Health Care Health Care Reform

How healthcare reform changes referral patterns?

As a specialist, one of the saddest truisms about practicing medicine in the private world has always been how little one’s clinical skills determines referrals. Unfortunately, as our present healthcare climate pushes “providers” to consolidate along the lines of major hospital networks this injustice will only worsen.

A decade-or-so ago when I started private practice it was obvious that referrals came to me because of my association with an established group. This association was essential, as one could have been the next Michael Jordan of electrophysiology, but referrals would still have gone along historic lines, to the favored group. It would have taken a herculean effort, over years, to encroach upon such long established referral patterns–etched over the bonds of rituals like Wednesday afternoon golf matches and dinner clubs.

Thus, few specialists start independently. You join an established group, do good work, form relationships and eventually, your quality becomes known. As it should be: do good work and doctors will trust you with their patients. But yet, even the highest caliber specialists may fall prey to the easily accessible, affable, but (unknown and untested) new guy.  For enhancing referrals, availability and affability trumps skills—at least ninety percent of the time.

Now there is a new trump card for referrals: physician consolidation. Who owns who. For example, hospital X’s primary care doctors refer their cardiology (substitute any specialty) to hospital X’s cardiologist.  And so on with hospital Y and Z.  Like in this example, as one local oncologist bemoaned to me recently: “referring doctor Y used to refer me all his patients, but since the acquisition, he sends his mom and brother to me, but sends the rest of his patients to his new mother-ship’s oncologist.”

My message here is not to cry sour grapes, but rather to echo two themes.  First, to mirror the message of the WSJ’s recent editorial—although a goal of healthcare reform is to enhance competition, paradoxically, in the case of incentivizing provider consolidation, patients’ choices are diminished. You (the patient) will be seeing our cardiologist, or our surgeon, or you will be having your MRI at our (smaller, but less costly) scanner.

The other motive for highlighting these new allegiances is that patients should understand the mechanisms at hand in deciding which specialists they are recommended.  Isn’t it fair that a patient know that their doctor may have signed a contract agreeing to use the ‘company’ doctors? (Sure, there was a also a clause in that same contract saying the ‘company’ would not interfere with medical judgement, but we all know that persistent rogue referrals will likely result in an unpleasant fireside chat.)

In employing doctors, the primary master of the profit-driven health care corporation is physician productivity; CPT codes and workRVUs are the grading system, the language.   The code for an ICD implant is 33249 and its reimbursement is set, regardless of whether it is appropriate, or done right. Hopefully, the companies that employ the best doctors will find ways (besides profit) to distinguish themselves.

Providing higher quality care, to millions more, at lower costs will surely have its consequences. Undoubtedly, for patients one of these will be fewer choices.  When eating for free, only the most daring ask for a special order.

Be daring.


4 replies on “How healthcare reform changes referral patterns?”

I have been watching this happen for some time now. My mother works for a local rehab center that is and has been a staple of the rehab community for many years. This was true until a local Hospital conglomerate started its own health insurance plan. Now if you need rehab and you have said insurance, good luck being able to go to this rehab center. You must now go to one of their centers.

Change to Stark In-Office Ancillary Services Exception

The recent health care reform legislation included one somewhat significant change to the Stark In-Office Ancillary Services Exception. As you will recall, this exception permits the referral source physicians who are members of a physician group practice to refer a patient for imaging services (or other Designated Health Services – DHS) to be provided within the group practice without violating Stark. This exception is basically what permits physician group practices to own and operate and receive compensation for imaging services and other DHS provided within their group practice.

Effective immediately upon the legislation being signed by Obama (March 23, 2010), a physician within a group practice referring his/her patient for MRI, CT or PET to be provided within the group practice must provide the patient, at the time of the referral, written notice that the patient may obtain these imaging services from a supplier other than the group practice. The written notice must provide the patient with a list of such alternative suppliers in the area where the patient resides.

At the present time, this new requirement only applies to DHS in the form of MRI, CT and PET. And it only applies to physician group practices composed of physician referral sources." and there is more…..

Dr.J– I don't understand this statement you made: "Providing higher quality care, to millions more, at lower costs will surely have its consequences. Undoubtedly, for patients one of these will be fewer choices."

Fewer choices? How can that be? I just checked the Obama website at, and it says this: "Barack Obama [has] proposed a plan that … ensures patient choice of doctor and care without government interference. Under the Obama-Biden plan, patients will be able to make health care decisions with their doctors….Under the plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year."

You are obviously misinformed. Please revise your blogpost accordingly to reflect the Government approved viewpoint. Change we can believe in.

Thank you.


Dr. John M is correct. Hospitals are gobbling up primary care practices to insure that high dollar reimbursement procedures like surgery and testing (hospitals charge three to four times what out-patient centers charge for testing) are kept within the hospital system itself.

The writers of the Obamacare legislation know little of health care delivery. The authors of the regulations implementing that law will probably know even less. If they knew anything, they would incentivize outpatient organizations that work to keep patients out of hospital-dominated systems, rather than incentivizing hospital dominated systems to take over the health care of our country. Remove the exemption of hospitals from stark self-referral and see how quickly hospital behemoths streamline to deliver only they care they should be responsible for. And give the money saved from those inappropriate in-hospital self referrals to health departments across this country if you really want to improve the health of this nation.

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