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Posted on 12. May 2011

Follow the Profit

By Kris McFalls

Physician-owned medical facilities are often criticized as an unethical way to raise profits and increase the cost of healthcare. Critics from public-owned facilities, government and insurance companies, cry foul saying physician-owned facilities are motivated by profit and, as a result, use their facilities to cherry pick the well-funded patients. The fact is, however, those same critics are often guilty of the same infractions. The difference is when the government and insurance companies do it; they take away patient choice, which some patients would argue leads to less competition, a lower quality of care and, in some cases, higher healthcare costs.

One example of this is of a patient with common variable immune deficiency (CVID) in the state of Michigan. Her insurance company gave her no choice but to attain her subcutaneous immune globulin (SCIG) product from its company-owned specialty pharmacy. Because of the lack of competition, the specialty pharmacy was not compelled to offer a charity care program or a way to pay down her debt on a monthly basis - as is common with privately owned specialty pharmacies. The patient soon accumulated $1,000 in debt. As a result, the specialty pharmacy refused to ship any more product until the debt was paid in full, even though at the time of the order, she had reached her yearly out-of-pocket maximum. That meant all future shipments would have been covered at 100 percent and the patient’s debt would not have increased.

The patient, then, was forced to stop her treatments. Not long after, she contracted a severe case of pneumonia requiring hospitalization. The same insurance company paid 100 percent of the $75,000 hospital bill. Regardless, even after discharge, the specialty pharmacy still refused to send the patient her SCIG. In order to receive treatment outside of the insurance-owned specialty pharmacy, this patient was forced to go back to the more expensive, clinic-based, intravenous immune globulin (IVIG) treatments. This allowed her to receive treatments at a facility that would work with her on the out-of-pocket costs. Once this patient returned to regular treatments, her health improved and she was able to avoid hospitalizations and severe infections.

In another example, the New York state attorney general accused insurance companies of defrauding patients by manipulating reimbursement rates. As it turned out, insurance companies owned the third-party companies that were tasked with determining usual and customary rates. Those rates were then used to determine how much patients were reimbursed for out-of-network charges. Insurance companies were accused of defrauding doctors and patients out of millions of dollars. Other states and the American Medical Association followed New York’s lead and filed lawsuits. Many cases have since been settled resulting in multi-million dollar settlements.

Politicians have their hand in the cookie jar as well. Healthcare reform and the advent of Medicare drug plans stimulated research that revealed many politicians owned stock in pharmaceutical companies that would benefit from legislation being considered. Therefore, if the companies profited from regulations, so did the politicians. Some politicians soothed their guilt by placing stocks into a blind trust so they didn’t know exactly which drug company stock they truly owned. Surely, voting for laws that would benefit themselves financially had nothing to do with the increased cost of healthcare.

There is no easy solution to any of these problems. At the end of the day, healthcare is still a business and there will always be healthcare decisions based on profits. It is also true that patients clearly benefit when there is competition in the marketplace. Maybe the solution lies more in the transparency of the details than the details themselves?

Categories: Need to Know

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