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Follow the Money: Hospitals and Doctors Put Profits over Care

December 5, 2012

Brian L. Grant, MD

health reformI went to dinner the other night. I knew that the restaurant wanted to sell me food and I was hungry. I looked over the menu and selected the fish special based upon description and price.

I was perfectly fine with the server offering the dessert menu. The sweets looked delicious and the price was predictably high, but affordable if I were craving it. I declined that night. I went in knowing what I was going to get and aware of the price for value. I left satisfied.

I once hired an architect for a job. They did a fine job of designing the project. The plans produced were submitted to several contractors for a bid and we selected based upon price and reputation. All three knew they were competing so I assume that they sharpened their pencils in hopes of getting the job. Once the contractor was selected, the architect monitored performance. I knew the architect was acting in my interests. They were paid for their design work and had no economic stake in the contractor.

Now we come to health care. We have no menu and no price list. We buy based upon ignorance and often, someone else is paying the bill so our economic interest in the price of the item is often absent or minimal.  The providers and facilities have no reason to price reasonably since the customer gets whatever they offer without paying the real cost (which is borne by the rest of us who pay for the health care dinner of the next guy via our taxes and insurance premiums).

In the past, as with the architect, a doctor was ethically and financially independent from hospitals, medications and testing facilities. Now, as illustrated in this article from The New York Times, doctors in some cases have sold their practices to hospitals for an upfront payout and are now employees, expected to do as they are told by their new owners and managers. Sometimes this means admitting patients who don’t need admission, referring patients to doctors based upon criteria other than quality, over-testing, and over-treating. And these hospitals in many cases have jacked up their fees via decreased competition and other maneuvers. The buyers made a financial investment by their act and expect their purchase to maximize profit.

Kudos to these smart businessmen and women! They know how to extract money from society, get a good return on their investment, while generally doing nothing to enhance quality of care, and in some cases diminish care quality, while driving up costs. The person who should be most interested in preventing this – the patient –doesn’t feel qualified to refuse their doctor’s recommendation, and is not in a position to outsmart their doctor, whom they thought was working in their best interest, not on behalf of the hospitals and investors who own them.

Some of the doctors quoted in the article assume the patina of victimhood upon becoming employed. But each of them made a choice when they took a payout for the sale of their practice or chose to work for such systems under such conditions. They knew or should have known that selling their practice comes with strings. Fortunately, at least for now, most doctors still have choices – though exercising them may mean risk, including being fired or needing to work in another place. Nobody ever said doing the right thing is easy or pays the most.

Those who manage claims should be wary and aware of these trends. These new financial models are driving some of the care that they are being asked to pay for, and it is driving up the premiums for all insurance payers. And when employers refuse to play along with these increases, patients end up with higher deductibles and co-pays, as well as constricting networks they may obtain care from.

Patients need to know that a recommended admission or test may be for the health of the doctor or facility, not theirs. And they should know that when they don’t seek a competitive bid for care, they may be paying much more for the same procedure than they would be charged in a facility down the street or in a nearby city.  As reported earlier in MCNTalk, if the doctor’s office located in a hospital-based office facility, patients are often being charged an expensive and non-sensical facility fee, though no hospital services are needed or used.

Since patients seem to care little about these matters until it hits their pocketbook, it would seem that the only logical way to combat these abuses is for patients, doctors and facilities to be told by the payers that regardless of the fee charged, payment will be made at an externally imposed fee schedule, with the patient being responsible for the difference, or the facility being required to write-off the difference. And patients need to be told in advance whenever possible in no uncertain terms the reality of their financial risk and the alternatives available to them. Payers need to fight and win the PR battle that it is not them being unreasonable and cheap when they question a bill, but rather it is they who are looking out for the interests of patients and society by setting limits on financial misbehavior and exploitation.

Another course, off the table it would seem in the U.S., is a single-payer system such as Medicare from birth. as practiced in any number of industrialized nations with excellent health metrics. But political reality and/or lack of political courage has made this option not subject to serious discussion. Significant entrenched interests would be impacted, and the matter has been manipulated by a well-oiled and financed industry into a political and partisan football. Paradoxically, fiscally prudent and conservative reforms are labeled by those who claim to be conservative, as left-leaning and liberal.

So this writer will have no end of opportunity to point out ongoing abuses borne of a system that is guaranteed to escalate in its abuses due to the structural realities of a lack of market dynamics, under-informed or intimidated patients, and decreased competition via consolidation. Doctors are alternately necessary pawns in this process or willing and enthusiastic participants in the degradation of care and their profession.

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One Comment leave one →
  1. Dave Trotter MD permalink
    December 5, 2012 10:22 am

    Well written and very on-point; Crystallizes yet another example of ‘capitalism gone wild’. The healthcare system requires bold and quality ‘management’ by experts with professionalism and vision.
    Congrats on succinctly ‘telling it like it is’ Brian.
    DT MD

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