David Witmer wants to bring reduced-cost MRI scans to Charlottesville, but faces a lot of resistance.
When an old friend called me a few weeks ago to talk about bringing an MRI scanner to the Charlottesville area, it initially sounded like a story which was probably better left for the back of the Daily Progress. With all the talk about health care reform, the ever-increasing cost of health care and the fact that, as an entrepreneur, I’ve payed insurance that’s increased 50% in 2 years, I quickly realized that the issue went far beyond a clanking magnetic scanner. Explanations for increased health care costs are: overuse and misuse of insurance, the cost of treating the uninsured, increased prevalence of malpractice lawsuits, limited supply of health care providers, low growth in productivity (the ability to efficiently service patients) and more expensive treatments for people who live longer. Today, this issue has become very local. We look at how anti-competitive regulation more than doubles the cost for MRI services in Charlottesville.
Dave Witmer’s an orthopedic surgeon who told me several times that “no one is going to like me over there.” It’s a funny thing to hear from a doctor who does nothing but fix people’s problems all day. Dave’s office sits right across from Martha Jefferson hospital where he performs a variety of hip, knee and other orthopedic surgeries. Often times, Dave might advise his patients to get an MRI scan as part of the diagnosis process. MRI’s are used to visualize the internal structure and functions of the body for evaluating everything from cancer to ligaments. Dave and his consultant estimate that approximately 40,000 scans take place in the Charlottesville area each year.
An MRI Scanner, from Wikipedia
These giant machines aren’t cheap (or quiet if you’ve ever been in one). They cost $1 to $3 million depending on the model type and scans can range from $1,000 to $2,500. In Charlottesville, you can get an MRI scans at two places, UVa Health System or Martha Jefferson. UVa has 7 MRI scanners and MJ has 3. Scan costs in town average $2,500 before radiologist reading fees, according to documents filed by both hospitals. Doing the math it’s easy to see that MRIs are big business, bringing in over $100 million in revenue to both hospitals, and comprising approximately 10% of MJ’s revenue. Dave believes that the scans cost way too much and have contributed to people refusing them or driving to Richmond to save money. Employers are overpaying for unnecessarily high MRI costs. It affects everyone in Charlottesville, because ultimately, as residents, we all have to bear the costs.
Dave, also an entrepreneur, decided to bring cheaper MRI scans to Charlottesville. Unfortunately, you can’t just bring in a scanner. You will face resistance from the hospitals that have, essentially, a duopoly on the Charlottesville MRI scan market. You need to spend a lot of money to deal with the legal and regulatory issues. To date Dave has spent well over $100,000 and isn’t very far.
Importantly, you have to go through the Certificate of Public Need program, which “seeks to contain health care costs while ensuring financial viability and access to health care for all Virginia at a reasonable cost.” Ensuring financial viability is a scary term which brings up a fear of politics superseding the needs of people. As part of a Certificate of Public Need (COPN), you have to meet 21 criteria which are basically a set of arguments you need to make to Virginia Health officials in order to receive approval to bring in an MRI scanner. Dave views the COPN as a process to exclude competitors from taking away the hospital’s highly profitable MRI business. The whole “ensuring financial viability” is a vague term which could easily be used to argue against competition and maintain the power of the existing, and overly expensive, set of services provided by the hosptial.
Here’s what makes the hospitals nervous: Dave plans to bring in a mobile scanning unit which would operate once per day out of his office parking lot, conducting scans for less than $1,100 including radiologist reading fees. He faces hospitals who prefer that competitors don’t exist and he faces a variety of decision makers that probably find it a lot easier to listen to what the hospitals say than one little doctor.
This issue is about access to health care and patient rights
While this is a for-profit business, that shouldn’t matter, because this is a perfect example of why we need less regulation and more competition in certain areas of health care. If Dave can more than halve MRI costs for Charlottesville residents, then we shouldn’t have any resistance from Virginia authorities. With the political clout of the hospital systems, the expected fight from the hospital (UVa has already put in a competing COPN for 2 MRI scanners, at the same $2,500 price to the end user), and the associated regulatory issues it’s going to be a long, difficult road for Dave.
