In New York, a Heart Surgery Factory With 'Obscene Levels' of Pay

Photographer: Terry Vine/Getty Images

Arterial catheterization. Close

Arterial catheterization.

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Photographer: Terry Vine/Getty Images

Arterial catheterization.

Certain patients who showed up at Mount Sinai Hospital’s emergency room on Sunday mornings stood out, and not because they were cases of gruesome trauma or exotic illness.

They drew scrutiny because they already had appointments. Each was scheduled for a procedure at Mount Sinai’s catheterization lab, where cardiologists thread wires and tubes into blood vessels to detect disease and insert cardiac stents.

The New York hospital’s cath lab has regularly scheduled such emergencies-by-appointment, according to three doctors and another medical professional, all of whom said they had direct knowledge of the practice. They asked not to be identified because they weren’t authorized to speak about hospital procedure.

On a pair of representative Sundays in 2012, 10 patients told ER workers they’d been instructed to arrive there before their cath-lab appointments, according to internal hospital correspondence. Two of them said they’d been coached to say they were having acute symptoms of heart disease, according to the exchanges.

The reports of scheduled ER visits raised a concern internally that some cardiologists might be using the emergency department to get the costs of uninsured patients’ procedures covered, according to hospital correspondence. In some cases, the government’s Medicaid program and private insurers will pay for procedures done via an emergency-room visit that wouldn’t be covered otherwise. It’s unclear how the 10 patients paid for their care.

Mount Sinai “does not ever support or condone misrepresentation of patient symptoms,” according to an e-mailed statement from the hospital. A Mount Sinai spokesman didn’t address whether the hospital has routed cath-lab patients through the emergency room.

Appropriateness Guidelines

Patients’ accounts to ER workers that they were instructed to claim specific symptoms also call into question whether the cath-lab services they received were appropriate, current and former Mount Sinai doctors said. Stents -- the small metal-mesh tubes that doctors insert to prop open blocked blood vessels -- are more likely to be deemed appropriate in patients who report urgent symptoms such as chest pain, according to the usage guidelines of leading cardiology associations.

The hospital’s annual cath-lab report last year said that fewer than 4 percent of the stent procedures it performed on stable cardiac patients in 2010 were considered “inappropriate” under professional guidelines, which it calls one of the lowest rates in the nation.

Busiest Lab

While Mount Sinai officials still are reviewing issues related to the ER allegations, the hospital’s internal reviews “have not identified systemic issues with regard to appropriateness or quality-of-care,” according to a statement issued by Jim Mandler, Mount Sinai’s spokesman prior to his Feb. 7 departure from the hospital. No one has publicly accused Mount Sinai of doing anything wrong.

Interviews and documents provide a behind-the-scenes look at Mount Sinai’s cath lab, which the hospital calls “the best and busiest” in the U.S. The lab’s stent doctors “are stellar proceduralists, with a track record of success worthy of emulating,” said Sanjay Kaul, a cardiologist and researcher at Cedars-Sinai hospital in Los Angeles.

The cath lab extols its volume; the most recent annual report described the growth in its number of procedures as “remarkable,” “substantial,” “significant” and “tremendous.” Hospital records show that the lab’s compensation system for doctors incentivizes more procedures.

Patient Referrals

The facility’s rise has been fueled partly by thousands of patient referrals each year from a network of affiliated doctors in private practice. Among the most prolific referrers are doctors who’ve had financial arrangements with Mount Sinai, including agreements allowing the hospital to use their offices for a fee, according to documents reviewed by Bloomberg News. The hospital doesn’t pay for referrals, and its dealings with the doctors comply with laws regulating that practice, according to statements from Mandler.

Mount Sinai’s cath lab sits atop the competitive New York market after more than doubling its annual number of stent-related procedures during the 2000s -- just as the use of cardiac stents in non-emergency cases became one of the most contentious issues in cardiology.

When stents are used to restore blood flow in heart-attack patients, few dispute they’re beneficial. For stable patients, at least eight studies have found that stenting, one of the most lucrative services hospitals provide, is no better than drug-centered treatment for preventing heart attacks or death.

Emergency Coverage

Allegations that pre-scheduled cath-lab patients showed up at the ER may signal efforts to get unwarranted payments from health insurers or federal coverage programs for patients who wouldn’t be covered otherwise, said James Sheehan, chief of the charities unit for the New York state attorney general’s office. Sheehan, a former inspector general of the state’s Medicaid system, was speaking generally, not specifically about Mount Sinai.

In emergency situations, patients cannot be turned away just because they can’t pay for care, according to federal and New York state laws. New York’s Medicaid system spends about $500 million a year on emergency procedures for uninsured patients.

