Consequences of physicians' ownership of health care facilities--joint ventures in radiation therapy

N Engl J Med. 1992 Nov 19;327(21):1497-501. doi: 10.1056/NEJM199211193272106.


Background: Physicians are increasingly the owners of health care facilities to which they refer patients for services but at which they do not practice. We studied such ownership arrangements, known as "joint ventures," in the field of radiation therapy, examining their effects on access, use of services, costs, and quality.

Methods: Because 44 percent of free-standing facilities providing radiation therapy in Florida in 1989 were joint ventures, as compared with 7 percent elsewhere (95 percent confidence interval, 3 to 10 percent), we compared data for Florida with comparable data for the remainder of the United States. We also compared radiation-therapy facilities in Florida that were established as joint ventures with those that were not. Since most data were derived from entire populations rather than from samples, any differences found were of necessity statistically significant.

Results: No joint-venture facilities providing radiation therapy were located in inner-city neighborhoods or rural areas, but 11 percent of other free-standing facilities and hospital-based facilities were located in such areas. Among free-standing facilities, joint ventures received 39 percent of their revenues from patients with well-paying insurance coverage, as compared with 31 percent for facilities that were not joint ventures (P < 0.01). The frequency and costs of radiation-therapy treatments at free-standing centers were 40 to 60 percent higher in Florida than in the rest of the United States; there was no below-average use of radiation therapy at hospitals or higher cancer rates that explained the higher rates of use or higher costs in Florida. Radiation physicists at joint-venture facilities (the principal personnel involved in quality control other than physicians) spent 18 percent less time with each patient over the course of treatment than did their counterparts at free-standing facilities that were not joint ventures (P < 0.05). Mortality among patients with cancer in Florida was not lower than the U.S. average, even though joint ventures are much more common in that state.

Conclusions: Joint ventures in radiation therapy appear to have adverse effects on patients' access to care. They also appear to increase the use of services and costs substantially. Some indicators show that joint ventures cause either no improvement in quality or a decline. Our results add to the evidence indicating that physicians' self-referral generally has negative consequences. We recommend legislation to ban ownership of joint ventures by referring physicians. Such legislation needs to be carefully designed in order to achieve its objectives and forestall new, financially abusive arrangements.

MeSH terms

  • Ambulatory Care Facilities / economics
  • Ambulatory Care Facilities / statistics & numerical data*
  • Fees and Charges / standards
  • Florida
  • Health Care Costs
  • Health Services Accessibility*
  • Health Services Research
  • Hospital-Physician Joint Ventures* / economics
  • Hospital-Physician Joint Ventures* / legislation & jurisprudence
  • Medicare Part B / statistics & numerical data
  • Ownership
  • Quality of Health Care
  • Radiotherapy* / economics
  • Radiotherapy* / statistics & numerical data
  • Surveys and Questionnaires
  • United States