Health-care costs higher at hospitals owned by doctors

Doctors in Oklahoma who become part owners of specialty hospitals refer more patients for surgery, tests and other services to treat back and spine disorders, a study found.

The odds of receiving complex spinal surgery were 65 times higher after physicians gained a financial stake in hospitals, according to the analysis of Oklahoma workers' compensation claims in the July issue of the journal Medical Care.

Health-care costs are "likely to be significantly higher" when patients are sent to hospitals by doctors who are among the owners, the study said. The number of doctor-owned hospitals has risen as fees paid to doctors have fallen and they seek a bigger role in hospital management, according to the study.

"They become owners and the rate of back surgery goes up dramatically," said Jean M. Mitchell, a professor of public policy at Georgetown University in Washington, D.C., and the author of the study. "You've got that financial incentive to refer the patient for surgery because you've got that ownership interest."

Doctor-owned hospitals generally specialize in profitable services, such as orthopedic, spine, heart and surgical procedures, according to the study. Physicians receive fees for their services and share in the profit from payments for inpatient and outpatient care.

Supporters of the hospitals say they can lower costs because of the efficiencies created by focusing in one area, according to the study. Opponents say they create conflicts of interest for the doctors who refer patients.

Molly Sandvig, executive director of Physician Hospitals of America, a trade group in Sioux Falls, S.D., said she doubted the findings were accurate, and questioned whether Mitchell had access to enough data to reach a conclusion.

"I don't believe that it's more likely that they're sending patients for more procedures," Sandvig said.

The study reviewed medical claims from 2000 to 2004 for the biggest workers' compensation insurer in Oklahoma, and involved two Tulsa hospitals that became physician-owned.

The frequency of use of fluoroscopy, a type of medical imaging, increased by 50 percent, to 19.5 percent from 13 percent, after doctors acquired ownership, according to the study.

Before becoming owners, doctors referred about 21 percent of back and spine cases for epidurals, or injections into the space surrounding the spinal cord, the study found. The referral rate increased to 26 percent after they gained a stake, according to the study.