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HEALTHCARE FINANCE
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Healthcare Finance
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HEALTHCARE FINANCE
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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.
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