Patient care vs. physicians' investments

The quality of medical care for a rising number of Americans is being threatened by the cozy financial relationship between some physicians and the medical facilities in which they invest, according to federal investigators and members of Congress. Questions about how good the medical care is, pricing, and whether unnecessary testing occurs at these medical facilities are multiplying with the number of facilities.

No firm answers to these questions yet exist, as investigators seek a clear nationwide picture of the current situation. They want to find out whether there is evidence that the quality of medical care provided by limited partnerships has in fact declined, because of a decrease in competition among medical facilities.

These facilities obtain their working capital in part by getting physicians to invest money in them. The doctors receive the prospect of a substantial annual return on investment; the actual amount depends, in part, on the profit of the facilities. The more patients the physicians refer to the facilities, and the more tests they order done, the higher the company's profit - and thus the physician-investors' dividend - is likely to be, congressional and other federal investigators say.

Now the federal government and Congress are trying to figure out ways to let the public gain the benefits of these physician-owned facilities, while siphoning off the disadvantages (Regulations planned by government, Page 4.)

``Clearly, the potential for abuse and unnecessary patient risk is great if corrective action is not taken,'' says Sen. John Heinz of Pennsylvania, the senior Republican member of the Senate Special Committee on Aging. ``With financial stakes this high, the temptation to allow dollars to drive medical decisions rather than patient need is great indeed,'' he adds.

Senator Heinz is speaking specifically about the close financial relationships between some opthalmologists (eye doctors) and opticians. But others say the same risks exist in other out-patient services, including laboratory testing and radiation therapy.

Unless limited partnerships are restricted by law or regulation, their numbers seem sure to soar, says Dr. Stephen Bandeian. ``Within five to 10 years, the great majority'' of medical services offered outside hospitals ``will be provided through these partnerships,'' says Dr. Bandeian, who drew up legislation for the House Subcommittee on Health that would have restricted such ventures. ``Your average doctor will be involved in multiple partnerships.''

Harvey Yampolsky, counsel to the inspector general of the Department of Health and Human Services (HHS), cites several possible problems with many limited partnerships that could directly affect the consumer. These include:

``Potential erosion of the quality of service,'' because fewer competitors are in the market.

``Potential increase in out of pocket expenses'' for the patient, who often has to foot at least some of the medical bill himself, because the recommended service is not necessary, or the provider is not the least expensive one available.

The ``gradual inflationary effect'' on health care costs inasmuch as limited partnerships are often able to lock in business and thus decrease competition.

More testing than is medically required, when the physician ``making the judgment call'' on whether to recommend a test ``is influenced by his financial interest as opposed to 100 percent the beneficiary's medical interest.''

Such overtesting may already be a problem. In 1984, Blue Cross/Blue Shield of Michigan found that physicians who had a financial interests in a laboratory referred twice as many patients for testing as those who had no financial stake.

Metpath, a laboratory which has been hurt by competition from limited partnerships, commissioned an independent research firm, Market Facts, to update the study in June 1988. Researchers found that doctors who had a financial ownership in a lab ordered 64 percent more tests than doctors who did not.

The people who run limited partnerships concede that some ventures do abuse the system, but chafe that all are being tarred with the same brush.

``The focus seems to be on the remunerative side for the physician,'' says Frank Kyle, president of Med Inc., which has put together nine, physician-owned radiology centers. ``Nobody seems to be talking much about the quality of service, the convenience, or the patient satisfaction,'' which, he says, are so high as to be ``off the charts.''

Even government watchdogs are careful not to squash all these ventures as they move to regulate them. ``You want to discourage limited partnerships from paying tremendous returns to physician-investors for referrals, driving everyone else out of business, and making tremendous profits at the expense of medicare,'' says Mr. Yamplosky of HHS. ``Yet it's the same structure that allows new technology to come into the area.''

Last of a series: Previous articles ran Dec. 7 and 8.