Investing in Health Care: What Happens When Physicians Invest and Why the Recent Changes in the Patient Protection and Affordable Care Act Fail to Protect Patients from Their Physicians' Self-interest

JurisdictionUnited States,Federal
CitationVol. 36 No. 01
Publication year2012

Washington Law ReviewVolume 36, No. 1, Fall 2012

Investing in Health Care: What Happens When Physicians Invest and Why the Recent Changes in the Patient Protection and Affordable Care Act Fail to Protect Patients from Their Physicians' Self-Interest

Nancy L. Zisk(fn*)

I. Introduction

Traditionally, physicians have made money by seeing patients. Today, more than in the past, physicians also make money by investing in the diagnostic tools and services they recommend that their patients use.(fn1) The Patient Protection and Affordable Care Act (PPACA or the Act), passed as a cornerstone of President Obama's presidency, is designed to protect Americans in a variety of ways, including by more stringently regulating physicians' ownership of the tools and services they recommend to their patients and by augmenting the disclosure requirements imposed on physicians when they do have a financial interest in the services they recommend.(fn2)

Under established statutory and ethical rules, physicians must disclose their ownership interests in diagnostic tools such as X-ray machines and scanning equipment, and now under the PPACA, physicians must put that disclosure in writing and provide a list of alternative providers their patients may see instead.(fn3) This provision, which appears un-controversial on its face, is not likely to draw a legal challenge. But recent research suggests that, instead of protecting patients from physicians' financial self-interest, the current disclosure requirements impose a great weight on patients-forcing patients to stay with physicians and even help physicians achieve such financial goals.(fn4)

As shown in the American Medical Association's 1957 "Principles of Medical Ethics," there was a time when patients were protected from the financial self-interest of their physicians, who were expected to derive professional income only from patient services.(fn5) But in 1975, the United States Supreme Court held that the federal antitrust laws applied to all of the "learned professions,"(fn6) and following that decision, restrictions on advertising, investment, and fee-setting were invalidated, making physicians free to invest in the business of medicine.(fn7) Few observers disagree that physicians should earn money for what they do, but many question whether physicians should have a financial interest in the equipment they use or the facilities to which they send their patients because the prospect of financial gain has been shown to affect the decisions they make.(fn8)

A physician's expectation of financial gain when a patient chooses treatment options that the physician owns creates a classic conflict of interest in the physician-patient relationship.(fn9) Studies have shown repeatedly that, despite their commitment to provide the best possible care to their patients, physicians who own diagnostic and treatment tools and services recommend such tools and services to their patients more often than physicians who have no ownership interest.(fn10) Based on these studies, the law has imposed rules to minimize the effects of these conflicts of interest on medical decision-making by limiting physicians' ownership options and requiring physicians to disclose their ownership interests.(fn11)

With the PPACA's retention and strengthening of established disclosure rules, it is now time to ask whether these rules are effectively protecting patients. Unfortunately, recent research suggests that disclosure does not have the intended effect of allowing patients to choose physicians free of financial conflicts of interest and that disclosure may actually have the opposite result on patients.(fn12) Indeed, one recent group of studies suggests that when patients learn of their physicians' financial interests in the recommended treatment options, patients are actually less likely to seek alternative care and more committed to doing what their physicians suggest to help their physicians reach such financial goals.(fn13) This paradoxical result is worsened when patients lose trust in their physicians' advice and begin to question whether their physicians have financial self-interests or the patients' best interests in mind when prescribing care.(fn14)

This Article therefore considers possible ways to protect a patient's interest in receiving care and advice that reflects solely what is in the patient's best interest and not what might be in the interest of his or her physician's financial health. Part II reviews the importance of trust in the physician-patient relationship and examines how that relationship is affected by the conflict of interest that arises between patients and their physicians who own the medical facilities, devices, and treatment services prescribed. Part III examines the ethical and statutory restrictions that have been and are currently imposed on physicians who own facilities or services to which they refer their patients. Part IV reviews the professional, state, and federal disclosure requirements imposed on physicians who diagnose and treat patients with devices and services they own, and examines the recent research suggesting that the current disclosure requirements may do little to protect patients' interests or to encourage patients to seek alternative care.(fn15) Part V reviews potential alternatives to protect patients in light of such research. Part VI concludes that a total ban on physician ownership would solve the problem but, given the legal constraints on imposing such a ban, recommends a change in how physicians are paid for the medical care they provide. In cases where physicians own the equipment they use in the diagnosis and treatment of their patients, physicians could be required to bill their patients a flat fee, to be disclosed prior to the start of treatment and to cover the entire course of their patients' care.(fn16) This will remove entirely the temptation to use diagnostic tools or treatment services for any reason other than the best interest of the patient. In light of the empirical findings that patients trust their physicians less after learning of their physicians' financial interests but nevertheless feel compelled to follow their physicians' advice and help them reach their financial goals, medical, legal, and ethics scholars and decision makers should confront these realities and adopt a model that restores the proper balance between a patient's best interest and a physician's interest in financial gain.

II. The Importance of Trust and How a Conflict of Interest Affects That Trust

It is by now axiomatic that before treating patients, physicians must obtain their patients' consent.(fn17) Historically, physicians did not disclose risks to their patients, believing that such disclosure might upset the patient and scare him or her away from treatment the physician believed was necessary.(fn18) Indeed, it was not until 1957 that a court first used the term "informed consent" when describing the duty of disclosure that is imposed on a treating physician.(fn19) Today, to obtain meaningful consent, physicians must disclose the risks and benefits of using the treatment they recommend, foregoing treatment, and using alternative treatment options.(fn20) Such disclosure is required because it "promotes communication and fosters trust" between physicians and the people they treat.(fn21) As explained by practicing physicians sensitive to the intimacy of the physician-patient relationship and the importance of disclosure of risk, the "sine qua non of effective patient care is the patient's trust, manifested as an unwavering belief that our advice and decisions are driven by the patient's best interest."(fn22)

When a patient visits a physician, he or she is usually sick and simply wants to get better; the patient is not a typical consumer. (fn23 ) "'Someone who is ill and seeking help-unlike someone who is purchasing a pair of socks or a pound of sausages-is often vulnerable, certainly worried, sometimes uncomfortable, and frequently frightened.'"(fn24) The patient is also almost always less educated than the physician, at least on the subject of his or her health condition, and "has an abject dependence upon and trust in his physician for the information upon which he relies during the decisional process."(fn25)

Even if otherwise educated, an ill patient may be unable to get information or make appropriate decisions and, thus, must rely on the physician to protect him or her.(fn26) As one scholar observed, "[m]ere apprehension of serious illness transforms us: It makes us afraid and causes us to regress to childlike states of dependence and wishful thinking. Diagnosis of serious illness furthers this transformation, as do disabling symptoms."(fn27) In essence, then, "'the patient is a captive consumer.'"(fn28)

Unfortunately for these helpless and trusting patients, when physicians have a financial stake in the equipment they use or the facilities to which they refer patients, the physicians' "professional medical judgment may become clouded."(fn29) Just like "auto mechanics, plumbers, actors, bicycle messengers, and newspaper reporters,"(fn30) physicians respond "'rationally'" to economic incentives that can interfere with their duty to place their patients' welfare above all else.(fn31) As traditionally defined, a conflict of interest is "a set of conditions in which professional judgment concerning a primary interest (such as a patient's welfare . . .) tends to be...

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