Cash Cow

Wednesday, February 15, 2012 | 0

Are medical treatment recommendations sometimes driven by profit motive?

In my whole career I've met very few injured workers who expressed concern that the treatment recommendations of their doctor were influenced by physician income considerations.

Americans tend to trust their doctors. Some of us grew up watching Dr. Kildare, Ben Casey, or the MASH doctors. Others cut their teeth on ER or General Hospital.

Nothing pisses off an injured worker as much as having an outside, non-examining utilization reviewer doctor challenge the recommendations of their doctor.

But the reality is that sometimes medicine and economics are intertwined.

Just as insurers want to limit costs, there are some doctors who are happy to push procedures and tests for profit.

In a prior post, "Upcoding", I noted recent investigative reporting by California Watch that documented unusually high rates of billings for "cardiac failure" in some California hospitals:

So it was no surprise to see today's article in the Wall Street Journal which documents high rates of spinal surgery procedures in some California hospitals. The article, "In Small California Hospitals, the Marketing of Back Surgery", was written by John Carreyrou, Tom McGinty and Joel Millman.

The article focuses on spinal surgery at Tri-City Regional Medical Center in the city of Hawaiian Gardens which is in southeast Los Angeles County near Long Beach.

According to the Wall Street Journal investigative reporters:

"For an operation known as spinal fusion, which joins two or more vertebrae, the small hospital billed workers' compensation insurers $65 million in 2010, up from less than $3 million three years earlier, state hospital discharge data show. Helping spur the business was Paul Richard Randall, a consultant to whom Tri-City has paid millions of dollars in marketing fees. According to people familiar with his role, it was twofold: bringing surgery cases to the hospital by recruiting surgeons to operate there, and supplying metal implants for the surgeries through distributorships he owned."

The article notes that Randall has been the subject of a federal investigation although charges have apparently not been filed nor have illegal acts been proven.

According to the Journal, many small hospitals are doing lots of workers' comp spinal surgeries, noting that "California employers paid $7.1 billion in insurance premiums to cover their workers' compensation liability in 2010. Spinal-fusion surgery is a growing part of the care these premiums pay for. It accounted for 40% of inpatient hospital charges to the state workers' compensation system in 2010, up from 30% in 2001, a Journal analysis of hospital discharge data shows."

Hospitals that did a large amount of spinal surgeries included university-based hospitals such as University of California, San Francisco; well known treatment centers such as Cedars Sinai and Scripps La Jolla; but also a number of small hospitals around the state.

While it would be unfair to assume that some of the hospitals mentioned in the article are encouraging spinal surgery cases as a "cash cow", the article raises a number of questions worthy of further looks by policymakers.

Spinal hardware costs have already been addressed in a Rand study prepared for the Commission on Health and Safety and Workers' Compensation, "Payment for Hardware Used in Complex Spinal Procedures Under California's Official Medical Fee Schedule", by Barbara O. Wynn and Giacomo Bergamo:

Julius Young is an applicants' attorney for Boxer & Gerson in Oakland. This column was reprinted with his permission from his Workers' Comp Zone blog.