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Device makers start courting young orthopedists during their residencies and fellowships and fight to get their brands into the major training programs, because doctors get accustomed to the products they learn on. In many ways the device manufacturers followed pharma’s practices in sidling up to physicians, but they took them many steps further.
With the 510(k) programs, device makers could readily reward the surgeons with patents and profits or funding for pet research projects.
limited their access, but device makers couldn’t be ejected so easily. Part of the sales deal is that the reps typically serve as unpaid assistants in the OR, helping surgeons install the devices they sell, a new tool at the ready to adjust a knee implant,
today “it’s nearly impossible to break into the market—it’s
An active practice of orthopedic surgeons could do $4 million to $5 million in implant sales a year.
In Dr. Rajamannan’s view, the device was “experimental” and Ms. Vlahoulis—only the eighth human to receive the device—should have been informed and required to consent.
American Medical Systems parried by raising the price of the older valve by $1,300 so that it was no longer more cost effective. One surgeon’s “little attempt” at cost control proved “futile,” Dr Elliott told me, adding, “If there was a generic valve I’d be there tomorrow.”
testing, medical equipment, and ancillary services became to hospitals and clinics what booze is to restaurants: high-profit-margin items that can be billed for nearly any amount.
No test, no appointment, the receptionist informed me. In emergency rooms today, physician assistants and even nurses at the triage desk are permitted to order tests before a doctor has a chance to prescribe more judicious procedures, or even becomes aware of a patient’s existence.
Ten or fifteen years ago most doctors sent the specimens to a hospital pathology lab or to one of the big commercial companies like Quest Diagnostics or LabCorp.
But ambulance companies occupy an indispensable position in the hospital supply chain and one that proved easy to monetize: they bring in the paying customers.
But around 2000, nearly all of the once-free ambulance companies began collecting fees for their service.
By 2011 ambulance transport was no longer primarily a charitable service but such a good business that America’s two largest private sector providers, Rural/Metro and American Medical Response, were both bought by private equity firms that year.
“The Fire Department’s attitude, which the City Council bought, was that we could keep raising the ambulance transportation rates because the private insurance companies always paid,”
Like the PARE doctors, many ambulance companies now refuse to contract with any insurers because they consider their negotiated rates too low. That leaves patients like Ms. Williams with big bills.
By 2014 physical therapy was a $26.6 billion enterprise, worth almost 50 percent more than it had been in 2004 and expected to grow 7 percent a year.
Home evaluation companies like CenseoHealth are a new kind of investor-owned healthcare business that has thrived in the past five years. The companies say their home visits are good for the elderly and that they report problems to patients’ primary care doctors.
In his pitch to the insurance plans that hire his company, Dr. Jack McCallum, a cofounder of CenseoHealth, says they typically can count on getting $2,000 to $4,000 more per person from Medicare, because home visits may uncover a new illness or tease out a new complaint that will send the risk score upward
Medicare Advantage plans, offshoots of traditional Medicare that work on an HMO model, were intended to provide more coordinated care for seniors at a lower cost; 31 percent of Medicare beneficiaries were enrolled in 2015. But 2012 payments for patients in Medicare Advantage plans were in fact 8 percent higher per patient than in fee-for-service plans, where patients could visit any physician or hospital. That excess is likely at least in part the result of coordinated efforts to raise risk scores, extracting billions in dubious billing.
Uninsured and underinsured Americans often get less testing and fewer services than they need. Poor Americans are less likely to get crucial recommended screenings for colon cancer and blood pressure. But well-insured Americans suffer often from too much treatment—particularly as they age—with tests and services meted out not for health but for money.
(COBRA allows employees or their families to pay out of pocket to continue on a company policy after certain life-changing circumstances, such as firing or death.)
was denied by several companies, she said, because of a preexisting condition: she had once taken medicine for mild depression. (This would no longer be legal since enactment of the ACA!)
“My kids got really upset because I said—and I meant it—if I’d just died, you’d have money for college. It would be better.” The hospital pursuing Ms. Wickizer like one of those predatory lenders who were shut down during the financial crisis was the University of Virginia Health System in Charlottesville.
Studies have showed that hospitals charge patients who are uninsured or self-pay 2.5 times more than they charge those covered by health insurance (who are billed negotiated rates) and three times more than the amount allowed by Medicare. That gap has grown considerably since the 1980s.
the codes gradually took on a bedrock financial function as the basis for medical billing.
U.S. version not only categorized and number-coded diagnoses but also introduced codes for procedures.
