By Dale Buchbinder

Dr. Jones develops an outpatient vascular surgical procedures center attached to his office. He equips the center with a fluoroscopy unit, and all the requirements for a single specialty operating room have been maintained. He hires a nurse anesthetist to give anesthesia and monitor the patients. In addition, he has a small recovery area with a nurse to follow the patients postprocedure. He learns he can be reimbursed an up to $20,000 facility fee for every procedure performed. He has decided that since his overhead is anywhere from 40%-60%, the more procedures he performs, the higher his profit ratios will be.

Therefore, when Mr. Smith is in need of a lower extremity revascularization, he is brought in for diagnostic angiogram. The angiogram reveals he has an external iliac and a superficial femoral artery stenosis on the left side. These two lesions probably account for the patient's symptoms. The patient returns the following week, and Dr. Jones performs an iliac artery angioplasty with a balloon. In approximately 10 days, the patient returns for one of three procedures in which he has his superficial femoral artery also treated with a balloon angioplasty.

The patient has now had three procedures totaling $60,000 in revenue. The overhead for these procedures was approximately 40%, providing a $36,000 profit. Had these procedures been done in a regulated space (i.e., a hospital), the physician would have probably performed the diagnostic angiogram as well as the definitive angioplasties of both external iliac and superficial femoral arteries at the same time. The physician's fees for these procedures would have been approximately $2,000. Also, it is possible that in a regulated facility the doctor would have chosen to at least place a stent or would have performed an atherectomy or even used a drug-coated balloon in one or both of these lesions. However, in the free-standing outpatient vascular surgery center, the use of these devices would have greatly driven up the cost of the procedure and decreased the profits.

It is not uncommon for these types of procedures to be performed in an unregulated space with no hospital quality control or supervision. While they drive up the cost of treating the patient, they are extremely profitable for the doctor. In order to gain this profit, the physician has subjected the patient to three procedures with three different anesthesia procedures, tripling the risk of any anesthetic complications for the patient. Furthermore, if an adverse event occurs in these settings, there is no rapid response team available to resuscitate the patient.

1. What are the facts of this case?
2. Compare and contrast the impact on Dr. Jones revenue stream for patients covered by the following insurance plans: HMO (closed or open panel), IPA model HMO, Network Model HMO, PPO, POS, Medicare, and Medicaid.
3. Based on your analysis of the above, which plan(s) do you think he is targeting for his revenues?
4. What are the legal and ethical obligations Dr. Jones has to his patients and how do they apply to this case?
5. What are the advantages and disadvantages for the consumer in this scenario?
6. What are the advantages and disadvantages for Dr. Jones in this scenario?
7. If an adverse event occurs, what do you think will happen to Dr. Jones and his facility?
8. Is Dr. Jones gambling with patients' lives? Provide a rationale for your responses.