After Andy Jagoda, Mount Sinai’s emergency-department chief, heard in 2012 that cardiologists were sending patients through the emergency ward with previously scheduled cath-lab appointments, he indicated that he had brought the matter up with the hospital’s administration and would do so again. Mount Sinai declined to make Jagoda available for an interview.

Stent Profit

Mount Sinai’s cath lab contributed to a financial turnaround at the hospital, which has a gilded cast of donors and trustees that includes Wall Street billionaires Carl Icahn, Henry Kravis and Leon Black.

Annual revenue doubled to $1.85 billion between 2002 and 2012 as the non-profit hospital swung from deficits to an operating surplus of $131 million. While Mount Sinai declined to disclose the cath lab’s financial results, hospital documents show that a typical patient pays about $20,000 for a stenting, and the lab did 4,729 stent-related procedures in 2012. It’s a lucrative specialty; about 42 percent of revenue from Medicare stent procedures represents profit at Mount Sinai, according to data compiled by the American Hospital Directory, which reviews hospital finances.

‘Commanding Lead’

Since 2007, Mount Sinai’s lab has maintained “a commanding lead” over other New York hospitals’ by doing at least 1,500 more “interventions” -- or catheter-based treatments -- than any other, according to Mount Sinai’s cath-lab report last year.

Under guidelines published by the American College of Cardiology in 2009, stent procedures are classified as “appropriate,” “inappropriate” or “uncertain,” depending on patients’ conditions and symptoms. Mount Sinai’s cath-lab report shows that slightly more than half its stent procedures for stable patients are considered appropriate, while more than 40 percent are uncertain and about 4 percent are inappropriate. The hospital’s reported rate of inappropriate procedures in stable patients is about a third of the average found in national studies, while its uncertain rate is about six percentage points higher.

“It seems unlikely any cath lab could do that many procedures that are all appropriately indicated,” said Kaul, the Cedars-Sinai researcher.

Compensation Structure

Doctors working in Mount Sinai’s cath lab can have their target salary and bonus cut if they don’t reach a certain level of “relative value units,” which are assigned to procedures they perform based on their complexity, according to Mount Sinai documents. In one hypothetical example in the documents, a doctor’s pay is reduced to $200,000 from $229,920 based on an RVU shortfall.

Linking specialists’ compensation to the volume of their work may give them incentives to perform unnecessary procedures and harm patients, according to Robert Berenson, a physician and fellow at the Urban Institute. “Such a ‘focused factory’ approach may improve technical proficiency and efficiency but frustrates the goal of providing higher value for patients and society,” said Berenson, a former vice chairman of the Medicare Payment Advisory Commission, which advises Congress on the federal health-insurance program for the elderly and disabled.

Mount Sinai doesn’t pay physicians based on how many patients they bring in, “but we do pay them for their personally performed professional services,” according to the statement Mandler provided.

Topping CEOs

At Mount Sinai, few doctors are paid more than Samin Sharma, the director of interventional cardiology, who oversaw and paced the center’s growth. Sharma, whose biography on the hospital’s website says he performs more complex coronary interventions than any cardiologist in the country, was paid $4.8 million by Sinai in 2012, the hospital’s report to the Internal Revenue Service shows. That’s more than the CEOs of 45 companies in the Standard & Poor’s 500 Index -- including Microsoft Inc. (MSFT) and Amazon.com Inc. -- earned that year.

Kenneth Davis, Mount Sinai’s chief executive officer, bemoaned the “obscene levels” of pay for interventional cardiologists at a conference this summer, where he said a starting pediatrician at the hospital “is going to earn 40 times less” than a top cath-lab specialist. Mount Sinai officials declined to clarify the CEO’s statement, or to make Davis or Sharma available for this article. Starting pediatricians earn an average of $135,000 a year, according to Healthcare-Salaries.com, which lists compensation for various types of physicians.

Lab’s Day

On a typical day, the patient board in the hallway of the cath lab is full of names scheduled for procedures that begin early in the morning. Sharma is a commanding presence, issuing orders as he moves among cases in the six rooms, checking the work of fellows in training and monitoring procedures.

Sharma travels frequently to his native India to treat patients. He and his wife, Manju, recently finished overseeing the construction of a 10-story, 250-bed hospital in his hometown of Jaipur called the Eternal Heart Care Centre -- a sleek, bowed facility that resembles a giant cruise ship sheathed in glass. The hospital, which lists Sharma as its chairman, plans to promote “medical tourism” and will be affiliated with Mount Sinai, according to its website.

Under Sharma’s leadership, Mount Sinai’s cath lab grew among some of the stiffest competition in the U.S. With 32 hospitals in New York City licensed to offer cardiac catheterizations, drawing more patients than your rivals isn’t easy, said Jonathan Marmur, who worked in Mount Sinai’s cath lab from 1994 to 2002.

