HEALTH NOTES

“Laboratory Tests Can Be Very Profitable”

Well, here we go again. This week I will be presenting some information that will be eye opening, but unfortunately will be somewhat negative relative to the medical community in general.

After being involved in the medical profession for twenty years, I recognize the fact that individual practices are businesses. In order for a business to be successful, it must be profitable. However, I also recognize the fact that the purpose of a medical practice is to help patients. In that respect, it is important to attempt to some degree, for the practitioner to distance his or herself from the business aspect of the practice, particularly during patient hours.

I often tell my patients when they ask me questions regarding insurance issues that “I’m the wrong guy to be speaking to about that. My job is to get you better.” This is a difficult line to walk at times for all practitioners; however, as a professor of mine in Chiropractic college once said, “Take care of your patients and all else will fall into line.”

The reason I’m prefacing this article with these statements is that recently I was at a large local hospital while my wife was having some tests performed. As I walked through the foyer area, a newspaper article in the stand in front of the gift shop caught my eye. The article was in the September 30 edition of the Wall Street Journal. The title of the article was “Lucrative Operation: How Some Doctors Turn a $79 Profit From a $30 test.” The subtitle of the article was “Physician Groups Add Mark-up to Work Done by Others Despite Ethics Concerns.”

The article, written by David Armstrong, begins by saying the trial an individual from North Carolina had gone through, after being diagnosed with skin cancer and having a biopsy test indicate atypical “cells.” The biopsy test was performed by a laboratory in California. Her doctor, according to this article, stood to make nearly $200 profit on the test. After the trials that this patient went through during the course of her evaluation for skin cancer, she learned about “referral deals.” These are business deals set up between doctors and laboratories which can be very profitable to the doctors. Laboratory business in the United States is a 40 billion dollar per year industry.

The way these deals are set up is that the lab charges the doctor a discounted price for a test, say $30 for example, for a skin biopsy, according to this article. The doctor then bills the patient’s insurance company for a higher rate, $100 for example, giving the doctor a $70 profit for his billing practice.

As we know, health care costs are sky rocketing. Because of this, we have been exposed over the last twenty years to the concept of “managed care” and health maintenance organizations, for example, both implemented to cut health care costs.

Next week we will discuss more regarding managed care as a motivation for these laboratory practices.