Physicians at first frustrated by declining incomes, then enabled by improvement in their market leverage, have made rational economic decisions to invest in a host of entrepreneurial activities, some of which could negatively impact patients, according to a report by researchers for the Center for Studying Health System Change (HSC).
The report, entitled "Financial Pressures Spur Physician Entrepreneurialism," recommends authorities take a second look at exemptions from Stark self-referral laws and antikickback exemptions afforded physician-owned facilities. In addition, the authors suggest financial incentives be realigned to protect patient access to care and more directly link payments to costs and quality outcomes.
"Doctors are very rational creatures," said Hoangmai Pham, M.D., an HSC senior health research and co-author of the study. "Their financial distress is real."
The report, published in the March/April issue of Health Affairs, used data from 270 interviews with healthcare leaders in 12 metropolitan areas between September 2002 and May 2003, as well as data on physician incomes and other financial measures.
"A common theme across markets was that harsh business realities had left physicians feeling financially beleaguered, forcing them to become more business oriented," the report said.
Another common theme was that while physicians of all stripes were being squeezed, primary-care physicians had little recourse to do anything about it, while specialists had better access to revenue-enhancing opportunities such as investments in ambulatory surgery centers, specialty hospitals, scanning centers and joint ventures with hospitals.
While most physicians remained in public programs, such as Medicare and Medicaid, many were shunning other community-oriented activities such as hospital call (or accepting call only if paid), refusing to accept new patients admitted through emergency departments due to malpractice liability concerns and avoiding inpatient care to maintain office patient volumes.
The report also notes a rise in the volumes of certain services in which physician-owned enterprises have played a prominent role.
"It's a given that the volume of imaging services in particular has spiked," Pham said. The question unanswered -- at least definitively -- by the report is what caused the rise.
Physicians and hospitals argue that improved access to care, marketing efforts and consumer awareness all could combine to raise utilization. But the report's authors also suspect the profit motive might be driving it as well.
"Supplier-induced demand has been documented before, and it looked a lot like this," Pham said.
"More generally," the report said, "escalating use could be a sign that payments are relatively too high for some services and inadvertently creating financial incentives that skew care delivery."
Further, neither hospitals nor health plans have been effective in checking physicians' entrepreneurial activities.
"Only a few plans (for example, in Seattle) were contemplating profiling physicians or group practices on referral volumes for ancillary services," the report said. Meanwhile, "local hospitals did not hinder it," although the report was based on a survey period before the recent round of economic credentialing actions by competing hospitals taken against more than two dozen physician entrepreneurs in Ohio, Idaho and Arkansas.
Joining Pham in preparing the report were Kelly Devers, formerly with HSC, now associate professor in the department of health administration at Virginia Commonwealth University in Richmond; and Robert Berenson, senior fellow at the Urban Institute in Washington, D.C.