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Controlling healthcare costs means getting back to the basics


Repealing the Stark Law is a good first step, but more must be done to put doctors back in charge of patient care.

Editor's Note: Welcome to Medical Economics' blog section which features contributions from members of the medical community. These blogs are an opportunity for bloggers to engage with readers about a topic that is top of mind, whether it is practice management, experiences with patients, the industry, medicine in general, or healthcare reform. The opinions expressed here are that of the authors and not UBM / Medical Economics.

In the 1864, a young family doctor from England opened his office above a drugstore in a small rural Minnesota town. Fifty years later, his two sons-also physicians-helped train military doctors during WWI. Drs. William and Charles Mayo were both colonels in the Army traveling back and forth across the county to prepare young physicians to treat casualties.

The brothers’ clinic incorporated earlier, with the help of the Sisters of St. Francis, established St. Mary’s Hospital in 1910 laying the foundation for what would become the world famous Mayo Clinic. Ironically, William and Charles Mayo died just months apart in the summer of 1939 but the Mayo Clinic has continued to grow over the past 80 years and expanded to include additional locations in Arizona and Florida.

With the current burden of legislation and regulations, this could never happen. There would be no Mayo Clinic.

The Stark I provisions were passed into law in 1989 to stop physicians from owning hospitals and was expanded in 1995 under Stark II forming what is collectively known as Stark Law. Finally, in Senate Finance Committee hearings in July 2016, Senator Orrin Hatch and other leaders in healthcare concluded that Stark was a “regulatory swamp” that can’t be fixed and might have to be totally repealed.

Stark intended to stop physicians from referring patients to their own hospital. Instead it created a model that shifted healthcare from doctors and other providers-who did the actual caring for patients-to a model based on procedures. This facilitated shifting payments to the facilities, hospitals, and away from the care providers.

The tidal wave of cash going to the facilities has led to unprecedented capital spending by “non-profits.” They have constructed bigger and grander buildings for their corporate offices, hospitals, clinics, and even sports arenas.

Lost in this gold rush is the patient.

Although corporate medical executives like to herald the growth in healthcare spending and research, they fail to tell the patients, who are paying for all of these facilities, that the welfare of the individual patient is no longer the top priority. This has led to excluding the patient’s family doctor from monitoring their patient’s care after they are admitted to a corporate hospital. This sometimes takes the form of banning the family doctor from the facility or making the compensation for visiting the patient so low that it makes no economic sense to leave the office to check on a few patients in the hospital.

Meanwhile the patient is at the mercy of corporate employee physicians who don’t know the patient and were not selected by the patient or the patient’s family. Patients are asked to trust that the corporation and its employees are interested in more than just maximizing billing.

Many patients no longer think of their healthcare in terms of their doctor. In many instances, they identify with the corporate healthcare group or even their insurance plan. They feel forced to make decisions on care based on staying in network.

Putting providers back in control of patient care is the first step. This must start with creating mechanisms and incentives to have family practice doctors involved in the care of their hospitalized patients. The power of facilities and corporate, market-driven medicine must be decreased. Patients need their family doctor to monitor all of their care.

Corporate medicine has forced many providers of ancillary services-nurse clinicians, respiratory therapists, certified register nurse anesthetist, and pharmacists-to sign non-compete clauses. Many physicians have also been forced to sign such agreements. The “good intentions” behind Stark have been turned inside out, forcing providers to refer all care only to their employer’s facilities.

The facilities, the real estate, and the corporate executives are now the masters forcing providers to maximize revenue. Such an approach ignores the needs of the patient. The welfare of top corporate managers and their perception of the “provider’s profit performance” are now controlling patient healthcare. They are creating monopolies and destroying competition.

This has to stop.

Repealing Stark is the critical step. Additional actions will be necessary to unravel the mess created by lawyers practicing medicine and facility managers focused on maximizing revenue.

In the 30 years since the first Stark legislation and regulations, the cost of healthcare has doubled while the average life span of U.S. citizens may have actually declined. Medical errors are the third leading cause of deaths in hospitals and perhaps as many as 40 percent of all lab tests are unnecessary. Medicare and Medicaid pay for nearly half of all hospital bills and these programs lose more than $140 billion annually to fraud, waste, and abuse, according to the U.S. Department of Health and Human Services.

The greatest strides in healthcare were made without insurance or regulations. It is time to change direction. Healthcare reform requires getting back to the basics. Providers, not facilities, care for patients; the patient and his family practice doctor need to take control of their healthcare.

Robert L. Mabee, RPh, MBA, JD, is an attorney practicing in Sioux Falls, S.D.

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