The physician-owned occupational health department

In-office magnetic resonance imaging (MRI) equipment ownership and MRI volume among medicare patients in orthopedic practices

BACKGROUND

Concerns have been raised about physician ownership of onsite advanced imaging equipment as allowed under Stark laws by the in-office ancillary service exception (IOASE).

METHODS

A web-based survey of orthopedic practices in the United States was used to assign a first date of onsite MRI capacity acquisition (if any) to specific orthopedic practices. Medicare claims data for 2006-2010 was obtained for providers in orthopedic practices acquiring onsite MRI capacity and in matched orthopedic practices without an onsite MRI over the same period of time. Multivariate regression was used to estimate the change in provider Medicare MRI volume one year before and one year after the onsite MRI acquisition year for providers in MRI practices compared to providers in propensity-score matched non-MRI practices.

RESULTS

In all of the MRI volume change models estimated, the association between onsite MRI acquisition and the change in provider Medicare MRI volume (one-year post-onsite-MRI-acquisition less one year pre-acquisition) was consistently small and not statistically significant. This lack of association was robust to changes in model specification in terms of types of MRI exams considered, specific covariates included in the multivariate model, or the process used to confirm individual provider affiliation with study practices in study years.

CONCLUSIONS

Our analysis of Medicare claims data provides no empirical support for the proposition that acquisition of onsite MRI capacity within an orthopedic surgery practice induces an increase in the rate of MRI use for Medicare patients among practice providers, relative to physicians in practices without MRI capacity over the same time period.

Organizational boundaries of medical practice: the case of physician ownership of ancillary services

Physician ownership of in-office ancillary services (IOASs) has come under increasing scrutiny. Advocates of argue that IOASs allow physicians to supervise the quality and coordination of care. Critics have argued that IOASs create financial incentives for physicians to increase ancillary service volume. In this paper we develop a conceptual framework to evaluate the tradeoffs associated with physician ownership of IOASs. There is some evidence supporting the existence of scope and transaction economies in IOASs. Improvement in flow and continuity of care are likely to generate scope economies and improvements in quality monitoring and reductions in consumer transaction costs are likely to generate transaction economies. Other factors include the capture of upstream and downstream profits, but these incentives are likely to be small compared to scope and transaction economies. Policy debates on the merits of IOASs should include an explicit assessment of these tradeoffs.This research was supported in part by funding from the American Association of Orthopaedic Surgeons (AAOS).