A Wake-Up Call For Bernie and Friends


Venezuela is imploding. Anyone paying attention to the economic disaster taking place in this socialist country could see this coming. As Americans, our concern should be for the increasing clamor of socialist Democrats who want to bring the same disaster to our country.

Mary Anastasia O’Grady, writing in The Wall Street Journal, says the democratically elected National Assembly President Juan Guaido took an oath to become Venezuela’s interim president last week, as prescribed by the country’s constitution. Within hours he was recognized by the U.S. and 20 other democracies, 11 in Latin America. Even the European Union has declared it will recognize Guaido as the rightful interim president if dictator Nicolas Maduro doesn’t agree to a new election by this weekend.

Maduro took over the presidency after the death of his socialist predecessor, dictator Hugo Chavez. Chavez introduced socialism into Venezuela in 1999, then stole, dominated, polarized and jailed anyone who disagreed. Despite the world’s largest oil reserves, the country has suffered economic collapse on an unprecedented scale.

I previously discussed this situation in an earlier post, A Tragic Lesson About Socialism. In that post six months ago the annualized rate of inflation was estimated by economist Steve Hanke at 112% in 2015, and 2,800% in 2017. For the first six months of 2018 it was rising at an annual rate of 65,000%! But the latest estimates by the International Monetary Fund now place that inflation rate at one million percent. That’s not an error – one million percent! 

The response of the citizens of Venezuela has been predictable. O’Grady says, “Not since the fall of the Soviet empire has a nation risen with such fury and determination to throw off the yoke of socialism. And not since then has Marxist misery been so clear for all the world to see. Venezuelans are experiencing what millions of Russians, Chinese, Cubans and countless others have suffered. Destitute and angry, they want it to end.”

Which brings us back to our own country. This very same week California Senator Kamala Harris announced her candidacy for the president of the U.S. and declared her support for the socialist agenda that includes Medicare For All (socialized medicine) and free education for all including college. She also continues to oppose border security and limitations on immigration.

These socialist ideas were once considered ignorant and naïve when espoused by a little-known Vermont Senator Bernie Sanders. But Sanders became a household name when he ran for president in 2016 and nearly beat Democratic front-runner Hillary Clinton. Today Sanders could be easily described as the “Father of American Socialism.”

Sanders’ influence has rubbed off not only on Harris but other Democratic presidential hopefuls such as Senators Elizabeth Warren, Corey Booker, and Kirsten Gillibrand. Perhaps no freshman Congresswoman has ever received more media attention than N.Y. Representative Alexandria Ocasio-Cortez (AOC) who is a Sanders’ acolyte. Are these people blind to what is happening in Venezuela?

Those who do not learn history are doomed to repeat it.”These are the words of Harvard professor George Santayana in 1905. Winston Churchill modified his words in a speech to the House of Commons in 1948 when he said, “Those who cannot remember the past are condemned to repeat it.” The tragic irony of our current situation is that these politicians don’t need to remember anything – they only need to be aware of what is happening in Venezuela as they speak!

Hospitals Pressure Doctors At Your Expense – Part II


In Part I of this series, I discussed how doctors in hospital-acquired practices are being pressured to refer their patients to the hospital for medical tests and procedures. The impact of this practice is higher medical costs for insurance and higher out-of-pocket costs for the patient. In Part II we’ll look at how widespread is this practice and how dramatically it impacts referral patterns.

Hospitals routinely rationalize the pressure to refer patients to them as necessary to provide the best care. SwedishAmerican Hospital said, “Patients have the final say in where they choose to receive care. We also believe that there is benefit to patients receiving ancillary services within our health system as it provides opportunities for enhance continuity of care.”

Trinity Health system justified their tracking of physician referrals by saying, “Referral tracking within our network helps us confirm that our providers are creating and optimizing opportunities for coordinated care.”

Phoebe Putney Health system responded by saying, “We do not use our referral tracking data to put pressure on our physicians to refer to their partners within our system. However, if an employed physician routinely refers patients outside of our group without good reasons to do so, then that physician is not demonstrating commitment to the best interest of the patients and may not fit well within our team of outstanding healthcare professionals.”

Doctors, unlike lawyers, do not get paid for making referrals. They have no incentive to refer someone except to be sure they receive the best care possible at the lowest reasonable cost. Only when hospitals put pressure on doctors to refer must the doctor consider issues unrelated to the best interests of the patient – despite the claims of these hospital systems.

How dramatic is the impact of hospital pressure on referrals?

The graphic below is quite impressive. It makes it very clear that referral patterns change when the physician is employed by the hospital.


Anna Wilde Mathews and Melanie Evans, writing in The Wall Street Journal, exposed these alterations of referral patterns by hospitals. They say federal rules generally block hospitals from directly tying physicians’ pay to referrals, because of worries that factors other than patient needs could impact physicians; decisions. Doctors and hospital officials said that hospitals make the goals clear in ways both subtle and overt.

