To the editor:

You published an editorial from the Providence Journal on Dec. 26 regarding the "Problem of self-referring doctors." A related issue that needs to be addressed in public debate and by lawmakers is the problem of self-referring hospitals.Pressured by per-service reductions (by not total reimbursement) from Medicare and other governmental entities, hospitals began in 1984 to set up owned subsidiaries in related businesses where they can control referral patterns.

Like physicians, these self-referring hospitals "make money if they patients have their X-rays in their hospital facilities but earn not a penny if their patients go elsewhere for those procedures."

Like physicians, hospitals may be trying to maintain close control of patient diagnosis and care with these ventures. More likely, as the editorial cited, "We suspect that plain old greed lies behind some of this activity."

Surveys in many areas find that hospital-owned companies seldom provide products or services at lower prices or higher quality then their competitors. An example in Utah is the rapidly escalating cost of blood services after the Red Cross was driven out of business.

Historically, home medical equipment (HME) companies have competed vigorously to provide continually improving quality products and services at competitive prices. Self-referring hospitals have, for the most part, shunned independent accreditation, certification and training that other companies have found necessary in order to provide better customer services. On the other hand, non-self-referring hospitals are able to refer their patients to the best HME providers that intense competition can provide.

What can be done? First, patients ought to be made aware that they have a choice. In Mt. Pleasant, the hospital has recently made a decision to open its own HME company, notwithstanding that its patients have been well served by competitive companies at the same price as charged in the urban areas along the Wasatch Front.

These companies have spent years developing programs, training their staff, and completing laborious accreditation standards in order to provide high quality care. The hospital, however, may simply "hang up a shingle" and obtain all of the patients in the area through self-referral.

Second, our state legislators and taxing authorities ought to investigate this problem and decide if it is truly in the public's interest to allow "not-for-profit" companies to drive tax-paying companies out of business simply because they can control the referral process.

Third, insurance companies ought to begin to question the quality of service and pricing their beneficiaries are receiving from self-referring hospitals as well as self-referring doctors and encourage their beneficiaries to check elsewhere.

James E. Robinson

President

Interwest Medical

Salt Lake City