Physician, cut thy costs - medical providers are considering taking part in the cost cutting battle - includes related information on physician specialization, American College of Physician's reform criteria, and worker's compensation - Cover Story

Business & Health, June, 1991 by M. Mary Conroy

It's difficult to quarrel with the use of technology, since technological advances can save both money and lives. A joint report issued in December, 1990, by AMA's Council on Medical Service and Council on Scientific Affairs entitled "Technology Assessment in Medicine," notes that "extracorporeal shock wave lithotripsy will decrease Medicare costs associated with the treatment of kidney and urethral stones by $16.2 million in 1991."

While MRI machines, lasers, and other technological breakthroughs have worked wonders, there is no question that the technology is sometimes overused. But not everyone agrees that it's the patients who are responsible for the overuse. When it comes to referral for laboratory procedures or outpatient tests, some critics say rising costs are the fault of the doctors, especially those who have a financial interest in a particular lab or outpatient facility.

Preliminary data from a recent study performed by Florida State University identified 5,166 physician owners of various health care entities, including imaging centers, ambulatory surgical facilities, and laboratories. Of those physician-owners, 85 percent are qualified to make referrals to the facilities in which they have an interest, the study reports. "The study also shows that physicians with ownership interests order more tests," notes a staffer in the office of Rep. Pete Stark (D-Calif.). "If that's how doctors are holding down costs, God help us."

In 1989, Stark was instrumental in passing legislation banning physician ownership in medical laboratories to which doctors might refer their own patients. He is now considering expanding the law to include all other health care entities.

The malpractice morass

The high cost of malpractice insurance and malpractice-related lawsuits are yet other factors thought to contribute to rising health care costs. According to the AMA, physicians pay $5 billion to $6 billion per year in malpractice insurance premiums alone; payers spend another $12 billion to $14 billion on "defensive medicine"-tests or other procedures done primarily to protect providers in case of a malpractice suit.

To stem these costs, the AMA is offering a model program which has three main features: 1) taking claims to arbitration instead of to court, 2) putting a cap on the amount of non-economic damages that can be won, and 3) combining complaint filing and provider discipline into a single office. This last feature "would help us notice outliners more quickly," says AMA spokesman James Stacey.

The AMA also supports a bill proposed by Sen. Orrin Hatch (R-Utah), which would award grants to states that are trying to determine ways to handle malpractice claims outside the regular court system. The bill, called the "Ensuring Access Through Medical Liability Reform Act," would also establish a risk retention group to provide liability protection for providers serving community and migrant health centers. State licensing and disciplinary boards would be strengthened under the proposal, enabling them to provide "quick, remedial, and punitive action," according to Hatch.