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How the System of Referrals Benefits Hospitals


You’ve probably noticed a growing number of health care facilities that cover a wide array of medical practices. It isn’t uncommon to find a dental practice tucked inside a complex with a general practitioner and orthopedic doctor. Hospitals too are taking care of more patients for general checkups. Who are these doctors sending their referrals to? I bet you can guess the answer.

Fundamentally, these all-in-one health care facilities and hospitals are businesses. They operate for profit and they make it in various ways. One controversial way of ensuring their money remains in-house is by pressing doctors to send more of their patients in-house for referrals. The question then becomes: Is this practice compromising patient care?

Not All Doctors Care for This System 

Doctors, for the most part, are used to making decisions and recommendations that are in the best interests of their patients—not in the best interests of their employers. For that reason, some have expressed contempt for a system that punishes them for sending patients to the top practitioners in the field.

While Phoebe Putney Health System says that they don’t “punish” doctors for sending referrals out of office, the term they use for losing patients to other health care systems is “leakage”. Recycling patients within their health care system is called “keepage”. How do health care systems encourage “keepage” and prevent “leakage”? By pressuring doctors to send their referrals in house.

Costs of Hospital Care are Often More Expensive 

For patients, regardless of their insurance provider, health care costs are often more expensive at hospitals than they would be at a specialist’s office. According to a 2016 analysis, the cost of a chemotherapy treatment at a specialist’s office would run about $247. At a hospital, the cost balloons to $612. In some cases, the markup is even higher, sometimes in excess of ten times the cost of having tests run at a lab.

Is This Legal? 

Well, it exploits a gray area in the law. Doctors can’t be paid for referring patients to other doctors but nothing governs referring patients within a health care system. In some cases, hospitals have employment contracts that require doctors to refer within the hospital system. The general idea behind the federal legislation prohibiting paying doctors based on referrals is that such a system would be motivated by something other than the patient’s best interests. Yet this skirting of the federal law endangers quality of care. In addition, hospitals may make the process of referring a doctor within their system easier while requiring additional steps to refer outside of the system. While some think this sounds awfully similar to a kickback scheme, hospitals contend that it makes it easier for them to coordinate care.

There are antitrust issues as well. In one well-known case, a hospital refused to refer patients to two surgeons who routinely took patients to another hospital to perform surgeries. Patients now seem caught in a power struggle between hospitals competing for a market share and doctors who aren’t on board with their policies.

Talk to a St. Petersburg Medical Malpractice Attorney 

If you’ve been the victim of medical negligence, the St. Petersburg medical malpractice attorney at Masterson & Hoag, P.A. can recover damages related to your injuries. Talk to us today to set up and appointment.




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