Volume Pressures Affect Entire Healthcare Industry

Below is an excerpt from a recent NYT article talking about the same hospital in McAllen TX featured in Dr Gawande's New Yorker "expose" about why healthcare costs are high in some areas of the country compared to others - namely the profit motive. While the profit motive may certainly be linked to increased volume of procedures, it would be over-simplifying to think of profit as the net motive, as the increase in volume is likely in part to make up for lost compensation from reduced reimbursement and increased expenses.

It is also a distraction to focus the debate on physicians and physician-owned facilities as the profit or net income motive applies to all healthcare entities, be they constituted as for-profit or not-for-profit. All institutions are struggling with how to maintain or increase volume in order to drive or sustain revenues and net income, as the dominant source of revenues for the industry continues to be dependent on the number of encounters. The debate on this topic needs to shift to payment reform for all providers, encouraging meaningful discussion about outcomes, quality, and overall health.

Texas Hospital Flexing Muscle in Health Fight

By KEVIN SACK and DAVID M. HERSZENHORN

Published: July 29, 2009

The gleaming, well-equipped Doctors Hospital at Renaissance, which has expanded to 503 beds from 30 in six years, has become a footnote in the health care debate. It was featured unflatteringly in a June article in The New Yorker about geographic disparities in health care spending, a story that President Obama has cited repeatedly in speeches and meetings.

The article, which is sharply disputed by hospital officials, posited that physician ownership provided “an unholy temptation to overorder” tests and procedures because doctors earn not only their fees but also a share of the hospital’s profits. At Doctors Hospital, where 353 of its 452 owners are physicians, net revenue amounted to $64 million in 2008.

Leading members of Congress have long been concerned about the potential for conflicts of interest, lapses in patient safety and cherry-picking of patients with the best insurance at the country’s 230 physician-owned hospitals. Past efforts to restrict ownership by doctors have stalled, but language to that effect is currently included in health care legislation in Congress, though in ways that are unlikely to hurt Doctors Hospital.