Physician-owned surgery centers come under researchers' scrutiny

Ambulatory surgical centers are becoming the dominant setting for many surgeries, particularly those affecting injured workers. While these facilities may be more efficient and cost effective than traditional hospital outpatient departments, researchers question whether financial incentives are resulting in unnecessary surgeries and increased costs to the workers' comp system.

There has been substantial growth in ASCs and the number of physicians who own them. There were 2,200 ASCs nationwide in 1996, and 5,360 by 2009, of which 83 percent to 88 percent were owned by physicians.

"As payers limit price increases for physician services, the physicians look for other avenues to supplement their income," said Richard Victor, executive director of the Workers Compensation Research Institute. "Ownership of surgery centers and MRI facilities as well as physician dispensing of prescription drugs have become much more common."

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Payers have encouraged the use of lower cost ASCs. However, there are increasing concerns about potential conflicts of interest that may influence treatment decisions and be inconsistent with high priority national goals of containing the rising costs of medical care while maintaining quality care.

A WCRI study looked at 941 Florida orthopedic surgeons who did knee, shoulder, and wrist arthroscopies and carpal tunnel release surgeries between 1997 and 2004, including those who ultimately became owners of ASCs. "Orthopedic surgeons who owned ASCs did between 52 and 111 percent more surgeries than orthopedic surgeons who were not owners," the research shows.

The researchers cited the following reasons:

Entrepreneurial recruitment effect.This accounted for one- to three-quarters of the average owner/nonowner differential in surgeries performed. ASCs are more likely to recruit high volume surgeons to become owners, the researchers said. "Similarly, high volume surgeons are more likely to become owners of surgery centers." They noted surgery centers are often more efficient than hospital outpatient departments, allowing physicians to schedule and perform more surgeries.
Financial incentives. Physicians who became ASC owners increased their surgery volumes by 14 to 22 percent due to the financial incentives, or 15 to 25 surgeries per year for the average surgeon.
Efficiency gains. The increased efficiency of ASCs allowed physicians to do more surgeries. "If the average surgeon shifted 10 percent of his surgery volume from hospital outpatient departments to ASCs, he would be able to do 1.3 to 3.5 percent more surgery," the study says. "Isolating these factors allows us to interpret the financial incentives effect as causal, not just as an association."

While the study did not determine whether the increased surgeries were necessary, it did note a change in the types of patients treated. "Owners of ASCs provided more surgeries to patients covered by workers' comp, commercial indemnity insurance and Medicare. These payers were higher paying insurers at the time of the data," the study says. "Due to owner financial incentives, the average surgeon increased the number of workers' comp patients by 17 to 23 percent. ... Surgeons did not increase the number of patients covered by Medicaid and certain HMO plans."

The researchers say more study is needed. They note that if the additional surgeries performed by ASC physician owners were necessary then their ownership improved access to surgical care for those who may not have had access previously. However, if the surgeries were unnecessary, then "surgeon ownership was a cost driver and merits increased regulatory attention," the study says.

Read more at the WorkersComp Forum homepage.

June 18, 2012

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