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Physician Ownership of SurgiCenters and Operation Rates

By April 23, 2010Commentary

Although some physicians deny it, doctors are humans subject to the normal rules of economics and responding to financial incentives as would other people.  Research has suggested a number of physician behaviors associated with what could be perceived as income-maximizing activities.  Health Affairs publishes research in regard to the effects of physician ownership of ambulatory surgical centers.  (Health Affairs Article) The recent national health law banned physician ownership in new specialty hospitals, but did nothing in regard to the much larger number of surgicenters.  In 2007 there were over 5,000 of them and doctors had at least partial ownership in 83% of them.

The researchers examined physicians in Florida who had an ownership interest in a surgicenter versus those who did not, comparing their rates of surgeries.  Among other analyses, the researchers examined the relative complexity of cases done at the surgicenter versus hospital setting and rates of surgery before and after acquiring an ownership interest in a surgicenter.  Physician owners tended to operate on less complex patients at their surgicenters than did non-owners.  This tends to maximize the potential profits to the facility.  The physician owners also performed surgeries at a much higher rate than did non-owners.  And most tellingly, the physicians who became owners during the time period of the study increased their rates of surgery after acquiring the ownership interest as compared to before.

The results of this research are consistent with common sense.  Aside from the health spending implications, many patients are likely having operations they could do without, exposing them to all the risks associated with surgery.  The cure to this problem is obvious also:  ban physician ownership in surgicenters, along with other health care facilities or equipment to which they might refer patients.  But physicians, and their non-physician co-owners, are heavyweight political contributors and lobbyists, so don’t expect this sensible change any time soon.

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