Nico Becker

Medical clinics and hospitals are responsible for human life and health. But they are also businesses which need to earn more income than their costs to continue operating.

This drive to maximize a clinic or hospital's income can distort treatment decisions and, in some cases, lead to worse patient outcomes. It can also lead to increased health care costs for patients, as clinicians prescribe expensive therapies, driving up insurance premiums.

How Clinics Maximize Revenue

The enormous revenue pressures of running a clinic or hospital understandably push the organizations to maximize revenue. Clinics and hospitals often achieve this by increasing the amount of reimbursable activity. In practice, this means recommending treatments that require clinical visits, which can be billed for.

For example, a clinic could be motivated to prescribe a clinic-administered treatment, such as an injection, over an at-home pill, because the former creates more reimbursable activity within the clinic.

Much of the bill is usually paid by an insurer or Medicare, and 92% of Americans have some form of health insurance or coverage. But because the patient often does not pay the full bill at the point of care, expensive treatment choices can be pushed through the system often without extensive scrutiny.

Higher system-wide spending has long term consequences, and can ultimately feed through into patient insurance premiums, impacting the most vulnerable Americans.

This behavior is not illegal, though it could be perceived as unethical. The real problem is that revenue maximization could encourage decision makers to prioritize treatments that are more profitable for the clinic, even when there are cheaper or more clinically effective treatments on the market.

ATTR-CM Market: Case in point of Revenue Maximization

The treatment for transthyretin amyloid cardiomyopathy (ATTR-CM) is a perfect example of where therapy choices may be impacted by financial incentives.

ATTR-CM is an underdiagnosed and potentially fatal heart disease, and there are only three FDA-approved treatments on the market: Pfizer's Vyndamax, BridgeBio's Attruby, and Alnylam's Amvuttra.

Vyndamax and Attruby are administered as pills, but Alnylam's Amvuttra is administered as an injection, requiring a clinic and/or hospital visit. As such, there exists a potential incentive for providers to prescribe Amvuttra, even when other treatments, such as Attruby, have been shown to be highly effective at treating the disease, with a 90% stabilization rate.

If clinics or hospitals prescribe Amvuttra because they stand to benefit financially from the margin they earn on buying and billing the drug itself, they could risk worsening clinical outcomes.

Rheumatoid arthritis treatment also affected

A similar conflict appears in treatment for rheumatoid arthritis, where patients may be offered biologic drugs through in-clinic infusions.

When a clinic owns the infusion suite, it can charge the patient for both the drug and its administration. A single infusion visit for a biologic therapy can represent up to $25,000 in billed charges.

That creates an incentive to favor clinic-administered biologics, such as Infliximab or Rituximab, which might not necessarily be the right treatment for the patient, over oral or self-injected options the patient could take at home.

Again, this is not necessarily illegal, but it does create a conflict of interest between the clinic's financial interest and the patient's interest in receiving the most appropriate and cost-effective treatment.

Clinic's Responsibility is Clear

Running any business is a challenge, let alone a clinic or hospital where more than just profit or loss is at stake. But the first duty of any clinic or hospital is to their patients, and clinicians should always choose the best treatment, regardless of financial incentives.

The ATTR-CM and rheumatoid arthritis case studies raise serious concerns around the financial incentives at the heart of the US healthcare system that require urgent review.