Good Medicine Benefits From Ownership Stake
Thursday, March 24, 2011 at 08:50PM by R.C. Villare, MD, MPA
from MD Advisor—A Peer Reviewed Journal for the New Jersey Medical Community
Published Spring 2008 Volume 1 Issue 2( Page 4)
A state court ruled that a physician who owns part of an ambulatory surgery center (ASC) and takes his own patients to that center to perform needed surgery violates New Jersey law.
The decision was reached on November 20, 2007, in the case of Health Net of New Jersey, Inc. v. Wayne Surgical Center, LLC. The court ruled that ASCs who receive referrals by physician-owners and bill the insurance companies for those services are in direct violation of the Codey Act, and that submitting insurance claims to get paid for their legitimate work constitutes fraud under the New Jersey Insurance Fraud Protection Act (IFPA).
In other words, health care providers can’t own the facility where they work. That decision is in direct conflict with American principles. According to this latest ruling on the Codey Act, health care providers are being singled out as the only Americans who are not free to own the buildings in which they operate their business.
Imagine yourself the owner of a gas station/auto repair garage. As a customer pulls up to a gas pump, you realize the engine is making an unusual sound. You open the hood and see the fan belts are about to break. If you, as a gas station/auto repair garage owner, were subjected to the same stringent regulations as health care providers, you would have to send the car to a competitor’s garage — even if the customer would rather you repair the car in your shop! In legal lingo, you would be prohibited from a self-referral!
This sounds illegal, yet that is exactly what the Codey Act imposes upon health care providers. The state overlooks the preference of most patients at their pivotal, most vulnerable moments. As they face the anxiety and uncertainty that accompanies surgical procedures, knowing that their doctor is in his own environment and has established relationships with the onsite anesthesiologists and nurses, helps ease their concerns. ASCs are more insular and welcoming than an ASC that belongs to doctors that patients don’t know, and are much more comfortable than large, impersonal hospitals.
The consequences of this ruling are that every physician who owns part of an ASC must send his or her patients elsewhere for their surgery — either to a facility owned by health care providers they don’t know, or to large, notoriously impersonal hospital settings, for their operations. New Jersey surgeons are now forced to perform “same-day” surgeries in expensive hospital settings as the result of a misguided law, causing an emotional disconnect between health care providers and their patients. To the patient, that translates into a visit to a cold, unfamiliar setting in which their physician operates in an environment with which he is just a visitor, and with fellow health care providers with whom they may not have the camaraderie so necessary to positive patient outcomes. To the health care professional, that’s like giving away his or her job (and salary) to others — quite nonsensical.
Strange how New Jersey Law strays from allowing professionals the liberty to “earn a living and make a profit,” values consistent with core constitutional principles upon which this nation was built. The law claims good intentions, but ignores that these services are the core of a physician’s trade. Someone must build the surgery center, equip it, pay salaries and ridiculously high New Jersey property taxes and legal fees to assure that the ASC complies with the maze of rules and regulations that suffocate health care. The state also ignores a law of human nature, which is that people take pride in what they own.
ASCs reduce the infection risk so prevalent in hospitals. Furthermore, ASCs save money for insurers and the public. Investing in an ASC is risky business and it seems appropriate that those who take risks should reap the rewards. Yet lawmakers think health care workers are not entitled to a profit for their risky work. If profit is good for Halliburton, aren’t good physicians and nurses worthy of the same?
When I first read this ruling, flashes of Communist Russia and tyranny went through my mind. “What could they be thinking?” I asked. This law violates a constitutional right to gainful employment and the freedom to own property, any property, including the property where you work.
New Jersey discriminates against medical providers. I am baffled at the double standard against the health care profession and the attack against the very people who save lives, relieve or eliminate pain, and help patients live more productive lives. This case is a glaring example of how laws later demonstrate unintended and harmful consequences. The good rapport, warm environment and close relations with patients typical in private ASCs contrasts to the impersonal culture found elsewhere. It is precisely this impersonal culture that spawns malpractice suits. At a time when New Jersey struggles with malpractice reform, The Cody Law has the unintended consequence of promoting an environment that increases the risk and cost of malpractice litigation.
