Post #13 A Conflict of Interest

Recently, one of my Urology friends confided in me about his personal angst over a proposition he had received to invest in a radiation treatment center. The root of the angst was not financial; he was confident that at the very least he would not lose his initial investment. Rather, his internal conflict stemmed from a 4th century oath that all physician's swear to - the Hippocratic Oath.

In some urology oncological cases, radiation therapy is considered by some the standard of care (prostate particularly). However, it is not always the best option, as there are other modalities to care for tumors, such as chemotherapy, surgery, hormone therapy, radioactive seed implants and watchful waiting. As part of his routine practice, he utilizes radiation therapy for particular tumors; and currently aside from his initial diagnosis and management of the tumor, he does not financially benefit from any referrals he makes when he sends his patients for radiation.

His concern is simple and honest: Would he lean ever so slightly towards utilizing radiation therapy greater if his pocketbook were to gain from every new referral? This question was addressed in more depth in an article in a December 1, 2006 New York Times article titled, "Profit and Questions on Prostate Cancer Therapy."

It is a question that the U.S. government addressed in 1989. Stark law, actually three separate provisions, governs physician self-referral for Medicare and Medicaid patients. The law is named for United States Congressman Pete Stark, who sponsored the initial bill.

However, since the law has been passed amendments have been made to work around the law provided certain conditions are met.* Critics of the law contend that while problems exist, they are not widespread. Further, these observers note that, in many cases, physician investors are responding to a demonstrated need which would otherwise not be met, particularly in a medically under served area.

Per the Dept. of Health & Human Services Website:
"Concern about the ethical risks inherent in physician self-referral dates back at least to a 1986 Institute of Medicine study. A 1989 HHS Inspector General study documented that physicians who owned or invested in independent clinical laboratories referred Medicare patients for 45 percent more laboratory services than did physicians who did not have such financial interests."

45 PERCENT MORE?!?

For those wanting to read which services are exactly governed by Stark law, I posted an additional excerpt from the website at the bottom of this blog.**

Obviously, in pediatrics, the potential financial gain from self-referrals is far less lucrative than those made in a surgical subspecialty. Nonetheless, even as I listened to my friend's story, I could empathize. As honorable as I'd like to think I am, if I stood to financially gain from ordering x-rays and lab work - especially if I had money already invested in a machine - I believe that I would probably order more tests to, at the very least, recoup the costs of the machine.

This is one reason my practice has resisted purchasing our own blood work machine and x-ray machine. (Prohibitive entry costs are another reason.) Certainly, it could improve turn around time on specific tests and possibly (but likely not) improve patient care. However, in my personal experience, I have seen medical doctors aggressively utilize x-rays and labwork far more then I thought clinically necessary when there was a "financial kickback" woven into the infrastructure of their practice - as the Institute of Medicine Study cited above exemplifies.

The cost is not limited to only finances either. If children are receiving x-rays that may not have been ordered otherwise, they are receiving unnecessary radiation in addition to the small risk of detecting incidental findings that may set off a battery of additional exams (and possibly more radiation) only to discover that everything is normal; slightly akin to opening up a small medical Pandora's box. Not to mention the pain and fear needles and claustrophobic exams induce in young children.

I 100% advocate the use of x-rays and labwork, and utilize both regularly in my own office-without any financial gain whatsoever. However, in my regular day to day flow, I resort to tests only when I am on the fence about a potentially important diagnosis that requires additional insight.

Luckily for me, I am paid mostly to think and counsel. I believe that surgeons have an inherent conflict of interest in their everyday occupation. The fact is they will (in general) make more money if they perform more surgical procedures.

Levitt and Dubner write in their book Freakonomics, "In a medical study, it turned out that obstetricians in areas with declining birth rates are much more likely to perform cesarean-section deliveries than obstetrician in growing areas-suggesting that, when business is tough, doctors try to ring up more expensive procedures."

Ultimately, my friend declined to partake in the radiation treatment venture; a decision he credited to his mores and faith. The truth is even the best of doctors can fall prey to the mighty dollar no matter how straight our moral compass. It is this author's opinion that the best solution to avoiding these conflicts of interest is to steer clear of them to begin with.

*From Wikipedia regarding self-referrals:
However the exceptions designed to allow necessary testing in physicians offices have been exploited to largely nullify the intent of the law. In particular, the in-office exception, which allows testing on equipment in the physicians office, has resulted in many physicians purchasing high-tech and expensive equipment such as CT scanners, MR scanners, and Nuclear Scanners for their own offices. Such purchases were not foreseen at the time that the laws were written.

The incentive for this practice is in large part the result of rapidly declining reimbursements for what has been termed “cognitive” physician care, i.e. the time spent talking to a patient and determining what course of diagnostic testing or treatment is best for that patient. Many clinical physicians feel that in order to have a financially viable practice, it is necessary to have income streams derived from patient testing.

The risk to the physician-owner of such a venture is minimal, since the physician-owner has it in his power to increase the volume of scans to any point necessary to insure profitability.

Defense of the practice of self referral is often rationalized and cloaked in a single word, "convenience". The self-referring physician claims that he or she performs the examination in the office strictly for the convenience of the patient. This is the primary explanation for self referral. However, the convenience argument does not justify unnecessary exams, increasing medical costs to society, or the absence of peer-reviewed quality imaging performed for the sake of profit. Often, the patient cannot be seen by the physician on the same day the study is performed, negating the argument.

**From the Dept. of Health & Human Services concerning tests covered under Stark law:
"Limits on self-referral were first enacted into law as part of the Omnibus Budget Reconciliation Act of 1989. The law took effect January 1, 1992. It bars referral of Medicare patients to clinical laboratories by physicians who have, or whose family members have, a financial interest in those laboratories. The Omnibus Reconciliation Act of 1993 expanded the scope of the ban on self-referral to 10 additional designated health services, including:

physical therapy;
occupational therapy;
radiology services;
radiation therapy services and supplies;
durable medical equipment and supplies;
parenteral and enteral nutrients, equipment and supplies;
orthotics, prosthetics, and prosthetic devices and supplies;
home health services;
outpatient prescription drugs; and
inpatient and outpatient hospital services."