Combing Streets

“You essentially have physicians combing the streets of Staten Island, Queens, Brooklyn and Bronx looking for patients they can screen on a treadmill to feed into the cath lab, where the big reimbursement comes,” said Marmur, now the head of interventional cardiology at State University of New York Downstate Medical Center in Brooklyn.

Mount Sinai tracks referrals to the cath lab closely, according to current and former employees and documents reviewed by Bloomberg. On average, doctors who have financial ties to the hospital -- such as arrangements to provide Mount Sinai cardiologists with office space for a fee -- tend to make more referrals, based on data from 2010. In that year, seven doctors or practices that had such business dealings with Mount Sinai referred 301 patients to the cath lab on average -- 15 times the average referrals made by all 546 doctors who sent patients to the lab that year, according to hospital documents.

‘Money Drives’

“Physicians with enhanced financial incentives have dramatically different referral patterns from physicians who don’t have enhanced incentives,” said Jean Mitchell, a health-care economist at Georgetown University. “Money drives the system,” said Mitchell, who has published more than 30 peer-reviewed studies on how financial incentives affect physician practice patterns.

Across New York City, cath-lab patients are especially likely to get stents, according to Medicare data compiled by the Dartmouth Atlas of Health Care. In the U.S., doctors perform about 480 stent procedures for every 1,000 times they do a visual scan for blockages in patients’ arteries, the data show. In Manhattan, it’s 584 per 1,000; in Brooklyn, 632. All five city boroughs have rates above the national average. They’re also higher than average for the number of stent procedures per 1,000 Medicare enrollees; for example, Brooklyn, at 14 per 1,000, is 84 percent higher than the national rate.

City Competition

New York’s rates are driven by a “surplus” of cath labs seeking patients, a competition that spurs usage of hospitals’ facilities and doctors’ expertise that’s unrelated to patients’ needs and distorts the market for heart procedures, Marmur said. “The pendulum is way out of whack,” he said. “It drives up the cost of health care for everyone.”

One leading source of patients for Mount Sinai’s lab is an affiliated medical practice, Cardiology Unlimited, that’s anchored in the city’s Dominican community and has offices in Manhattan and the Bronx. Its owner, cardiologist Eliscer Guzman, sent the cath lab 471 patients in 2010 -- more than 23 times the average of all referring physicians that year, hospital documents show.

At the same time, the hospital was using Cardiology Unlimited for other services, hospital records show. As recently as 2011, the hospital had an agreement to pay the practice about $500,000 annually for the use of workspace and services at two Cardiology Unlimited offices, according to records reviewed by Bloomberg News.

Market Value

Federal laws prohibit hospitals from paying doctors to make referrals. In cases where hospitals have business dealings with referring doctors, like Guzman, the laws require that any payments from the hospital must align with the market value of the goods or services it receives.

In one arrangement, Mount Sinai paid Guzman’s practice $24,700 a month for the use of three rooms and support services for five Sinai doctors at a Manhattan office on West 185th Street, according to hospital records. The practice was paying the building’s owners, which included Guzman, $8,269 a month for what was listed on a ledger as rent, according to Cardiology Unlimited documents reviewed by Bloomberg News.

Mount Sinai said its transactions with Guzman were “rigorously vetted” to comply with the law. The hospital’s contracts with him prohibit paying in any way for patient referrals, according to Mount Sinai’s statement, which didn’t address specific questions about the rental payments.

Guzman was too busy for an interview, an employee told a visitor to his office. He didn’t return repeated messages left at his office and home.

TV Show

Mount Sinai’s dealings with Guzman also included negotiations over an employment contract for him in 2007 and a plan for the hospital to sponsor a local television show that featured the doctor.

“This is probably the single most important relationship we have,” Wayne Keathley, the hospital’s former president, wrote in a 2007 e-mail to Sharma and another cardiologist. Keathley declined to discuss the hospital’s relationship with Guzman.

Under terms that Mount Sinai was negotiating that year, the hospital would pay Guzman to give talks at conferences in New York. Mount Sinai staffers would “prepare the conferences for him,” according to an e-mail that Pedro Moreno, a Mount Sinai cardiologist, sent to Keathley. The hospital declined to say whether the arrangement for speaking fees was finalized. Moreno declined to comment.

The television show, called ¡A Tu Salud!, or To Your Health!, ultimately aired on the local Univision station on Sunday mornings. The hospital declined to comment on the terms of its sponsorship, saying the program’s “sole purpose” was “to enhance the Latino community’s understanding of important health issues and to offer them opportunities to access culturally-sensitive clinical services.”

To contact the reporters on this story: David Armstrong in Boston at darmstrong16@bloomberg.net; Peter Waldman in San Francisco at pwaldman@bloomberg.net; Gary Putka in Boston at gputka@bloomberg.net

To contact the editor responsible for this story: John Voskuhl at jvoskuhl@bloomberg.net

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