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Conflicts of interest may be at heart of health care reform

By | July 7, 2009, 9:38 AM PDT

Most of the debate over getting U.S. health care costs in line with those of the rest of the world involves finger pointing.

Is it the profits made by insurers? Is it the lack of automation? Is it the risk of lawsuits?

Or is it doctors turning from healers into businessmen?

What the BBC and policy makers now call the McAllen Problem is a simple conflict of interest. (This image, from McAllen.net, shows officials of McAllen’s doctor-owned Renaissance Hospital making a donation to the local Christmas for Kids charity.)

Drawing heavily from a New Yorker article published last month, the charge is that when doctors become owners of clinics, imaging centers and hospitals they gain an incentive to over-use those facilities. Their business interests conflict with their medical interests and they subtly tilt toward the former.

While several major research centers, like Harvard, have tightened up their conflict-of-interest rules recently, mainly for fear of scandals like one enveloping Emory University and drug research, the doctor-entrepreneur conflict has not been addressed.

Yet it’s old news.

As far back as 1991 studies were being done linking doctors’ ownership of clinics and imaging centers to skyrocketing costs. Yet at that time the AMA backed away from any rulemaking, fearing a backlash among doctors in the business.

Instead the AMA has focused recently on possible conflicts arising from corporate-owned clinics staffed by nurse-practitioners, fearing unfair competition. Given the enormous and growing shortage of primary care, one must wonder now whether that stand was itself a conflict of interest.

This is not a partisan issue, by the way. In 2006 the Bush Administration sought, through the budget process, to limit doctors’ ownership of hospitals.

In his June 9 speech to the AMA, President Obama does not appear to have directly addressed the issue of doctors having a conflict of interest in owning clinics, hospitals or imaging centers. He addressed McAllen only obliquely, noting that people there are over-treated based on a Dartmouth cost study.

But he did say this:

You did not enter this profession to be bean-counters and paper-pushers. You entered this profession to be healers - and that’s what our health care system should let you be.

That starts with reforming the way we compensate our doctors and hospitals. We need to bundle payments so you aren’t paid for every single treatment you offer a patient with a chronic condition like diabetes, but instead are paid for how you treat the overall disease. We need to create incentives for physicians to team up - because we know that when that happens, it results in a healthier patient. We need to give doctors bonuses for good health outcomes - so that we are not promoting just more treatment, but better care.

Few considered that when he spoke those simple words some doctors might be cringing, or preparing to fight back. But he knows now.

Political deals with hospitals, insurers employers and drug companies are one thing. Breaking the link between doctors’ ownership of facilities and their over-use will be harder to do, because it puts the Administration in direct conflict with an important interest group.

But word about these conflicts of interest is out. It will be interesting to see how both the profession and politicians address them.

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Dana Blankenhorn

About Dana Blankenhorn

Dana Blankenhorn was a contributing editor for SmartPlanet from 2009 to 2010.

Dana Blankenhorn

Dana Blankenhorn

Contributing Editor

Dana Blankenhorn has written for the Chicago Tribune, Advertising Age's "NetMarketing" supplement and founded the Interactive Age Daily for CMP Media. He holds degrees from Rice and Northwestern universities. He is based in Atlanta.

Follow him on Twitter.

Dana Blankenhorn

Dana Blankenhorn

Dana Blankenhorn has been a technology reporter since 1982, a business reporter since 1978, and a writer for as long as he can remember. His Schwab IRA has a few tech stocks in it, most notably some Intel and Applied Materials bought over 10 years ago. But the vast majority of his tiny fortune (emphasis on the word tiny) is invested in mutual funds. He presently writes for no one else but ZDNet, SmartPlanet and himself. But if you've got an opportunity let him know. If he takes the gig he"ll first add it to this disclosure page.

He writes for SmartPlanet and is not an employee of CBS.

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RE: Conflicts of interest may be at heart of health care reform
What Obama said was dumb, and he got booed by the MD's at least at one point in the speech.

