Last week, Health Affairs published a report on the MRI referral patterns of hospital-employed physicians. The title — “Hospital Employment Of Physicians In Massachusetts Is Associated With Inappropriate Diagnostic Imaging” — doesn’t leave room for much suspense. Not that the conclusions from the research are particularly shocking.
Revcycle Intelligence provided a good breakdown on the paper here, but among the highlights:
- MRI referral rates for patients with lower back pain, knee pain, or shoulder pain increased by 34% after a physician transitioned to hospital employment
- The odds of a patient receiving an inappropriate referral increased by 26%.
- Given the importance of imaging services to many hospitals’ margins, the study authors hypothesize that hospital policies account for the differing referral patterns.
Research like this shoots some holes into the now well-trod arguments for the benefits of consolidation and increased vertical integration in the industry. Vertical integration may promote better care quality and coordination and be better for patients in some cases, but clearly not all. If the MRI study is indicative of broader patterns, patients and the healthcare system at large are saddled with extra costs and patients themselves take on unnecessary burdens associated with healthcare services. The widespread opposition by some industry groups to policies like site-neutral payments that might help to mitigate the harm, if it doesn’t give up the game outright, makes at least for a bad look.
If more studies like this come out, it might provide an impetus for greater regulatory scrutiny. It’s hard for me to look at this and not draw comparisons to the tech industry and the new attention it has received but doesn’t want.
Robert Bork wrote The Antitrust Paradox in 1978, a hugely influential book that argued in part that consumer welfare (itself more a term of art by Bork than its plain language indicates) — not promotion or protection of competition — should be the driving factor in antitrust laws and government intervention. It has been cited in over a hundred cases and significantly reshaped antitrust law. It is one of the key arguments against breaking up companies like Amazon, Google, and Facebook: Amazon may be engaging in anti-competitive behaviors, but the result is lower prices and improved economic efficiency, and therefore, there isn’t consumer harm. (There is now more movement to change that, both at the state and federal level.) In contrast, these researchers show that consolidation in healthcare is definitely resulting in consumer harm in a very real sense: more services get ordered and prices increase. The pendulum’s been swinging in one direction for too long and we’re overdue for a correction.
The impact on competition should not be ignored either. Becker’s ran an article earlier in May that touched on the difficulties that private practices face as referral patterns change. Our blog post on the Price Transparency Initiative referenced a different study on MRI referral patterns which found that patients will generally take referrals regardless of price. So it would seem that one of the biggest levers competitors would normally be able to pull in a healthy market — price — isn’t likely to be effective. For anyone operating a practice and engaging in referral generation, this is the business environment we’re operating in and it can be a challenge. Maintaining relationships with referral networks and identifying other differentiators for your practice will be more important than ever.