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Nov 24, 2024

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HEALTHCARE FINANCE 1 Healthcare Finance Name Institution Affiliation Professor Course Number Date

HEALTHCARE FINANCE 2 Westwood’s Proposal to Lease Diagnostic Equipment Westwood’s proposal to provide physicians with “leased” diagnostic equipment raises both positive and negative consequences. To begin with, the action will likely increase the number of referrals to the imaging center since the scans carried out would be assumed to have been done by the physicians in their offices. This would mean that the imaging center will get more profits from the increased referrals. Also, since the imaging equipment is expensive, the leasing option will likely save the physicians some cash. Giusti et al. (2020) stated that leasing equipment is less expensive than buying it since the lease does not have to pay the initial cost or principal. By paying the monthly or yearly amount, the physicians will lessen the burden of purchasing the equipment at a high cost, thus maintaining business with Westwood. At the same time, the physicians will also receive significant “payment” or kickbacks without breaking the law. However, giving the physicians leased diagnostic equipment will raise the cost of care since the physicians would likely recommend even small procedures that do not require scanning for their own benefit or personal interests. Although the Anti-kickback regulations permit self- refer when the physicians provide the services in their offices, offering these professionals leased diagnostic equipment will raise the referral rate for their own benefit. They might also be tempted to refer even patients under the Medicare and Medicaid health insurance programs, restricted by Stark Law. Such a situation might have a toll on the future inflow of patients to Westwood Imaging Centers. Patients would be likely to run away from this facility when they realize they are charged highly and physicians are the primary architects of the syndicate. This would hurt the

HEALTHCARE FINANCE 3 revenue stream of the facility. Also, the payers might take legal action against the facility for claiming unnecessary reimbursements, leading to financial and reputational issues. Ethical Issue and Parties The case raises several ethical issues. The primary one relates to the fact that Westwood Imaging Center will have to go with the lease deal or proposal to prevent self-referrals. Based on the provisions of the Anti-kickback Law, self-referrals can only be accepted when they have been carried out in the physicians’ offices (Pink & Song, 2014). In this regard, Westwood will have no option but accept the proposal of providing the physicians with leased diagnostic equipment to remain within the confinements of the law. However, this decision will likely increase the healthcare cost for the third parties since the physicians might increase the imaging procedures, including the irrelevant ones, for their benefit. This situation presents an ethical problem since none of the alternatives will result in a morally acceptable outcome. For example, if Westwood agrees with the proposal to provide the physicians with leased diagnostic equipment, the healthcare cost for the third parties will shoot as these professionals will get the opportunity to overcharge. This would be ethically inappropriate since the physicians will be reimbursed for specific services not provided (Rainer et al., 2020). At the same time, if the facility chooses not to offer the physicians the leased diagnostic equipment, it will likely bridge the Anti-kickback Law for self-referrals (Ashwin Palaniappan, 2021). Typically, the two choices put Westwood in an ethical dilemma. Besides, the scenario presents an ethical issue to Westwood Imaging Centers and physicians. The main reason for this is that physicians are restricted from receiving any payment from patients under Medicare and Medicaid refereed to the Westwood. Essentially, a significant percentage of patients are covered by Medicare and Medicaid health insurance program (Pink &

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HEALTHCARE FINANCE 4 Song, 2014). In this sense, if Westwood fails to lease the diagnostic equipment, the physicians will likely not benefit from the imaging services. In other words, they will get the opportunity to overcharge the patients. The case also presents an ethical issue to Westwood Imaging Centers since they are paying physicians for referrals, which breaches the Anti-kickback Law. The facility fears that failing to pay physicians would lead to no patient referrals to their centers, resulting in revenue losses. This comprises the primary reason Westwood is proposing for physicians to be provided with leased diagnostic equipment such that any imaging service for self-referral can be deemed to have been carried out in their offices. What I Would Do As the final authority, I would support the idea of providing physicians with leased diagnostic equipment. This will ensure that healthcare costs remain at reasonable levels and that the Anti-kickback Law’s self-referral provision is not breached (Ashwin Palaniappan, 2021). Also, leasing the equipment will ensure Westwood continues to generate revenue to support its operations. It will also ensure the physicians refer one patient at a time, preventing instances of kickbacks. Moreover, I will ensure that Westwood charges physicians hourly in a week to prevent them from referring a patient and expecting payment. This is because the healthcare expenses rise since Westwood has promised the physicians money for any referral they made.

HEALTHCARE FINANCE 5 References Ashwin Palaniappan, B. A. (2021). Regulatory Changes Affecting Physicians' Referral Practices. Rhode Island Medical Journal , 104 (6), 70-72. Giusti, M., Persiani, N., Silvia, F., & Ricci, R. (2020). Planning and Managing of Diagnostic Imaging Technologies in Healthcare: The Introduction of Managed Equipment Service (MES) for the System’s Sustainability. KnE Social Sciences , 325-338. Pink, G. H. & Song, P. H. (2014). Westwood imaging centers: Payment for referrals. Gapenski's cases in healthcare finance. Chicago, IL: Health Administration Press. Rainer, J., Schneider, J. K., & Lorenz, R. A. (2018). Ethical dilemmas in nursing: An integrative review. Journal of Clinical Nursing , 27 (19-20), 3446-3461.