Our data demonstrate a significant association between physician ownership of ASCs and higher use of surgical services for the treatment of urinary stone disease. Further, surgeon annual caseloads were found to rise as the penetration of physician owners increased within a health care market. With the Centers for Medicare and Medicaid Services new prospective payment system for ASCs, reimbursement for several lithotripsy procedures is slated to increase (Centers for Medicare & Medicaid Services, HHS 2007
). As such, the observed differences in stone surgery utilization may become even more pronounced, resulting in higher health care expenditures.
Admittedly, these data do not demonstrate a causal relationship between physician ownership and the provision of increased and/or nonbeneficial patient care, and we acknowledge that there are multiple plausible explanations for our findings. For one, the higher surgery rates associated with ownership may reflect surgeon specialization. Physician owners may have clinical practices tailored toward treating patients with urinary stones—the majority of surgeries for which can be performed on an ambulatory basis. Conversely, nonowners may lack the caseloads needed to justify the cost of investment. As such, owners' utilization would be higher because of their skill set, not because they own facilities.
Another possible explanation for our findings, which is also unrelated to financial incentives, pertains to efficiencies in patient care. Proponents of ASCs have long argued that by focusing solely on one component of patient care, ASCs are more efficient in their care delivery (Davis 1987
). Without the huge infrastructures and associated maintenance expenses that burden hospitals, ASCs can maintain low overheads, keeping costs to patients down (Wolfson, Walker, and Levin 1993
). Physicians who see a large number of their patients treated more readily and for lower costs at ASCs may understandably make the decision to become owners themselves.
Alternatively, our findings may be related to differences between owners and nonowners with respect to their desire for financial gain. Profit motive works no less among nonowners as it does among owners, and nonowners maximize personal profits in the same way that owners do—by operating more. While most would agree that the majority of urologists do not practice medicine for monetary reasons alone, they do face a business reality, and it seems reasonable to assume that those urologists who are the most motivated by profit are also the most likely to invest in ASCs, given their unique incentive structure. By virtue of their profit preferences, some owners may be driven to the point of relaxing their indications for intervention and inducing demand (McGuire and Pauly 1991
; McGuire 2000
There are several limitations to our study that merit further discussion. To begin, we did not measure ownership directly, but rather derived it empirically relying on the safe harbor provisions (Health Care Financing Administration 1999
; Becker and Biala 2000
;). Nonetheless, we externally validated our ownership definition, querying the public records of a meaningful subsample of facilities, and found good agreement. Moreover, based on the threshold used to constitute ownership status, we may have misclassified some urologists; however, we conducted secondary analyses, varying the share of a surgeon's cases needed to establish ownership, and demonstrated our results to be robust.
We also recognize that our primary outcome—a surgeon's annual caseload—is not ideal. Summing procedure codes assumes that the surgeries performed are homogeneous and that the amount of work required for each is about the same. Since this is unlikely to be the case, we performed subgroup analyses in which we examined the annual volume counts and RVUs for each procedure as a function of physician ownership status; and we found that the difference in stone surgery use between owners and nonowners is largely driven by owners' greater affinity for shockwave lithotripsy—a finding that is not surprising when considering that shockwave lithotripsy has one of the highest reimbursement rates per hour of service provided among common urologic procedures (Lotan et al. 2004
Our secondary outcome has its shortcomings as well. If we knew the number of patients with stone disease that each urologist saw, we would be able to determine if the proportion of patients referred for a lithotripsy procedure differed between owners and nonowners. Lacking these data, we used a urologist's annual utilization rate of stone surgery as a proxy for his frequency of surgery use. The problem with this measure is that the denominator for the rate calculation—the population of the HRR in which the urologist practices—overestimates the urologist's panel size. With population estimates for HRRs that range from several hundred thousand to over two million people (The Dartmouth Atlas Project 2007
), the urologist's annual utilization rate surely underestimates his actual frequency of use. Consequently, the observed rate difference between owners and nonowners, which is small in absolute terms, may be misconstrued as having little clinical significance. Therefore, we caution the reader against interpreting these rates in isolation. They are best viewed in conjunction with the annual caseload difference between owners and nonowners.
Finally, we are limited by the granularity of the SASD. As such, we are unable to control for those clinical features (e.g., urinary stone size, location, patient symptom severity) known to influence treatment. Thus, we cannot comment of the appropriateness of the cases performed.