Sunday, January 23, 2005

The Rise and Fall of the Body-Scanning Clinics

The New York Times > Health > Rapid Rise and Fall for Body-Scanning Clinics

There's not that much that surprises me in health technology and marketing, but this did. I did not expect the body-scanning clinics to crash and burn. Is the story really over? These services struck me as a really awful idea, but I'm used to awful ideas being popular.

Overall it seems like the market for these services was more limited than expected; vendors overbuilt then slashed prices. Maybe they'll continue at a lower level of demand, or maybe they'll find a way to provide CT services for far less money. The latter would be interesting if it happened, but it may be the demand simply isn't there. On the other hand the non-medical fetal ultrasound clinics seem to be still in business

This is a great story by Gina Kolata, one of the best medical journalists around. She exposes the greed of some prestigious academic health centers -- who jumped on the bandwagon even though they knew well that this service was likely to cause more harm than help. Shame on Harvard for succumbing, and credit to Yale for resisting.

One of the most important aspects of this story is what it says about the effects of a true marketplace on healthcare costs. There are almost NO true markets in medicine, this was one of them. Prices fell by 50% over a year -- to the very edge of profitability. It may say something about how medical savings accounts might work (I'm a cautious fan):
The New York Times
January 23, 2005
Rapid Rise and Fall for Body-Scanning Clinics

For a brief moment, Dr. Thomas Giannulli, a Seattle internist, thought he was getting in at the start of an exciting new area of medicine. He was opening a company to offer CT scans to the public - no doctor's referral necessary. The scans, he said, could find diseases like cancer or heart disease early, long before there were symptoms. And, for the scan centers, there was money to be made.

The demand for the scans - of the chest, of the abdomen, of the whole body - was so great that when Dr. Giannulli opened his center in 2001, he could hardly keep up. "We were very successful; we had waiting lists," he said. He was spending $20,000 a month on advertising and still making money.

Three years later, the center was down to one or two patients a day and Dr. Giannulli was forgoing a paycheck. Finally, late last year, he gave up and closed the center.

Dr. Giannulli's experience, repeated across the country, is one of the most remarkable stories yet of a medical technology bubble that burst, health care researchers say.

It began as a sort of medical gold rush, with hundreds of scanning centers, with ceaseless direct-to-consumer advertising, and with thousands of Americans paying out of pocket for the scans, which could cost $1,000 or more.

It ended abruptly with the wholesale shuttering of businesses.

CT Screening International, which scanned 25,000 people at 13 centers across the nation, went out of business. AmeriScan, another national chain, also closed. So, radiologists say, did another company that put scanners in vans and traveled to small towns in the South.

The business's collapse, health care researchers say, holds lessons about the workings of American medicine.

It shows the limits of direct-to-consumer advertising and the power of dissuasion by professional societies, which warned against getting one of these scans. The tests, they said, would mostly find innocuous lumps in places like the thyroid or lungs, requiring rounds of additional tests to rule out real problems, and would miss common cancers, like those of the breast.

It also shows the workings of the medical market - when insurers refused to pay, requiring customers to dig into their own pockets for the tests, scanning centers found themselves cutting prices to compete. Within a year, some centers said, prices fell to less than $500 from $1,000 or more.

... The scans were something new in American medicine - not like traditional screening scans, mammograms or colonoscopies, for example, in which patients are overseen by their doctors. People requested these scans on their own. They paid on their own, with no hints that insurers would start picking up the bill. And the reports came to the customers, not their doctors.

Some proponents said the scans would enable people to take their health care into their own hands. Critics said the scans were medical nightmares, a powerful medical technology gone out of control.

But few anticipated the precipitous reversal of fortune for the scanning centers...

... Dr. Carl Rosenkrantz, a radiologist in Boca Raton, Fla., said the business had another appeal - it promised radiologists a good living without being on call at a hospital and even without necessarily being present at the scanning center.

...Academic medical centers also got into the business, including Beth Israel Deaconess Medical Center at Harvard, which opened Be Well Body Scan. The center is owned by the Beth Israel Radiology Foundation, a nonprofit organization that supports the hospital's radiology department...

At Yale, Dr. Howard Forman, an associate professor of diagnostic radiology and management, said he had felt pressure from hospital administrators to explore the possibility of offering whole body scans to healthy people. He could see why. "From a profitability standpoint, you would go in this direction." But he and his colleagues resisted. "There is no evidence that the scans are good medicine," Dr. Forman said.

Dr. Barnett Kramer, director of the National Institutes of Health's office of disease prevention, said: "For every 100 healthy people who undergo a scan, somewhere between 30 and 80 of them will be told that there is something that needs a workup - and it will turn out to be nothing."

The same arguments were made by the American College of Radiology and the Food and Drug Administration.

...As for Dr. Giannulli, he has moved on to other things. He founded a company, CareTools Inc., which sells software for medical record keeping to doctors' offices. That, he says, is the new frontier in medicine.
I work in the clinical automation industry, so it's a bad sign that Dr. Giannulli thinks we're the next big thing ...

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