Making A Profit From Self-Referrals

THE GROWING TREND FOR PHYSICIANS TO INVEST IN the clinics, treatment centers and laboratories to which they send their patients -- a practice known as self-referral -- is blamed by many experts for contributing to excessive treatment and soaring national health-care costs. Two reports in the New England Journal of Medicine provide new ammunition for the critics. In one, researchers analyzed 6,581 California workers' compensation cases and found that physiotherapy was recommended twice as often by physicians with a stake in physical-therapy centers as by doctors who had no financial ties to the facilities. Moreover, 38% of body scans ordered by physicians who owned imaging centers were deemed unwarranted, in contrast to 28% requested by independent doctors. Another study of Florida radiation-therapy centers concluded that self-referral increased the frequency and cost of treatment. Moreover, researchers found that none of the centers were located in inner- city or rural areas, though service to these communities is a major rationale offered for doctors' ownership of health-care facilities.