Financial incentives affect surgical decisions

NEW YORK (Reuters Health) - Your odds of going under the knife may depend on whether or not your orthopedic surgeon has a financial stake in your treatment center, suggests a new study.

Patients receiving care for their wrist, rotator cuff or knee from a provider with ownership in the facility were up to twice as likely to have surgery compared to those treated by non-owners.

“It is far more lucrative for providers to do surgery than recommend physical therapy,” Jean Mitchell of Georgetown University’s Public Policy Institute in Washington, D.C., told Reuters Health.

“The physician is doubly-motivated to perform the procedure. Not only do they profit from professional fees, but also receive residual claim of profits,” said Mitchell.

Federal law currently bans physicians from referring Medicare and Medicaid patients to centers in which the physician has an ownership interest. Half the states have similar laws. But the rules don’t apply to specialty facilities or ambulatory surgery centers, the numbers of which have been on the rise across the country.

While earlier studies have highlighted a rise in the use of procedures following the opening of a new physician-owned specialty center, little was known about the effect of financial incentives on outpatient surgery.

So Mitchell looked at five years’ worth of insurance claims data from the state of Idaho, dating between 2003 and 2007. The state was an obvious choice due to its nearly equal numbers of physician-owned and competing general hospitals, as well as four physician-owned hospitals.

After adjusting for age and sex, the likelihood of undergoing carpal tunnel repair for those treated by physician owners was 54 to 129 percent higher, rotator cuff repair 33 to 100 percent higher and arthroscopic knee surgery 27 to 78 percent higher, compared to those treated by a non-owner, Mitchell reports in the Archives of Surgery.

“There may be alternative ways to be treated, but the patient is not in a situation to judge,” Mitchell said. “We don’t know whether we need the procedure or surgery, and we rely on the physician to act as our agent. It’s a conflict of interest.”

Of course, Mitchell admits that some of these surgeries could have been beneficial, which she was unable to determine.

In response to a request, the American Medical Association (AMA) declined to comment directly on the paper, but said its policy “is to support and encourage competition between and among health facilities as a means of promoting the delivery of high-quality, cost-effective health care.”

In an email to Reuters Health, Stuart Guterman, of the Washington D.C.-based Commonwealth Fund, said: “Dr. Mitchell’s results certainly strengthen the argument that the current fee-for-service payment system -- in which physicians are paid for performing more services, tests and procedures, regardless of their appropriateness -- leads to decision-making that may not be in the best interests of patients.”

The Commonwealth Fund is a nonprofit fund that conducts research into healthcare performance and promotes changes in the U.S. health system.

Guterman noted that the new health reform law contains some provisions that would provide more of an emphasis on coordination of care, as well as the measurement of and rewards for appropriate care, rather than more care.

Mitchell added: “Unless we get a reign on controlling utilization, we’ll never get a reign on health care spending.”

SOURCE: Archives of Surgery, August 2010.