According to a coding professional, “In order to code for the more lucrative code, you have to know how it is defined and make sure the care described in the chart meets the criterion, the definition, for that higher number.”
(While ICD codes indicate diagnoses, CPT codes indicate medical services.)
Modifier 59 could be deployed to allow for two payments in certain situations, such as when an oncology nurse needed to insert two separate IVs—one to administer chemotherapy and another because the patient appeared to be dehydrated. And the games began.
secondary business of even more advanced coding consultants, who advised other coders as well as healthcare providers and taught courses that covered the nitty-gritty of insurers’ reimbursement policies. For example, an ER doctor learned that insurers would accept a better-reimbursed code for the examination and treatment of a patient with a finger fracture (usually 99282) if a narcotic painkiller was prescribed (bump up to 99283).
Because adopting the new system in the United States would require new billing software and require every coder to go back to class, the medical industry convinced Medicare to delay adopting ICD-10 year after year.
Like most insurers, the plan had farmed out precertification to a contractor/middleman, who might work “for free”—but is compensated by keeping a portion of the money “saved” by making getting a test really difficult or denying care outright. That’s how such firms make the business case for their services.
These wasteful bureaucratic processes have been a lucrative job creator for the business of healthcare. They also siphon hours away from what patients want from their doctor and what good doctors want to provide: human contact.
Many companies that advocate for patients also make good business by providing price information to hospitals, doctors, and insurers, who want to know how much their competitors are receiving for medical encounters, after negotiations.
“When we first discovered this, we went to pharma and they said, ‘It’s really interesting but we’ve got a problem: Tell us how it will ever make us money?’” she recently recalled. “‘You’re working with a generic drug.’”
Moreover, between 2010 and 2015, the cost of insulin and other products used to manage diabetes skyrocketed, despite few significant advances in treatment. The recommended wholesale price of different forms of insulin rose between 127 and 325 percent. The monthly wholesale price of Humulin, the most popular insulin, has risen to nearly $1,100, up from $258 for the average patient between 2012 and 2015.
“venture philanthropy”; that is, investing money in drug, device, and biotech companies with the expectation of financial return.
“How could the board of Vertex and the CFF fundamentally align the objectives of a for-profit company with those of a non-profit institution?”
The deal was abandoned only after it was condemned by an ethics task force, which opined at the time: “As a professional association the AMA is not and cannot function as a profit-maximizing business interested in perpetual growth.”
Most notably the AMA owns the copyright for those CPT codes, which are essential for billing. It sells books of the code to doctors, hospitals, and researchers. It requires companies that use the codes in their products—such as collection agencies—to pay royalties and licensing fees. It derives money and power from that ownership.
each spending prolifically to promote its particular interests. Collectively, the medical industry has become the country’s biggest lobbying force, spending nearly half a billion dollars each year.
But the efforts were not always noble. Anesthesiologists have fought successfully to have the label for the sedating drug propofol state that it must be administered only by “persons trained in the administration of general anesthesia.” Meanwhile, gastroenterologists have argued and lobbied ferociously to get that label restriction removed, noting that nurses working under their supervision could do the job as well.
Lobbying for theur own jb security
Daniel Burke proposed a bill in 2012 requiring physicians to inform patients whether they were in a patient’s insurance network before rendering treatment to avoid surprise out-of-network charges. It didn’t pass.
“They say, we fight to protect patients, but what they really mean is we fight to get exorbitant fees for unneeded procedures. This was not a medical issue; it was a trade issue.”
“I did pay really because my premium is two thousand dollars a month and keeps rising. I’m angry at this system because it seems predatory.”
At first joint purchasing gave hospitals economies of scale and reduced redundancy as they negotiated with manufacturers for devices, drugs, and supplies. But over time the consolidated alliances meant primarily inordinate sway to demand high rates from corporations, insurers, and HMOs.
At a certain point, the major effect of consolidation was simply a huge rise in prices, economic research has now shown, because hospital conglomerates that have driven out competition can raise prices with abandon.
“If the intent is to improve care and bend the cost curve, networks can do it. If the objective is to corner the market and negotiate higher rates, that’s what will happen.”
Forces like rising costs and declining payment for services have made it difficult for hospitals and physicians to continue operating on their own. In a little over a decade at the beginning of the twenty-first century, more than seventy California hospitals had to close. Small hospitals that tended primarily to poor patients and those on Medicaid were particularly vulnerable.
“There was heavy pressure to refer patients for testing and surgery within the Sutter system, which was overpriced,” he said. “I wasn’t really able to be my patients’ advocate.”