To think that incentives for "good health outcomes" is a great idea, lets figure out how you pay Incentives to MD's for cancer centers or chronic disease centers or burn units or trauma E.R. MD's. or centers for geriatrics. This administration is dumb.

We got to be the highest form of healthcare in World by doing what we're doing right now, and change for the sake of change will only make it worse.

See anyone moving to Canada or England to get better treatment than they can get here in the good ole USA? Nope! Never heard of one.
Posted by brain.trust
7th Jul 2009
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RE: My Big Idea Gone Bad in Vegas
We have been living in Montana for the past 5 years and I am not supri sexshop to find it #3 on the "worst" list. Considering a sexy shopmove to Idaho to escapthe high cost of living a low income in MT. There may not be a sales tax here but they get you if you own property!
Posted by filhomarques
23rd Jul 2011
0 Votes
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RE: Conflicts of interest may be at heart of health care reform
Yes, this is one of the fundamental issues for health care costs in this country. While I know lots of caring and committed health care professionals, and some are doctors with an ownership stake, I can see where this poses a classic moral dilemma. However, I would not stop with doctor/owners, there's also HMOs which are run as mid-large corporations. Corporations are setup to serve the interests of business, which has on the top of the list making money.

I think this is a healthy conversation for us to have as society in this country. It's good to put these items on the table and see what lots of folks think about them.

Having just been over to the UK, I heard many stories of good health care happening there, without the level of stress I hear lots of folks having in the US. I recently had someone tell me they were looking to travel to some central american country to get some treatment they needed. We might do well in this country to take a moment and look at how health care gets done in other parts of the planet.
Posted by krid007
8th Jul 2009
0 Votes
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Brain Trust conclusion debatable
I do not agree that we have the best health care system in the world,
and the numbers don't agree with you either. We pay more than other
people, yet our outcomes are worse.

When you look at the regional variations this becomes even more
obvious. The Mayo Clinic concentrates on teams and its people are
rewarded based on outcomes, as professionals. McAllen doctors are all
for themselves and are rewarded based on the number of procedures
they direct to clinics they own.

The care in both cases is nearly identical, although the Mayo care feels
better to the patient because it's more humane. But the difference in
price is staggering.

I do agree we need more price transparency so consumers can
compare apples-to-apples when buying drugs, devices, and procedures.

But to claim our system is great and there's no need to change, full
stop, is I believe a minority view.
Posted by DanaBlankenhorn
8th Jul 2009
0 Votes
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RE: Conflicts of interest may be at heart of health care reform
Health Care is designed around the concept of health. Health is living in a harmonious way to present dis-ease. Out current system is primarily Sick-care not health care. Yes, I agree the biggest added value we could get is to look at the systems that are producing a population of healthier people. The incentives in out current systems here in the USA are geared at keeping people sick. The more sick they are or might be the the more chemo, machines and resources that are needed.

Education is the key to keeping people healthy. An ounce of prevention is worth more than a pound of health. It is the value of life.

Back pain is just one aspect of the current system that has not been addressed in a way that allows healthy results. We are now finding out that many of the surgeries have failed and now people are still left in pain. The UK has done some incredible research that invites education as part of a solution to healthy backs. http://www.bmj.com/cgi/content/full/337/aug19_2/a884?gca=337/aug19_2/a884&sendit=Get+All+Checked+Abstract(s)

Most interesting is that the emphasis of this study was on teaching chronic back pain sufferers new choices in movement via the Alexander Technique. This has been around for over one-hundred years but has not gained much recognition because it is a cost effective solution to back pain resolution. When back pain is one of the leading causes of missed work days, pharmaceutical uses, high tech machines and surgeries there hasn't been any incentive to look at cost effective solutions that actually work. I am looking forward to seeing a better balance of resources offered to the educated public. Why spend more money on things that are not working when other countries have already figured out positive outcomes for pain resolution?
Posted by FormFunctionFlow
11th Jul 2009
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