Some hospitals have employment contracts that mandate doctors refer within their system, with a few exceptions required by law. They may also try to influence referrals by training sessions for the doctors’ staffs, since doctors often leave the final decision up to them.

Some hospitals have taken extreme measures to enforce doctor compliance. Southern Illinois Healthcare (SIH) has used employment contracts to restrict referrals. One contract viewed by these reporters said the doctor, “shall be required to refer all patients to an SIH facility.”

Documents from an antitrust case filed against SIH by a local surgery center showed the system going further. In a 2014 letter to doctors and managers of the SIH Medical Group, a SIH executive said the group “will no longer refer patients” to two surgeons because  “they regularly take patients” to a rival hospital to do procedures after being referred by SIH physicians.

Dr. Kevin Koth, one of the surgeons referred to in the letter, said, “I don’t conform to what the hospital wants, I do what’s best for the patient.” He said he typically did operations at whichever hospital could schedule the surgery soonest because that was better for the patients.

This issue hits remarkably close to home for me. My own hospital, Orlando Health, is mentioned in the same article. Orlando Health has more than doubled its physician employees since 2010 to more than 550 doctors and acquired local outpatient imaging centers in late 2014. (I am not one of those 550 doctors.)

When the primary care group affiliated with the hospital wasn’t utilizing the acquired imaging centers, they were approached by the hospital to find out why. Poor quality service and higher fees was the explanation. In response, the hospital imaging centers improved service and lowered fees – but only for that group’s referrals. For other physicians the fees remain higher.

The next time your doctor refers you for lab tests, imaging, or medical procedures, ask why he believes that’s the best place to go. You may not like the answer.

Hospitals Pressure Doctors At Your Expense – Part I


The world of medicine is changing. When I began my practice in 1984 the only doctors employed by the hospitals were radiologists and pathologists. Everyone else was a private practitioner.

In that arrangement, hospitals considered doctors their primary customers because the doctors determined where their patients would be treated. Hospital administrators understood they were in competition to attract doctor referrals so they treated the doctors well to earn their business.

Today, everything has changed and not necessarily for the better. A study by Avalere Health in 2016 found 42% of all doctors are now employed by hospitals. While the majority is still in privately-owned practices, this is a significant change.

Hospitals no longer look to private practitioners to fill their beds and their outpatient schedules. They expect that to come from the physicians they employ. They track the referral patterns of every physician and confront those who fail to refer consistently to their hospital.

Anna Wilde Mathews and Melanie Evans, writing in The Wall Street Journal, report on the Phoebe Putney Health System, based in Albany, Georgia. The doctors in the affiliated physician group receive regular reports breaking down their referrals to specialists or services. If the share of in-house business wasn’t viewed as adequate, administrators would press them to improve.

Doctors generally are more concerned with the quality of the service they can expect their patients to receive than the name of the hospital owner. Good patient experience after referral reflects well on them and leaves both patient and referring doctor happy. But hospital administrators are more concerned with their bottom line.

Hospitals refer to lost referrals as “leakage.” But efforts at “keepage” may mean higher costs for patients and the employers that insure them – and poorer quality results when doctors must refer to someone with a poorer reputation.

Health services are frequently more expensive when delivered in a hospital setting instead of in the doctor’s office. This is the motivation behind hospitals pressuring physicians to refer to them. This is also a major reason behind the rising cost of healthcare, which has now reached $3.5 Trillion per year according to the Centers for Medicare and Medicaid Services (CMS). The graphic below shows the cost of the service provided in a doctor’s office on the left and in the hospital on the right.

The impact of these differences is not just more money to the hospital – it is also more money out of the patient’s pocket. For a patient with employer-provided insurance, the average cost of a complicated drug administration – such as chemotherapy – was $612 when performed in hospital-affiliated facilities, and $247 in a doctor’s office in 2016.

A study this year by Yale University found that patients whose doctors worked for hospital systems were 27% more likely to get their MRIs at a hospital where their scans cost  $267 more on average – and about $90 of that extra expense was paid by the patient. (Even more is absorbed by the patient indirectly in higher premiums.)

Individual experiences can be even more dramatic. Jim Wood, a business executive in Illinois was referred to SwedishAmerican hospital for his annual lab tests in 2015 and the cost was $529. The next year the same tests were done at an independent lab and cost $57. He was sent for a shoulder MRI to the hospital and it cost $2,507 and when he compared this to a local imaging center the estimate for the same MRI was under $300, not including the doctor’s fee.

These dramatic differences can mean significant expense to the patient without necessarily providing higher quality. Is this practice wide spread and how dramatic is the shift of referrals when a hospital acquires a private physician practice?(The answers to these questions in Part II of this post next time.)