How can you help?
The Northwestern Virginia Health Systems Agency will be holding a public hearing on both MRI applications on Thursday, June 18, 2009 at 6:30 PM at the Lane Auditorium in the County Office Building. This meeting is an important opportunity for members of the public to speak out in a favor of our project.
You can also send support letters to:
Karen Remley, MD, MBA, FAAP
State Health Commissioner
Virginia Department of Health
P.O. Box 2448
Richmond, VA 23218-2448
Copies should be sent to:
Erik O. Bodin, III
Director
Division of Certificate of Public Need
Virginia Department of Health
9960 Mayland Drive, Suite 401
Richmond, VA 23233
G. Stuart Mills
Executive Director
1924 Arlington Blvd., Suite 211
Charlottesville, VA 22903
David S. Witmer, M.D.
912 East High Street
Charlottesville, VA 22902
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spellcheck yo title
Thanks, I do not know how that one slipped through.
NOW I CAN STARE AT THIS DOCTOR ALL WEEK!!!! woo!!!
i would much rather stare at this nice doctor than those stupid fucking hipsters
we get it. you are an entrepreneur.
nice article, Kyle.
“Dave Witmer’s an orthopedic surgeon who told me several times that “no one is going to like me over there.” ”
This makes me like him very much! Good guy, I hope he succeeds. Thanks for the contact info and great article.
Good article. It’s nice to know that someone is willing to advocate for patients locally…there’s been so much debate about health care reform at the national level that we tend to forget the people needing care in our area now.
Will the Good Doctor be reaching out the the Free Clinic with this kind of service should it become available?
Dave said he works at the Free Clinic and I wouldn’t be surprised if he would lend the services to the Clinic.
Awesome!
Dr. Witmer saved my leg in 2003 when I cut it while fishing down on the Rockfish River. When I fell from the cut on an unknown object in the river I fell and tore my MCL and my meniscus. I had to tie a tourniquet to stop the bleeding as it was cut down to the bone and very deep and wide freaking open about 6 inches. It took me two hours to get out of the river and another 45 minutes to get to the emergency room at Martha Jefferson… Thank god my buddy Ben Hernandez was there with me or who knows what would have happened.
Later I got a joint infection and septic arthritis from the filth in the river with a 105 temperature. Dr. Witmer went in and cut out the infection and saved my leg as well as my life… Of course two days after the surgery I went to the UVA-Duke football game and took three morphine pills combined with two bourbons in a luxury box and nearly lost my mind in a Hunter S. Thompson like ACC experience.
He’s a great surgeon and a very good man. Good luck fighting the hospitals.
you’d look pretty cool with a peg leg though. but oh yeah, good job Dr. Witmer!
Read the New Yorker article with the picture of the patient as an ATM machine:
The Cost Conundrum, by Atul Gawande
Is this advertorial? I realize cvillain isn’t a news source, but my guess is that the state, MJ, and UVA would at least nominally respond with something more than, “We don’t want any competition.”
No it’s not…it’s a fucking infomercial.
I think it’s great that someone wants to add another magnet to the Cville area, but let’s be fair. The issue is more complex than the angelic do-gooder vs. the price-gouging corporate monsters.
MJH and UVA charge more for their scanners because, among other reasons, because their overhead is about 3x what a solo doc’s overhead is. At MJH, part of that overhead includes maintaining the operating rooms and staffing them with personnel so the good Dr. Witmer can do his thing. At UVA, that overhead includes quite a bit of care for Virginians who cannot pay (they are required by law to accept all comers – including medicaid – which many private practice docs refuse to accept; ditto people who can’t pay). It also includes subsidizing the salaries of the physicians (who don’t get paid nearly as much as an equivalent private practice doc) who wish to do research (historically, research is funded by grants, but the decline in NIH funding during the Bush years has been felt by research institutions like UVA).
