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.