Investors of ASCs must worry that insurers will use this decision to justify refusing to pay claims for all self-referred procedures. This can cause a devastating economic blow. According to an article on the Minnesota Surgery Center Association’s Web site, Judge Contillo, who ruled in the Garcia case, acknowledged the positive benefits of such centers and the important role they play in the delivery of healthcare in New Jersey. And studies show that Medicaid clinics do not deliver high-quality, personalized service seen in private offices, and that ASCs deliver the best care for their customers.
Any effort on the part of insurers to deny claims submitted by physician-owners will likely have a significant impact on the availability of services, representing a potential imminent peril to the public health. Were ASCs to close or cut back on the services provided, alternative providers — hospitals or offices — may not be able to immediately absorb additional cases and provide timely services.
What is familiar to New Jersey politics is a system admittedly plagued by corruption. Politicians create laws under the premise that everyone is not trustworthy. This is not true. Not a shred of evidence suggests that any surgery performed in an ASC was unnecessary or that the medical judgment of any physician-owner was impacted by his or her ownership in the ASC. Needless regulations paralyze our healthcare system and those who struggle to care for their patients. New Jersey seems to regulate everything but the regulators.
One thing is certain in this whole debacle: Money, better spent on health care, will be wasted to sort out this mess created by lawmakers. Lobbyists, consultants and lawyers will work for months or years to find a resolution. According to the terms of the state’s November ruling, lawmakers could own the ASCs and charge physicians and nurses a fee for the privilege of working there. These lobbyists and consultants may all profit from health care if they win their fight to own the buildings in which health care providers take care of patients. The tail is truly wagging the dog — it’s time for health professionals to regain control and respect for their profession.
This misguided ruling has the potential to set precedents in other states, an idea that should send chills down the spine of all patients and health care providers.
I propose a simple solution. An addendum to the law should read: “Physician or nurse ownership in an Ambulatory Surgery Center does not constitute a violation of the Codey Act.” This solution would save millions of dollars in litigation for an already burdened health care system.
Note response by Senate Presidient Richard J. Codey (page 36 of Journal)
Robert C. Villare, MD, MPA The author is a member of the Camden County Medical Society and Legislative Council of MSNJ and also an active member of the Medical Society of Delaware and its Universal Healthcare Task Force. A practicing surgeon and medical director of Salem Hospital’s Regional Vascular and Wound Care Center, he holds a Masters Degree in Health Management and Policy, and served as a Senior Scholar with the Department of Health Policy at Thomas Jefferson University. Dr. Villare does not own an interest in any ASC or other health facility, but believes in the right for physicians and nurses (or anyone else) to invest in one.
Reader Comments (3)
In my opinion this is an obvious conflict of interest. It is illegal for Allstate for example to own the car repair shop. From my own observations, there are so many neighborhood physician owned surgical centers going in it must be profitable else the physicians would not do it. It is a huge investment to bring one up and to operate it. I personally have an issue with a surgeon collecting a professional surgical fee and also getting a profit from the surgical center. This stiffles competition and is not good for the average consumer. It encourages more unnecessary procedures since a doctor can double dip. Heck it also gives more operating room time for profitable procedures rather than "sharing" the operating room priviledges at a hospital for example. Imagine that you have a room with nurses and a dedicated anesthesiologist for surgeries all day Mon-Fri rather than only doing surgery Mon at Hospital XYZ and maybe surgery at Hospital ABC on Wed.... add to that the possibility of being bumped by the "Shock Trauma" patient. Dang a doctor can certainly get more "hours" for the profitable business by owning it their self can't they.
I like the idea to this. At least it will give a chance to those who are not health care providers. I don't think it will be a great idea also if they have their own building as a pharmacy at the same time as a health providers. It will be biased.
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