One other thing, employers aren’t paying for MRI scans, their paying for the insurance that pays for the MRI scans. That same insurance pays for all kinds of care, including Dr Witmer’s fees, which I would wager, are comparable to those charged by other docs of his specialty in the area [full disclosure: I haven't checked his fees against other ortho docs in Cville; I'm guessing] The charge for a scan is one of many, many factors that an insurance company will take into account when determining fees.
I’m not saying either of the hospitals in Cville is perfect, but let’s be real. Dr. Witmer’s motivations may be to increase competition in the area, but it’s equally plausible that the man wants to make a profit on the service and he’s taking advantage of his low overhead to give him the ability to do so. And there’s a lot I don’t know about antitrust law, but I was under the impression that docs can’t own the imaging center they refer to. If he does own the magnet, he has an incentive to order more scans and will make money on every one of them. That conflict of interest isn’t a deal-killer to me, but that conflict doesn’t exist for the docs at UVA or MJH. So before you run out and ask him for a pan-man-scan in his shiny new MRI, think about where that money goes.
DGL, thanks for adding some insight. I’m aware that hospitals have costs that single doctors don’t bear. Why then did they allow a joint venture orthopedic surgery center several years ago under the fear of the removal of COPN? Hospitals should be willing to reduce costs and work with doctors to make that happen. Overhead also includes things like large salaries for directors, questionable marketing spending, and other things which sound less than noble.
I agree that limited labor and the uninsured increase the cost of health care, but I don’t think that justifies passing on the cost and limiting competition. With that argument, we might as well throw in the towel, monopolize everything and charge everyone billions of dollars for simple treatments to subsidize all the research and all the other overhead costs. Don’t misunderstand me, I think research and paying for the uninsured are necessary parts of health care, but doing that through unfair practices will hurt everyone in the long run. What happens when people start driving to other cities for MRIs and flying to other countries to save money on procedures? The problem is they already do.
Monopolies and lack of competition make companies lazy and prone to price gouging. By the way, have you ever been treated at UVa? I have a close friend who is going through cancer treatment and her experience has been full of miscommunication and confusion. She’s getting good treatment and her doctor is excellent, but there have been so many periods of uncertainty, lack of communication between departments and poorly organized schedules that you have to wonder. What if there were another local cancer treatment center that actually was competing for “business” with UVa? Would that make UVa rethink how it runs its hospital? Probably. Why do you think everyone who has money goes to MJ when they have a choice?
Employers very well pay for MRI scans, although not directly. Compare that to your example of overhead, indirect costs of doing business, in hospitals. Rising insurance costs, generated by things like MRI monopolies and steady increases in price, contribute to higher overhead for businesses in the form of increased insurance costs.
Dr. Witmer, as I mentioned, is an entrepreneur and as one is trying to make a profit. That’s a great example of how competition can solve problems and make the innovators money. Isn’t that what we’re proud of in this country?
I know heath care is different, but to me, it sounds like a poor justification to monopolize something as prevalent, standardized and profitable as an MRI scan. Also, what about markets like Richmond where a duopoly doesn’t exist? Somehow they function without limiting MRI scans to just the hospitals.
Funding for NIH did not decline under Bush: http://www.politifact.com/truth-o-meter/statements/154/
Just thought I’d mention it.
Have to agree with Craig. I have no reason to doubt the veracity of any of this or the general goodness of Mr. Witmer, but it’s hard to completely believe without addita voice from the supposed oppressors. Shrug.
Err, no idea why that came out “addita voice,” should be “additional voices.” Apologies.
Are you drunk? If so, you do not apologize… you just write ” Oh fuck it”.
Addita voice: Ffuck it, feeling rather antisocial. Bitches dont know about my dabeetus! Fuck you all, chunky, bloviated, cornbiscuitated know it alls. I find it hard to believe any of you, myself included, have any idea what the fuck you are talking about. So whats worse… apathy or ignorance? I dont know and I dont fucking care. GArrr.
