Justinian Lane

Sloan-Kettering physician exposes a major cause of "defensive medicine"

Exhibit A in the argument that defensive medicine (aka insurance fraud) is driving up medical costs is the CT scan.  "Reformers" rightly claim that in recent years, doctors have been ordering more and more unnecessary CT scans.  Where reformers and reality part ways is the reason why doctors are running unnecessary scans.   According to reformers, many doctors run these unnecessary tests because they're afraid of being hit with a malpractice suit if they don't.  The reality is that it's very profitable for doctors to run those tests:

Each fee is meant to reimburse the doctor for the time and skill he or she devotes to the patient. But it is also supposed to pay for overhead, and this is where the problem begins. To Medicare, a doctor’s overhead (or “practice expense”) includes such items as rent, staff salaries and the cost of high-tech medical equipment. When the agency pays a fee to a doctor who has performed a CT scan, it is meant to cover some of the cost of buying or leasing the scanner itself. Services using more expensive equipment generate higher fees.

Any first-year business school student can see the profit opportunity here. The cost of a CT scanner is fixed, but a doctor earns fees each time it is used. This means that a scanner becomes highly profitable as soon as it’s paid for.


Doctors who do their own CT scanning and other imaging order roughly two to eight times as many imaging tests as those who do not have their own equipment, a 2002 study by researchers at the University of North Carolina found. Altogether, doctors are ordering roughly $40 billion worth of unnecessary imaging each year — which adds up to nearly 2 percent of the total Americans pay for health care.  (Emphasis added.)

Source Op-Ed Contributor - How Medicare Payments Discourage Doctor-Patient - Op-Ed -

I'm not suggesting that doctors never run tests they feel are unnecessary just to protect themselves in case of a lawsuit.  I'm sure it happens.  But isn't it more likely that the doctors who buy these multimillion-dollar machines are ordering unnecessary tests in order to pay for those machines?  "Reformer" propaganda aside, unethical plaintiff's attorneys don't have the market cornered on greed.  There are plenty of greedy doctors who place profits above their patients.  Let's not place doctors on an ivory pedestal and pretend they're immune from the temptation to make easy money by committing almost undetectable insurance fraud. 

The article also points out how doctors have financial incentives to see as many patients as possible in the least amount of time possible; quantity over quality, in other words.  Doesn't that sound like a recipe for missed diagnoses and other malpractice?

Justinian Lane: Author Bio | Other Posts
Posted at 4:07 PM, Jul 24, 2008 in Medical Malpractice
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For what its worth, ER doctors and family physicians don't own CT scanners and are the ones who order the most scans. The same is especially true of MRI scans which cost on the average 4 times as much as a ct. They also don't own the lab the runs all the Lyme titers and other one in a million tests that are now part of the defensive work up.

Posted by: throckmorton | July 24, 2008 5:18 PM

Throckmorton, have you read the North Carolina study mentioned? I'd be interested in your opinion on it...

Posted by: Justinian Lane | July 24, 2008 5:20 PM

In the study there was no control for specialty. When you look at specialty specific numbers there was no variance. The physician groups who were most likely to own their own scanners are those that utilize the most scans such as ct ivp for urology. In that specialty, there is no difference in the numbers if they own a scanner or not. If you compare this to orthopods who dont get cts, there is a difference.

As physician reimbursement decreases, physicians are looking for ways to keep revenue. This all has to be done within the latest versions of the Stark laws which keep it very regulated. Stark law prohibits physicans from referring cases to labs, diagnostic centers or other services that they partially own except for very specific cases.

All this however does not explain why ER docs, family docs, internists, OBs etc order numerous defensive tests when they have no monetary gain from them.

Posted by: throckmorton | July 24, 2008 8:56 PM

Justinian is so biased, and indoctrinated, he is mentally crippled. The self-evident evades him.

1) Defensive medicine is not insurance fraud. It is compliance with the standard of due care imposed by a court at the point of a gun. A plaintiff expert has asserted a standard of due care. The judge has allowed it. Now, the doctors of an entire state must comply with this false standard of due care, or face being put on trial themselves. In all cases having opposing experts, the judgment of court has settled a scientific dispute, but only with a gun, instead of with additional data.

2) People who own their own scanners have been busier, because they are better doctors. They can afford to do so, by the filling of their practices. Their patients tend to be worse because the get more referrals.

3) Those scans have been pre-authorized by stingy insurance companies, who have been granted absolute immunities by the government, in its all assault on clinical care.

4) In the absence of blind ratings of the indications for the scans, the assertion is garbage. Why not say, urologist tend to do more exams of the bladder, and OB's tend to do more hysterectomies. One of the reasons to go to the doctor who owns the scanner is that he has seen 8 times more scans than the non-owner. The owner has 8 times the experience. Experience is the sole correlate with outcome in clinical care.

Justinian never thinks of the other side, because he is so biased. His indoctrination has been so good, he does even know it took place. If you want to see a lawyer type switch sides, do this experiment. Wave a $100 bill. Cheap.

Justinian is a law student. I want him to start thinking more like a lawyer. Practice presenting the adverse evidence. If you fail to do that in a court, see what the judge does as he feels like you tried to mislead the court.

Posted by: Supremacy Claus | July 24, 2008 11:13 PM


I agree that this is beneficent for the doctors to take more tests. But this is much more expensive for the reformers. I think this is not a good way to earn.

Posted by: Rechtsanwalt | July 25, 2008 1:14 AM


I think the doctors are not doing well. This is much more expensive for the reformers. I think this is not a good way to earn. They should put of this.
2ndly they can be afraid of having incorrect results so they may need to retake it. In this case it is acceptable.

Posted by: Anwalt für Arbeitsrecht | July 25, 2008 1:20 AM

Andreas: Glad you dropped by. How is the lawyer situation in Switzerland? I know Germany is overrun with lawyers, as the US is. What is the situation in Switzerland?

What education did you have to be a lawyer, what exams, and do people sue each other as they do here? One assumes you have a civil law system.

Posted by: Supremacy Claus | July 25, 2008 1:32 AM