Joint venture physician practices over-treat patients and reap economic rewards in the process. These types of practices are very different from the traditional group practices described in the text. Physicians partnered in traditional large group practices provide comparable services, usually practicing within the same specialty, such as Dermatology or Orthopedics. As Getzen (2010) explains, "One reason for physicians to work together in group practices is to obtain economies of scale from sharing office space, equipment, and information systems." (Getzen, 2010).The goal of these physicians groups are to increase revenue through sharing the expenses associated with ancillary help. The traditional group practice structure appears to uphold the agency relationship among the treating physicians and patients, and, on its face, does not appear to foster an environment in which treatment plans are devised and recommended in order to increase practice revenue.
Joint venture practices, on the other hand, (either by their design or because of it) are under continuous scrutiny for just such practices. Joint venture practices are structured to provide ancillary services, a business structure much different than sharing ancillary help (as with traditional group practices). Under this structure, treating physicians set up their own 'in-house' diagnostic and pathological laboratories and various types of treatment centers to provide patients with prescribed therapies. These joint venture practices are structured to provide patients with a virtual one stop doctor's visit, no referrals needed, and, all services are rendered 'in-house'. Arguably, under this arrangement, the spirit of the AMA code of ethics against profiteering from patient treatment is completely desecrated, as the checks and balances of peer oversight has been removed. Still, legally, these kinds of practices are permitted, under Stark Law (Omnibus Budget Reconcilliation Act of 1989, 1989) because of the...
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