Um… anyway. yeah… so… wait what? oh yes… “Oh fuck it”.
Don’t hate on the chunk!
read the new yorker article. everybody is.
Floozy is right @15. I’m sure Dr. Witmer is a good orthopedic surgeon, but physicians that own their own scanners order between 3 and 8 times as many radiology studies as colleagues who do not. It may be cheaper for patients, but the odds are that a lot of marginally necessary scans will end up being done, which adds to the cost of care for everyone in the community. The New Yorker magazine article is worth reading. Turn out for the hearing and vote “NO”.
Truman – Increasing supply and reducing per scan costs don’t increase overall costs. They may increase demand, but most likely other doctors will switch and use the cheaper scans for their patients. Without getting too much into economics, the additional number of scans that a once per week scanner could add aren’t nearly enough to cover any increase in demand that would increase overall costs. The logic that cheaper services means increased overall costs is not accurate because heath care demand isn’t a function of pricing; demand is a function of mainly what doctors advise and then maybe a small factor based on pricing.
Since MRI’s have a large up front capital cost and a relatively small operating cost, the majority of those costs are already sunk by the hospital which should make it easy to offer cheaper services right away to the entire community.
Your statistics (please provide the source) reflect general trends in all of health care. I mentioned the overuse and misuse of insurance which affects health care providers everywhere, not just private practitioners. How many hospital doctors engage in the same types of “marginal necessities?”
additionally, part of the reason hospitals utilize their expensive machinery for “marginal necessities” is because they purchased the machine and have to justify that purchase by its use. (source: Associate in Claims curriculum)
i think the difference between what Dr Widmer proposes and the situation Truman has explained is that it appears Dr. Widmer is proposing to be the administrator of the less expensive MRI scans. it’s not clear if he plans to use this service for his own patients. (or if he’s able to — conflict of interest?)
health care is an anomaly. demand for services is not driven by need for services. demand is driven by availability of services. if there is more care available, people will use more care. in communities where there are more physicians, the community goes to see the doctor more. (source: Associate in Claims curriculum).
There is a copious literature on this phenomenon, dating back almost twenty years. Bruce Hillman, who’s the editor of the Journal of the American College of Radiology was the first of many investigators to find the huge volume increases created by self-referral for imaging. His article was in the New England Journal of Medicine in 1990. You can find a review of this literature in the June 15 report of the Congressionally chartered Medical Payment Assessment Commission (MedPac), which is recommending a crackdown on self referral as part of health reform.
The evidence is compelling: doctors who can hear the coins dropping whenever they order an expensive test (like an MR scan) on equipment they own use the services a LOT more than doctors who do not own the equipment, and refer diagnostic studies to independent radiologists. Cardiologists and oncologists are also cashing in, so it isn’t just a slam on orthopods like Dr. Witmer. Medicare generally prohibits physicians from profiting from the referral of patients to facilities or services they own , but created a gaping loophole for “in office ancillary services”. The loophole ought to be closed.
You should also ask if he is going to be taking indigent or Medicaid patients.
So how much is Witmer going to make from this? This is a recipe for him to order a ton of scans and make money off them, and one of the things Obama is targeting as causing increased medical costs.
In addition, the scans at UVA may expensive, yet there are a bunch of patients with no insurance who pay little or nothing for the care they receive (which can be quite substantial) – money makers like MRIs are often used to offset these costs, and actually help the community by partially funding healthcare for the poor.
Lauren – Do you also question how much service providers make at the hospital? Do you question how much hospital directors make? Or how much the drug companies make? Or how much the machine manufacturers make? Certainly you have a wise group of people at the hospital evaluating these things everyday in order to reduce expenses.
To me it, seems irrelevant and unfair to target Dr. Witmer as anyone could be making the same proposal and try to bring more competitive health care to Charlottesville.
Also, how much did the Charlottesville Free Clinic “save” Charlottesville hospitals last year?
Not sure what you mean about the free clinic – I do volunteer my time there, but am unsure about the financials. There is a limited population who is eligible for the free clinic, and they still would need to go to UVA for hospitalizations, ER visits, etc.
