If you live here in Mobile, the big news is the feds announcement that they are deep into an investigation of our neighboring hospital, the Mobile Infirmary, and their relationship with the large multi-specialty that lives in a building on their campus. I have no inside information but from what I have read, things are pretty bad. The ask on the part of the government is about half-a-billion dollars, with $120,000,000 coming from the physicians and the rest from the hospital.

The Stark Act was designed to level the playing field. Doctors, based on their special knowledge, have an unfair advantage over the average consumer. If you complain of chest pain to your doctor, for example, her response might be “Don’t worry about it, it’s nothing.” Or, her response might be “Oh my goodness, let’s get a cath done before you die of your heart attack.” It is no secret that Americans, all things being equal, would rather have a test than not (“Let’s be on the safe side, Doc”) mostly because having a negative test is a good thing (“John, the test was negative. Thank goodness it wasn’t your heart”). It’s also no secret that the doctor make more money by saying “What the heck, let’s do the test” more times than not. Pete Stark’s law is intended to put the brakes on relationships where the doc writes an order for a test and then gets money back from the testing entity.

So, what was the relation between the docs and the hospital? The docs were an independent practice but the infirmary provided a lot of support (the suit alleges):

Infirmary Health provides office space, equipment, medical supplies, utilities, laundry services and other support at below-market value. Infirmary Health receives 42 percent of the money collected by the doctors. That totaled $243.7 million from January 2004 through December 2010, with a combined salary for the doctors of $150.1 million during that period, according to the lawsuit.

Well, that is not necessarily good but one could argue that market value is a negotiation. So what if the docs get a sweetheart deal on rent and administration and the docs used the machines in the hospital closest to them to take care of patients. They would probably use those machines anyway, amirite (as Tweeters say)?

In addition to a regular salary, Heesch’s complaint alleges that doctors also receive illegal bonuses based on the number of medical tests performed with machines owned and operated by Infirmary Health. In many cases, according to the allegations, the tests are not medically necessary.

Uh, oh…well, that’ll be difficult to prove. After all, as I tell my residents, there are a lot of different ways to take care of patients and probably the financial arrangements were pretty complex.

The bonuses are based on the doctors’ shares of the total number of medical tests performed the previous year. To hide the arrangement from auditors, the complaint alleges, the formula builds in a “fudge factor,” so that the payments do not exactly correspond to the referrals. By basing doctors’ pay on medical tests ordered, the complaint alleges, Diagnostic Physicians Group set up an illegal conflict of interest. The more medical tests a doctor ordered, the higher his bonus was.

Like I said, complex. In medicine, we have a saying that association does not necessarily prove causation. Just because people who die of lung cancer are typically smokers does not mean the smoke causes lung cancer.

In addition to ordering medically unnecessary tests, some doctors in the group went as far as to falsify records, according to the suit. For instance, forms requesting nuclear imaging tests falsely stated that patients had complained of chest pains when the medical charts specifically denied such symptoms. In other cases, the suit alleges, the forms stated patients had abnormal electrocardiogram readings when the medical charts showed EKG readings to be normal.

OK, this is (allegedly) bad. Apparently the government only gets involved when they think that patients have been actively harmed. I am curious to see what comes out in the investigation.