Evidence on Complex Structures of Physician Joint Ventures

Abstract

Physician ownership of health care facilities has become a controversial issue in the national debate over how to control rising health care costs. Proponents of physician ownership contend that investment by physicians in health care facilities broadens access to health care by increasing the financing available for such facilities. Critics of physician ownership contend that such ownership arrangements lead to higher prices for medical services and more frequent use of unnecessary medical procedures, without improving the quality of care. In this Article, Professors Mitchell and Scott review the current debate and present new empirical evidence based on their study of more than 2600 health care clinics in Florida. The evidence presented here indicates that physician investment in health care clinics is more widespread than previously believed. The evidence also indicates that physician investment tends to increase both the frequency of referrals to the clinics and the cost of the services provided by the clinics. In light of this evidence, the authors argue that current legislation which prohibits or restricts physician joint ventures is inadequate. They recommend that future legislation be strengthened to include stronger prohibitions and restrictions on indirect physician investment.