And service providers at UVA make, in general, far less than those in the community and MJH, such as Dr. Witmer…
As far as ‘targeting’ Dr. Witmer, I think it is a valid point. Cvillain writes essentially an advertisement on his behalf, and I think it is fair to examine his motives and financial ties to the situation. The financial incentives and extra income may matter far more to him than passing the savings along to his patients (or it may not), although the latter is far more compelling when arguing his case in the media.
i don’t buy the argument that treatment costs a lot because it subsidizes those who are unable or unwilling to pay for treatment is a valid argument for justifying those costs.
i refuse to be shamed into accepting high medical costs so that my fellow c-ville residents who are uninsured also get the same benefits of that treatment. that’s not the only reason the costs are high.
Kyle -
Your points are well-taken, and I’ll try and respond to those later today when I’m not at work. I wanted to touch base about the conflict of interest issue. As I understand it, under Stark I & II, Dr W wouldn’t be able to refer patients to his scanner, but would accept referrals from other docs. As I said, I’m not certain about the regulatory parts of this, but that’s my best guess.
DGL
Medical care is for losers. Tough it out.
The New Yorker author is on the Fresh Air radio show right now. Did I mention to read that article?
The Cost Conundrum, by Atul Gawande
This guy might be Albert Schweitzer, but then again, Albert Schweitzer was no Albert Schweitzer.
Gawande mentions Stark, and says doctors hire consulting companies to help them get around the self-dealing prohibitions, which are complex. He describes a case where a group of doctors invest in an imaging center and later find they are losing money (presumably the equipment is leased). They then decide to abuse the system and order too many tests. Only one doctor quits the investment instead and takes the financial hit.
Consulting company involved here?
UVa Hospital could learn some lessons from the article too (did I mention this article is a big deal in D.C right now?) Mayo Clinic and some hospital in Grand Junction, CO, are examples of efficient, patient-friendly care. It’s all about how they pay the $.
Adventures in Babysitting is the new Goonies.
The more that I stare at the doctor’s picture, and the more he stares right back through my skull, the more I get a feeling that he has no soul.
Nah, it’s just that he looks british
Which of the two hospitals is better? I’m moving to Charlottesville. Thanks
when i have a choice — and i always have up to this point (by that i mean i can afford it and i’ve not yet been unconscious and subject to the whims of the emergency response team and which hospital is closer) — i choose Martha Jefferson. others may choose differently.
Colfer: It’s my understanding that Mayo sees only patients who can afford to pay them. UVA could do that, but then it wouldn’t be fulfilling its mission to serve all the citizens of the commonwealth. Mayo, while it delivers great care and is beloved by patients, is hardly the economic model that all hospitals could easily duplicate.
What happens when people start driving to other cities for MRIs and flying to other countries to save money on procedures? The problem is they already do.
>>How is that a problem? It’s seems to me it’s clearly a market response that American hospitals respond to or ignore at their peril. By your own logic, such a move should bring down the cost of care here.
By the way, have you ever been treated at UVa? I have a close friend who is going through cancer treatment and her experience has been full of miscommunication and confusion. She’s getting good treatment and her doctor is excellent, but there have been so many periods of uncertainty, lack of communication between departments and poorly organized schedules that you have to wonder. What if there were another local cancer treatment center that actually was competing for “business” with UVa? Would that make UVa rethink how it runs its hospital? Probably. Why do you think everyone who has money goes to MJ when they have a choice?
>> I have a lot of experience at hospitals here in Virginia and Texas, and they all have their problems. The issues are bigger than simply competition/monopoly, as the same problems exist in the Texas Medical Center (multiple hospitals in a few city blocks) as they do in Charlottesville. I agree with you that this needs to change.
Dr. Witmer, as I mentioned, is an entrepreneur and as one is trying to make a profit. That’s a great example of how competition can solve problems and make the innovators money. Isn’t that what we’re proud of in this country?
