Joint Venture Group Practices

Joint venture physician practices over-treat patients and reap economic rewards in the process. These types of practices are very different from the traditional group practices described in the text. Physicians partnered in traditional large group practices provide comparable services, usually practicing within the same specialty, such as Dermatology or Orthopedics. As Getzen (2010) explains, "One reason for physicians to work together in group practices is to obtain economies of scale from sharing office space, equipment, and information systems." (Getzen, 2010).The goal of these physicians groups are to increase revenue through sharing the expenses associated with ancillary help. The traditional group practice structure appears to uphold
the agency relationship among the treating physicians and patients, and, on its face, does not appear to foster an environment in which treatment plans are devised and recommended in order to increase practice revenue.
Joint venture practices, on the other hand, (either by their design or because of it) are under continuous scrutiny for just such practices. Joint venture practices are structured to provide ancillary services, a business structure much different than sharing ancillary help (as with traditional group practices). Under this structure, treating physicians set up their own 'in-house ' diagnostic and pathological laboratories and various types of treatment centers to provide patients with prescribed therapies. These joint venture practices are structured to provide patients with a virtual one stop doctor 's visit, no referrals needed, and, all services are rendered 'in-house '. Arguably, under this arrangement, the spirit of the AMA code of ethics against profiteering from patient treatment is completely desecrated, as the checks and balances of peer oversight has been removed. Still, legally, these kinds of practices are permitted, under Stark Law (Omnibus Budget Reconcilliation Act of 1989, 1989) because of the 'in-house ' structure of the businesses.
Stark Law prohibits physicians from 'referring ' a patient to an entity for a service in which the referring physician has a financial interest in. This law and the spirit of this law was intended to bolster the AMA code of ethics prohibiting doctors from putting profits before patients, and, as a tool for helping to control medical costs associated with ancillary treatments, therapies, and diagnosis. However, no sooner than this law was passed, law makers were lobbied to create exceptions (also known as loopholes) that would allow for a business structure that circumvents the restrictions imposed by the law. The exception with greatest impact in subverting Stark is the exception that allows for 'in-office ancillary services '. This exception has provided physicians with a legal carte blanche to provide any and all services to their patients with little or no oversight for cost or quality of care, as long as all those services are rendered under the same roof.

An article by the Wall Street Journal (Carreyrou & Tamman, 2010), studied a urology group involved in a joint venture practice whose business structure included an 'in-house ' radiation treatment center, staffed with Radiation Oncologists and an 'in-house ' pathology laboratory, staffed with Pathologists. An examination of the practice 's Medicare claims showed that 53% of the Medicare patients treated at the facility were treated with radiation therapies (in-house). By contrast, only 13% to 24% of Medicare patients being treated for similar ailments were treated with radiation therapies, when treated by physicians without in-house radiation facilities. Even this practice 's Head Urologist, Dr. Kampoor initially projected that radiation treatments administered to patients in his practice, was within the industry norm at ~17%. When confronted with the actual statistics, the 53%figure, Dr. Kampoor rebutted "Our credo in medicine is not 'spend the least money '". In the same article, James Mohier, a urologist at Roswell Park Cancer Institute in Buffalo, NY, cited a 2006 study in the Journal of the National cancer Institute that found that 45% of American men with prostate cancer, who received external radiation, were being over treated (Carreyrou & Tamman, 2010).

A study published in 2010 JGIM (Bishop, Federman, & Ross, 2010) examined the association between physician 's offices with on-site laboratories and the frequency of laboratory test ordering.
At issue were five common, but not routine laboratory tests, and the frequency in which these tests were ordered in practices with in-house/on-site diagnostic/pathology laboratories as opposed to physician offices that used off-site or independent laboratory services. The data collected revealed that the panels of tests were performed at a rate of 64% in practices with in-house/on-site laboratories. By contrast, medical practices that used off-site laboratories order the same tests only 34% of the time. The estimated costs of these tests were $75 million per 100 million excess visits. A separate WSJ article (Weaver, 2012); explains the incentive for overusing anatomic pathology services. "At issue in the study is a quirk of billing for lab procedures. Labs get paid based on the number of jars used to hold specimens from a prostate biopsy. Doctors can choose to put several specimens in one jar, or put each in its own jar, potentially boosting lab fees, which average about $104 a jar in 2010, according to the
study."

The ASCP (American Society for Clinical Pathology) has long opposed joint venture physician practices that utilize in-house diagnostic and pathology laboratories. They argue, of course, "the inevitable overutilization associated with financial interest" is a serious issue, and cite a 2007 DHHS OIG (Department of Health and Human Services, Office of Inspector General) study of three urology practices that were found to have over-utilized of pathology services. After the practices instituted in house laboratories, their utilization of pathology services increased 699%, 230%, and 26%. (Stoler, 2010).

While many would argue that the ASCP is trying to protect its lion 's share of the laboratory business with its firm opposition to joint venture practices with in-house laboratories, the group also raises the very serious concern of oversight. Specifically, the ASCP questions the qualifications of a specialized physician/clinician, such as a urologist with regard to overseeing the technical aspect and preparation of laboratory specimens, given that the majority of these physicians have little to no training in this specialty. Rightfully so, this lack of oversight calls into question the veracity of the preparation procedures, and the subsequent diagnosis rendered from these specimens, not to mention the questionable necessity of the test being ordered in the first place. Clearly, this system lacks quality control.

So, you needn 't be an economist to see that these practices generate revenues that are not economies of scale, but economies of grand scale. 1989 Stark Law was authored to combat the ills associated with physician referrals, kickbacks and overtreatment. But, because of amendments, Stark

has become a 'how-to ' manual on how to circumvent itself. As long as physicians structure their corporations to provide ancillary service 'in-house ', they are free to order all the tests, and make all the treatment plans they wish, with little consideration of the cost to the patient and insurance plans (Medicare specifically), but, with great consideration of how those treatment plans offered bolster their own bottom line.

Bibliography

Bishop, T. F., Federman, A. D., & Ross, J. S. (2010). Laboratory Test Ordering at Physician Offices with and without On-Site Laboratories. Journal of General Internal Medicine, 1057-1063.
Carreyrou, J., & Tamman, M. (2010, December 10). A Device to Kill Cancer, Lift Revenue. Wall Street Journal, p. http://online.wsj.com/article/SB10001424052748703904804.
Getzen, T. (2010). Physician Financing:Expenses. In T. Getzen, Health Economics and Financing (p. 143). Wiley.
(1989). Omnibus Budget Reconcilliation Act of 1989. In s. 1. Act, United States Congress 101.
Stoler, M. H. (2010, October 1). Washington Report:American Society for Clinical Pathology; Centers for Medicare and Medicaid Services. Medical Laboratory Observer, pp. issn 0580-7247.
Weaver, C. (2012, April 10). Prostate-Test fees Challenged. Wall Street Jornal, p. A2.