Doctors Inc.

Heart test costs rise as cardiologists flock to hospitals

Updated: 2013-12-30T02:53:40Z


The Kansas City Star

It was late in 2009, and Willie Lawrence and the other heart specialists in his practice faced a dilemma.

Should they renew their expiring office lease and commit themselves to their independent cardiology practice at Research Medical Center or shut down their business and take the jobs that local hospitals were offering?

Medicare helped make the decision for them.

Like many cardiologists in the 2000s, Lawrence and his partners had been making good money by using their own equipment to run sophisticated nuclear stress tests and ultrasound scans. These heart-imaging services were a lucrative and growing part of many cardiology practices.

Then Medicare, the federal health insurance program for the elderly, put on the brakes. In July 2009, it announced new rules that cut payments by as much as 35 percent to 40 percent.

The reductions, which started in January 2010, triggered a stampede of independent cardiologists to the shelter of hospital employment.

And that just created a new and expensive problem for Medicare: Those pricey imaging tests migrated to hospitals along with the cardiologists, and the hospitals have tacked on facility fees that make the tests even more costly.

Here’s how it worked for one imaging test.

When the Medicare payment cuts took effect, the number of echocardiograms performed dropped 6 percent in the first year. But the number done at hospital outpatient departments shot up by almost 18 percent, the Medicare Payment Advisory Commission told Congress in June.

And because hospitals can charge more for their expenses than a doctor can, the price went up.

Medicare and the patient paid a total of $453 for an echocardiogram done at a hospital outpatient facility this year; the price at a doctor’s office is $188, the advisory commission said. Patients with commercial insurance policies also are encountering higher charges, the commission reported.

The combination of technological advances and the opportunity to make more money had triggered the boom in heart tests that cardiologists did in their offices.

“All of a sudden you could easily perform those procedures in your office. We bought our own nuclear cameras, echocardiology machines. Anything we could do in an office,” said Lawrence, who is on the national board of the American Heart Association.

“From a financial standpoint, the business of medicine is testing, not seeing patients one at a time. For entrepreneurial physicians, why not test in your office if you’re going to do it anyway?”

But Lawrence acknowledged that there was always a potential downside to doctors owning the technology: “Inevitably, you run the risk of overtesting.”

From 2003 to 2008, diagnostic imaging of Medicare patients increased by more than 7 percent per year. By 2008, imaging tests had grown to about 38 percent of the average cardiologist’s income from Medicare.

Studies from that time found that Medicare spent twice as much on nuclear stress tests for heart patients when their doctors used their own equipment. About 14 percent or more of the tests were unnecessary.

Congress and Medicare tried before to rein in this testing by tightening payments. Cardiologists made up some of the difference by doing more tests.

But the 2010 reductions came as a mortal blow.

“It was clear you would have to take a significant pay cut,” Lawrence said. “You weren’t going to be able to survive.”

The heart specialists lobbied strenuously against the cutbacks and unsuccessfully sued Health and Human Services Secretary Kathleen Sebelius to stop them.

“These cuts will devastate patient access to care,” warned Alfred Bove, then president of the American College of Cardiology.

“Already practices are closing their doors and their patients have nowhere to turn. … Tests will be delayed, diseases will worsen and patients will become sicker and sicker.”

There’s no evidence that patients were harmed, but hospitals did seek out anxious cardiologists with offers to buy their practices. Heart care is a highly profitable service line for hospitals.

“Everyone was dancing and trying to figure out who to take to the dance,” Lawrence said.

Lawrence accepted an offer from Research Medical Center’s corporate parent, HCA Midwest. The other cardiologists in his practice became employees at St. Joseph Medical Center.

A survey by the American College of Cardiology found that between 2007 and 2012, the share of cardiologists working for hospitals tripled from 11 percent to 35 percent. In the Kansas City area, virtually all the cardiologists are now affiliated with a hospital organization.

Through all this, most cardiologists have transitioned comfortably to hospital employment. They’re still among the highest-compensated specialists, with an average income of $357,000, according to a recent survey by Medscape.

And as employees, they can leave much of the business side of medicine to the hospitals.

“We’re insulated from that. Billing, bad debt. I haven’t said those words in three years,” Lawrence said. “The good part is we can concentrate on patients.”

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