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Examining the Idea of Patient Refunds

Medicine: Money-back guarantees are proven marketing strategies in business. But in the health field, contingency fees are controversial.


They may be the six most repeated words in business: Satisfaction guaranteed or your money back.

If the toaster doesn't toast, the dress looks awful or the new car is a lemon, most Americans don't hesitate to stomp back to the store and demand a refund.

We even seek reprisals if we're dissatisfied with such subjective experiences as restaurant meals and Broadway shows.

But would you demand your money back if your health care didn't measure up to what you wanted or expected?

In what some in the medical establishment see as one of the most distasteful repercussions of medicine's transformation into a bona fide business, some health care professionals are beginning to support the idea of the money-back guarantee.

The concept, some critics charge, strikes at the heart of the traditional doctor-patient relationship, which is based on the patient's trust that the doctor will do his or her best and the rest is left to fate. Proponents of the money-back fee structures, however, question the sacred concept that the doctor gets paid no matter what happens.

The controversy of contingency fees in medicine began last year when one of the nation's top infertility clinics, Pacific Fertility Medical Center, began offering some patients a partial refund if they didn't get pregnant. That controversial program has spread to at least five infertility clinics nationwide.

Some urology clinics are offering refunds to men who undergo vasectomy reversals if the surgeries aren't successful, including one doctor's office in Houston that advertises its refund offer on a billboard.

Kaiser Permanente's Northern California Region is offering a refund of up to $25 of the co-payment if members aren't satisfied with their doctor's visit.

And Blue Shield of Northern California, several years ago, dipped a cautious toe into this puddle by offering, in a few cases, to pay for a patient's treatment with an experimental therapy that was not approved for insurance reimbursement provided that the treatment was successful. Blue Shield no longer offers that option, and a representative says the company now views contingency fees based on outcome as "a bad idea."

But refund offers, or payment made contingent on the outcome, should have a role--albeit a limited one--in medicine, argues Dr. Geoffrey Sher, who pioneered the refund program at Pacific Fertility Center, where he is executive director.

"Outcome-based pricing makes in vitro fertilization more accessible to more people [who don't have insurance]," Sher says. "The vast majority of people don't have access to IVF because they can't afford it."

Fees contingent on outcome are particularly suited to the infertility field, he says, because it is obvious whether the treatment is successful.

"I am against outcome-based contingency fees in medicine where you cannot guarantee outcome," Sher says. "But there is no field in medicine where the outcome is so clear-cut as ours. The end point is so measurable. You're pregnant or you're not. I'm not saying this belongs in every field of medicine."

Instead of suffering, the doctor-patient relationship should be enhanced by risk-sharing fee structures, he suggests.

"Nobody would argue that perception of caring is as important as the quality of care. But don't you feel better if you get all the TLC and yet are assured that you are coming to a place where it's cost-effective? It's like getting a warranty on a product you buy."


Such fee structures do not necessarily violate Federal Trade Commission standards on truth in advertising, says Michael Katz of the FTC, which has kept a close eye on the largely unregulated infertility field.

"Our interest is whether the advertising is truthful and accurate, or does it misrepresent facts? We will not get involved in an issue about whether something is ethical," he says.

Critics, however, view the trend as over-the-top commercialism.

The American Medical Assn. in June reiterated its objection to contingency fees because of the growing popularity of the concept in the infertility field. The AMA statement explained that a doctor's fee should be based on the "value" of the service, not the outcome.

"Doctors do the very best they can, and what happens after that is beyond their control," says Dr. Robert M. Tenery Jr., a Dallas ophthalmologist and member of the AMA's council on ethics and judicial affairs.

Contingency-fee plans "change medicine from a bond between the doctor and patient to some sort of business transaction. That is not what we want the relationship to be," he says.


Other observers say the concept makes them uncomfortable.

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