Sponsor testimony by Senator David Goodman

Senate Bill 309

Physician Conflict of Interest

Senate Health, Human Services and Aging Committee

Wednesday, November 20, 2002

 

 

Chairman Wachtmann, members of the Senate Health, Human Services and Aging Committee, thank you for the opportunity this afternoon to speak on behalf of legislation I introduced last week to extend state law on physician conflict of interest to inpatient hospitals.

 

Senate Bill 309 was introduced at the request of the Ohio Hospital Association. A companion bill was introduced in the House yesterday by Representative Jon Peterson, R-Delaware. I ask your support of this legislation on behalf of Ohio’s 170 community hospitals.

 

I, along with other Central Ohio legislators, have been concerned for several months about the looming threat of physician-owned hospitals and the conflict that exists when a physician refers patients to an inpatient hospital in which he or she is an owner. This conflict threatens to undermine the ability of full-service community hospitals to serve their communities by continuing to provide necessary, but not typically profitable, services like burn units, trauma care and wellness programs. Simply, it threatens to erode the high quality of care we current enjoy.

 

Ohio hospitals are seeking passage of this legislation at the earliest opportunity to clarify state law that physicians cannot refer patients to inpatient facilities in which they have an ownership interest. National studies have demonstrated that physicians with ownership interests refer patients more frequently to their own facilities than physicians without such conflicts. In addition, hospital administrators and community leaders on their governing boards believe health care access and delivery will suffer if the growing national trend of physicians investing in specialty hospitals proliferates in Ohio.

 

Physician conflict of interest is not a new issue. The 119^th General Assembly first recognized the problems associated with physician self-referral in 1992. Since initial prohibitions were enacted in December 1992 to bar physicians from referring patients to their own clinical labs, the law has been amended to also recognize the conflict of interest created when physicians refer patients to other facilities they own. Current statute now prohibits physicians from referring patients to clinical labs, outpatient prescription drug services and home health facilities that they own. My legislation would merely add a fourth conflict – inpatient hospitals.

 

It is important to also understand what this legislation is not about. It is not about opposing specialty hospitals, which certainly have their place and may even play a greater role in health care delivery in the future. It is not about opposing competition from health care providers who wish to enter the Ohio market. And it is not about restricting the medical practice opportunities of physicians.

 

This legislation is about the awkward position physicians find themselves in when they refer patients to a facility in which they have an ownership interest. The legislation is about recognizing that, despite a physician’s best intentions on behalf of patients, corporate concerns could pose problems that should be avoided. The legislation is about making sure patients are not placed in situations where their physicians have a conflict of interest.  And, I am asking your urgent approval because this legislation is about making Ohio law clear before the state sees a proliferation of physician-owned facilities, which would ultimately threaten the existence of community hospitals.

 

Of behalf of a strong Ohio health care system that deserves our support, thank you for your favorable consideration of and support for Senate Bill 309. I am happy to answer your questions.