Posted by Bill Sandweg on 27 December 2018.
Health care costs go up and up. Hospital chains get larger and larger by purchasing the practices of local doctors. These two trends are related.
One of the main reasons hospitals purchase the practices of local doctors is to create a health care system which can meet all of the needs of the patient. This goal is thwarted if the patients are sent out of the system to obtain care which can be provided in the system. This where the concept of “leakage” comes in.
In the “good old days,” if there were ever such a thing, if you needed care that your primary care physician could not provide, he or she referred you to another doctor who could provide the care or testing you needed. There was no guarantee, of course, that the doctor to whom you were sent would be top notch and one of the best in town. You had to trust your primary care physician and hope for the best but at least you knew that the fix was not in. At least you knew that your doctor was not being forced to send you to a specific person. He or she could freely choose someone they thought was best for you. It is not that way any longer.
Today, your doctor may work for one of the hospital chains in town. The hospital chain keeps track of all of your doctor’s referrals. It knows when she makes a referral and to whom she sends her patients. If she sends a patient to a doctor outside the system, the hospital knows this. Patients sent outside the system are called “leakage.” Leakage is a bad thing as far as the hospital is concerned. Every patient sent outside the system is money lost to the system. It defeats the whole purpose of buying the doctor’s practice in the first place.
According to a story appearing in the Wall Street Journal, referrals by doctors who work for hospital-owned practices are more likely to be made to another hospital-owned doctor, are more likely to cost more than treatment by a doctor whose practice is not owned by a hospital, and are more likely to be to a higher-quality doctor.
If the doctor working for the hospital doesn’t make enough referrals to doctors in the hospital’s system, the hospital makes sure he or she knows about it. The hospital “encourages” the doctor to do better. Of course, the hospital chains deny that they pressure doctors for their own financial benefits. They claim they are only trying to keep quality up. It is amazing how trying to keep quality up just happens to put millions of dollars into the pockets of the hospital chains.
We need transparency in hospital charges and hospital business arrangements. This is our money that is being moved around the health care system and we deserve to get good quality for our money. Without transparency, this will be hard to do.