If you have pain, you may visit your medical provider first. A growing trend is that older providers are selling their practices to local hospitals and hospital systems, preferring to leave behind the problems related to running a practice and instead of becoming an employee. Some younger providers are going to work for large systems, avoiding the risk of starting and running a medical practice.
Health care providers know that they have quotas for the number of patients they see daily. They had the same quotas in private practice as well to cover their overhead. After selling, many doctors now work as part of a medical group and must satisfy the requirements of their employer.
What you may not realize is that as an employee, doctors are incentivized to refer within the hospital system. Sure, they must refer you to a participating doctor in your network, however, many hospitals as part of their business model incentivize their employees to refer back to the hospital.
This can be very costly for consumers, as many hospital-based services are exorbitantly priced and you may pay much more for an identical service that is less expensive somewhere else. A recent article in the Wall Street Journal explored the world of hospital systems and their influence on the referral process.
Your doctor is actually a feeding mechanism for other providers either working for or with that hospital, and any loss of this business is considered leakage.
If you have back or neck pain, your doctor may first order a test in the hospital system, and then refer you for rehab to a hospital-based therapist, when a chiropractor may have been a better first choice of referral. Some groups such as Summit Medical Group derive profit from a culture such as this and derive income from every referral kept in the group. Many hospitals function the same way, resulting in many referrals to providers when a simple less costly solution may have been more appropriate.
Check out this fascinating article
The Hidden System That Explains How Your Doctor Makes Referrals
More primary-care doctors work directly for hospitals, and they are being pushed to keep lucrative referrals in-house
By Anna Wilde Mathews and Melanie Evans
Dec. 27, 2018
Phoebe Putney Health System doesn’t want its doctors to send business to competitors. If they do, Phoebe makes sure their bosses know about it.
Doctors working for the Albany, Ga.-based hospital system’s affiliated physician group get regular reports breaking down their referrals to specialists or services. One viewed by The Wall Street Journal included cardiology, colonoscopies, and speech therapy, along with the share of each referred to Phoebe health-care providers.
If the share of the in-house business wasn’t viewed as adequate, administrators would press them to improve, doctors said.
“They would let you know it wasn’t high enough,” said Thomas Hilsman, a primary-care doctor who recently retired from the Phoebe medical group. He said he felt referrals should be based on which health-care provider was best for patients. “They keep the Phoebe physicians busy, they see more patients, they make more money.”