HEALTH NOTES

“LABORATORY TESTS CAN BE VERY PROFITABLE”

PART IV

As I stated at the beginning of this article, a medical practice is a business. As such, it is there to make a profit. Understanding that “Medicare reimbursement for procedures fell more than 50% over the five year period ending in 2002, according to a government study” we must understand that doctors are looking for other ways to make up for lost profits from cost containment and managed care.

So, doctors are looking at this technique for enhancing their overall profitability of their practice. Unfortunately, this leads to ethical questions. According to Dr. Clay Cockerell, a Dallas dermotopathologist, who serves as the President of the American Academy of Dermatology “the practice raises ethical issues.” He goes on to state that “is the physician billing for it the one looking at the slide? No. From that perspective, does it totally pass the smell test? Maybe not.”

According to the Wall Street Journal article, several studies have shown physicians are more likely to order services for patients if they have a financial incentive. A study performed in 1993 found that doctors who were allowed to bill for outside lab work ordered 28% more tests than those who were not.

These findings were concluded in a study performed the Center for Health Policy Studies. The study’s author, economist Zachary Dyckman, states that he would expect the results to be the same today, according to this article. He goes on to state that this extra 28% of testing “appears to be done exclusively to earn more revenue and increase profits.”

One doctor who paid $35 to an outside laboratory to perform an analysis on a biopsy of a patient and then billed $328 for that same procedure. He rationalizes this practice by stating “his deals with labs are appropriate and don’t cost patients anything.” While this doctor may be accurate in this statement that the patient is not being charged, he fails to understand the impact this practice has on health care costs in general. In a time when we are looking to contain health care costs, it is ludicrous to feel that just because the patient isn’t paying for it that it’s not having an impact on health care costs. Next week I will discuss ways to contain health care costs.