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Urology’s Golden Revenue Stream

BY Terry J. Allen

Medicare is a good place to start determining whether doctors are favoring profit over good patient outcomes.

It’s time to crank up the death panels–no, not for granny. Instead, we need to pull the plug on the profit-making machines that medical practices and hospitals are hooked up to.

Here’s the problem: When any business invests in expensive equipment or technology, the new stuff must generate more income than it costs. Sometimes consumers, who ultimately pick up the tab, get good value, other times they get screwed, or worse. This is about the worst scenario–which is what often happens when the business is healthcare.

Rather than accessing centralized equipment and sharing costs, physicians are concentrating their own profits by buying expensive in-practice technologies that pay off only if regularly used. One result is overtreatment, which is driving up health care costs, exposing patients to unnecessary radiation and surgeries, and is frequently no better than cheaper approaches.

The problem is replicated throughout American medicine, from relatively small practices and hospitals buying $1 million-plus CT-scanners, to dentists purchasing new cone beam X-ray units that, because of high radiation and cost, should be only selectively used. Instead, the units’ general application exposes children and others to extra radiation. (Even veterinarians are cashing in; after one Vermont practice bought a high-tech dental system, it’s $600 kitty teeth cleanings became a community joke.)

The Wall Street Journal (WSJ) recently exposed one example of the public cost of this pattern. About one-third of all Medicare beneficiaries diagnosed with prostate cancer now get IMRT, a sophisticated radiation therapy for which doctors can charge Medicare as much as $40,000 per patient. In 2008, Medicare handed over an estimated $1 billion or more on IMRT reimbursments.

Urology practices are increasingly paying more than $3 million for “turnkey” IMRT setups and then hiring radiation oncologists to deliver the treatment to patients in-house. This incestuous “self-referral” scheme is designed to slip through a loophole in the law that bars physicians from referring Medicare patients to facilities where they have a financial interest. The Office of Inspector General ruled that it “stops just short of proclaiming the described [IMRT] arrangement as absolutely in violation of the federal anti-kickback statute, [but] …has great concerns.”

Urorad Healthcare, which provides a ready-to-go IMRT operation, is more upbeat. The Texas-based company boasts: “There is no better revenue source available to urologists than IMRT. … [O]ne urologist handling two new IMRT cases per month can increase his income by $336,000 annually. …Join the URORAD team and let us show your group how URORAD clients Double their practice’s revenue!” (Tacky emphases in original.)

“The sharp rise” in IMRT use is partly driven by “financial incentives,” the WSJ concludes. The necessity for aggressive treatment for many prostate cancer patients, especially the elderly, is controversial. A 2006 study in the Journal of the National Cancer Institute found that 45 percent of men receiving IMRT were “overtreated.”

Medicare–which covers 47 million beneficiaries and costs taxpayers more than $500 billion a year–is a good place to start determining whether doctors are scamming the system by favoring profitable treatments over good patient outcomes.

But access to Medicare’s comprehensive taxpayer-funded database is restricted by a three-decade old court order that effectively bars it from revealing billings by individual physicians. The order was won by the American Medical Association, which has repeatedly sued the government to keep secret how much Medicare pays physicians for expensive procedures such as in-house IMRT.

Through extensive and very expensive reporting, the Journal uncovered one doctor with a “pattern of billing which strongly suggests abuse or even outright fraud” to bill Medicare more than $2 million. Nonetheless, the Journal was legally barred from printing the physician’s name.

The irony is that while some doctors get obscenely rich gaming the system and bilking taxpayers, honest physicians are often less well reimbursed by Medicare than by other insurance schemes. Opponents of healthcare reform fling inflammatory terms such as “death panels” to discredit the need to gather evidence-based research essential to designing systems and treatments that benefit patients and society. But it’s past time we stick a scalpel in the greedy heart of profit-driven medicine.

Terry J. Allen, an In These Times senior editor, has written the magazine's monthly investigative health and science column since 2006.

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