AGA Washington Insider

A policy blog for GIs

Physician Collaboration Isn’t Collusion to Increase Costs

“This GAO report sheds new light on the behavior of physicians reaping personal gain by referring patients to services at locations where they have an ownership interest. The analysis suggests that financial incentives for self-referring providers is likely a major factor driving the increase in referrals for these services. As Congress looks to reign in unnecessary spending, my colleagues and I should explore this area in greater depth,” Rep. Waxman said.

Explore you should, Representative Waxman. For if you look beyond the GAO’s conclusions, you will find that what we really need are bundled payments and a regulatory environment that supports, not inhibits, innovation to improve high-value health care.

Just because physicians have come together to manage their own futures doesn’t mean that their intent is to collude and increase costs. Could it not also indicate that health-care professionals have joined together to provide better care in a more efficient manner that reduces waste and unnecessary services to save the system money?

My practice, which initially started with 25 physicians in suburban Chicago, has owned an anatomic pathology laboratory since 2010. We see commercial, Medicare and Medicare Advantage, Tricare, Medicaid, and other patients. We have grown to 38 physicians, and we regularly monitor the percentage of pathology specimens generated by the physicians in our ASC and office-based endoscopy suites as part of our quality improvement initiatives.

I am proud to say that our rate of pathology specimens per endoscopic procedure has held steady at the rate that we were at before we opened our own path lab. The pathologists who work with our practice are university trained professionals who have a special expertise and interest in gastrointestinal pathology and our path lab routinely provides its reports within 24hrs which are then immediately passed on to the patient.

Mr. Waxman was not alone in his comments. The College of American Pathologists (CAP) called attention to the GAO report documenting millions of dollars in wasteful health-care spending by physicians who self-refer anatomic pathology services, and called on Congress to take immediate action outlawing this business practice.

But the sword swings both ways. Who monitors the pathologist when they order a special stain for a specimen? Isn’t there a potential for the pathologist or pathology company to generate additional income when special stains are ordered?

One of the first interventions that our practice made after opening our pathology lab, which is certified by CAP, was to limit the use of special stains even though we would have generated more money by doing just the opposite.

There are significant quality issues to consider here. In the GAO study no attempt was made to identify the characteristics of the respective study groups. Most GI groups that own their own path lab are larger, and therefore subject to a higher level of peer review than what is performed in the typical community hospital. Our GI peers monitor individual biopsy patterns to assure that we maintain high levels of adenoma detection rates (ADR), for higher ADR levels are associated with decreased incidence of colorectal cancer. We monitor the quality of the pathology specimens that we generate: if I don’t obtain an adequate specimen, our pathologist calls me on it.

I chair the Practice Management and Economics Committee for the American Gastroenterological Association where we have discussed the topic of inappropriate pathology practices. Unfortunately, there are very few published standards for us to use to create guidelines and metrics. We continue to strive to find a solution for this and would welcome a joint initiative with CAP.

Pathology is an important tool in the fight against colorectal cancer. Banning high-quality in-house GI pathology is not the answer.

The best way to solve this issue is to allow for a pilot that bundles the expense for the pre-procedure E/M visit, the colonoscopy, sedation and anatomic pathology into a single payment. If the service can safely be performed in a cost-effective ASC rather than an HOPD setting, then we should encourage such. This would control the cost better than banning self-referral. We have to be responsible for not only the quality of the procedures we perform, but also the expenses incurred to those who are paying for the care.


This piece originally appeared on The Health Care Blog.


  1. The model described in this blog sounds ethical.My observation in this community is that path services controlled by small ASC’s do multiple unnecessary biopsies and special stains- so much so that a pathologist employed by a group complained to me, a gastroenterologist,about this pattern..In addition the pathologists who work in these small ASC’s generally seem to provide much less accurate readings than the high standard that we get in large hospital or centralized GI path labs. An ASC controlled path service does represent an obvious conflict of interest which will frequently lead to unethical behavior. I believe the AGA will lose credibility if it does not recognize this fact.

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