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What!?! Physicians Respond to Economic Incentives?

By April 20, 2016Commentary

Actually, I think even most consumers now understand that clinicians’ treatment decisions may be influenced by their economic interests.  A National Bureau of Economic Research paper provides the latest evidence for this phenomenon.  (NBER Paper)   There has been general research suggesting, for example, that physician ownership of certain treatment sites or modalities may increase inappropriate use.  One uncertainty is always what the optimal level of use is for the best patient outcomes.  The researchers used an example of a procedure, surgery for knee osteoarthritis, that research had clearly demonstrated was inappropriate and did not improve outcomes and compared decay rates for use of this procedure by physicians that an interest in the surgery centers where the procedure was done versus those physicians who did not.  They also looked at rates of shoulder surgeries, to test whether some other factor may have affected use of both surgeries.  The data source was all such surgeries in Florida, for the period 1998 to 2010, covering before and after the research finding lack of value in the procedure was published.

Physicians get paid a fee for the procedure no matter where they do it, but those who have an ownership interest in the facility where the surgery was performed also get a cut of the facility fee that accompanies the procedure fee.  So it seems pretty obvious that doctors who have such an ownership interest might have done more of the procedures in the first place and kept doing them after the research showed the knee surgery was ineffective.  The overall volume of knee procedures declined following the research, particularly at hospitals.  The overall volume of shoulder procedures did not, suggesting that there was no independent factor causing a decline in both surgery procedures.  And of course, the data does indicate that physicians with an ownership in a surgicenter had a much slower rate of decline in use of the procedure than did physicians operating at a hospital.  The surgeons with facility ownership also had faster declining rates for Medicare patients that for private insurance members, indicating that they may have been afraid of Medicare fraud and abuse investigations and also that they would lose even more money if they stopped doing the surgery on private patients, where they were likely paid much more than Medicare pays.

From the physician ethics perspective, what is really disgraceful about this is that the doctors doing these knee surgeries had to have observed, even before the research confirmed it, that it did not result in better outcomes for their patients, and they just went right on doing the surgery and collecting the money.

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