physician-owned specialty hospitals. Idaho also has no state certificate-of-need laws and has favorable reimbursement rates because of the absence of managed care plans.

For the following procedures, the differences were:

  • Carpal tunnel repair, 54 percent to 129 percent higher during the five-year period.
  • Rotator cuff repair, 33 percent to 100 percent higher.
  • Arthroscopic surgery, 27 percent to 78 percent higher.
  • There were no differences in rotator cuff repair in 2003 and 2004, whether the patient's physician owned a center or not.
  • Similarly, there were no differences among those who had arthroscopic surgery of the knee in 2003. That pattern started to change in 2004 and reached its peak in 2005, when the difference was 13 percentage points between groups.
  • It started to fall again in 2006-2007, although rates were still significantly different.

Mitchell feels that the findings “clearly suggest that financial incentives linked to ownership of specialty hospitals or ambulatory surgery centers influence physicians' practice patterns, and should be of concern to federal and state legislators, third-party payers, employers, and patients. The increased utilization that characterizes physician self-referral arrangements will continue to lead to higher health insurance premiums, which, in turn, are likely to result in more uninsured and underinsured persons.”

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