>>I’m sorry, but now you’re being naive. Simply having an additional magnet in town (or writ large – the whole country) won’t solve the problem. As others point out, the ability to provide medical care creates its own demand, without necessarily improving outcomes. The group up at Dartmouth has done a ton of work on this and has shown pretty convincingly that more spending doesn’t equate to better outcomes. Another magnet in town may bring down the price of a scan, but the overall costs may increase as the reduced price reduces the reticence physicians may have to order them.
I know heath care is different, but to me, it sounds like a poor justification to monopolize something as prevalent, standardized and profitable as an MRI scan.
>>I’m not sure what you mean by ’standardized’, but MRI scans aren’t ‘one-size-fits-all’. Each scan has to be designed with the clinical issue of the patient in mind. Protocol the scan wrong, and you can miss something important. I’ve seen MRIs from a lot of different scanners, and they vary considerably in quality; in some cases, they were a complete waste of money.
One last thing – where is Dr. Witmer going to have the scans read? Will they be read by a local radiologist or will he have a ‘nighthawk’ radiologist in India read them? I’m not trying to engage in any jingoistic foreigner-bashing, but I would rather have a doctor who is licensed (and residing) in the US to read my films. Not because he/she may be better than someone in India, but if I want to ask some follow up questions about the interpretation, I can pick up the phone and do so; and, if that doctor misses something and that failure causes me harm, I can haul him/her into a good ol’ court o’ law and try and persuade a jury that I was wronged.
As others point out, the ability to provide medical care creates its own demand…
Solution: eliminate all medical care, therefore eliminating all demand. Win-win-win.
Saying that the hospital needs the mri’s to subsidize other things is bullcrap. They bill for the operating rooms. doctors pay for priveleges. The MRI machines are a cash cow that allows them to WASTE money elsewhere without searching for cost savings. Hospitals charge for EVERYTHING and the money is WASTED everywhere you look.
The hospital should not charge more for an mri to subsidize another part of the hospital that is inneficcient.
As for the radiologists from “india” reading them… just wait until Obama gets done… all the indian doctors will be here opening up chop shops to milk the system.
To be clear: I’m not trashing Indian docs. It is the case that lots of hospitals are farming out their overnight radiology studies for interpretation. Much of the work goes to doctors who live in India because of low labor costs. That’s the background to my reference.
i was once treated by a doctor in Nairobi who very well may’ve gotten educated in Kenya or Britain or India. he was quite competent, as was his staff.
some patients in Africa go to India to have surgeries done by competent doctors there, for procedures that aren’t done in their area.
Actually, what Dr. Witmer is doing is one of the main contributing reasons FOR increased costs in health care, specifically imaging and radiology.
Good Dr. Witmer, as noted, isn’t doing this solely to make things easier and cheaper for his patients, but to make more money. If he can see the patient as an orthopedist, then do the imaging in house, AND read the imaging in house; he gets insurance reimbursements for not just the professional fees (his time and labor) but the technical fees (the imaging). Non radiologist physicians are importing imaging technology mainly because they get to double-dip (its called self-referral), especially since insurance and medicare/medicaid does not discount the technical (imaging) reimbursements nearly as much as the professional fees.
The reason this increases healthcare costs is because physicians are:
1) Physicians are almost twice as likely to order imaging (even when not necessary) when they have the technology in house. This is CYA, but also to boost profitability for their enterprise…more imaging (as note in the post) equals more money. So…even if the good Dr. saves each patient 50%, he’s imaging 100% more than he would have been referring.
2) Although non-radiologists can see lots of imaging, they are not specialists in imaging, and their misdiagnosis and missed-diagnosis is significantly increased. This increases litigation (not to mention the need for MORE imaging, and MORE professional fees when the mistakes are discovered). Would you let your radiologist do your orthopedic surgery if they set up an operating room in their office? After all the radiologist knows whats wrong, and maybe this radiologist has some procedural and operating experience…
http://www.ajronline.org/cgi/content/full/179/4/843