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.)
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?