Overcharges and overuse in dermatology exposed

November 2nd, 2018

It’s been a rough week for dermatology. Recent news stories have revealed blemishes in the field, prompting frank discussions on social media about overuse, privatization, and conflicts of interest. 

An unwarranted removal

The top dermatology story of the week was the abrupt removal of a paper from the Journal of the American Academy of Dermatology website, due to criticism from some leaders in dermatology and private equity executives. The deleted article examined the growing trend in dermatology of private equity taking over clinics, and found that clinics backed by private equity were are more likely to do an excessive amount of well-reimbursed procedures. 

This study aligns with a previous analysis by The New York Times, finding that the number of skin biopsies and invasive dermatologic procedures performed on Medicare patients has increased in recent years, at the same time that private equity firms started buying dermatology practices.

The removed study also suggested that private firms recruit dermatology leaders to work for and promote this commercialization, a claim to which industry leaders unsurprisingly objected. In response to these criticisms, the editor of JAAD decided to take down the piece temporarily, to “allow the authors time to address some inaccuracies reported by readers.”

The journal’s editor, Dr. Dirk Elston, said that temporary removals to correct inaccuracies is not unusual. But other readers asserted that the removal of the piece was an unnecessary and disproportionate response. Dr. Ade Adamson, assistant professor of Dermatology at the University of North Carolina at Chapel Hill, pointed out on Twitter that critics could have contacted the authors or written a letter to the editor to be published along with the piece, instead of pushing for removal. Dr. Vinay Prasad, hematologist-oncologist and assistant professor at the Oregon Health & Science University School of Medicine, agreed that the journal’s response was extreme. “Some facts may be incorrect in many articles, but usual protocol is correction without suppression,” he wrote on Twitter, “Removal of the article is unprecedented.”

The disappearance of the article shows how much power the proponents of privatization have accumulated in a short time. Not only have they turned some dermatology clinics into mills for unnecessary procedures, they have gotten professional societies and journals to aid them in silencing voices of dissent.

As Adamson and other doctors noted on Twitter, there is a generational divide between those who support privatization, because many older doctors are being pressured to “cash out” and sell their practice to private equity, while younger doctors have to live with the consequences. “There is a lot of anger among young dermatologists that see PE as slowly destroying opportunities in the field,” wrote Adamson.

Despite the outrage among many dermatologists about the paper and privatization in general, the article remains off the website as of today (November 1, 2018). 

A grossly inflated price tag

The Kaiser Health News‘ “Bill of the Month” for October shows how some dermatology practices are hiking up prices far beyond the standards in the field. When English professor Janet Winston went to get an allergy test, she had no idea that the provider, Stanford Health Care, was charging $399 to test each potential allergan, more than ten times the price that is considered “customary and reasonable” for that area. Her total bill for testing 119 allergans was $48,329. Even though her insurance paid about $11,000, Winston was still charged a co-pay of 20% of the negotiated rate. 

Why did Stanford charge so much, and why did Winston’s insurance pay so much? Large health systems like Stanford have more leverage to charge absurdly high amounts, and consolidation is only making it worse. Insurers also can contribute to high costs, by accepting “deals” that are much costlier than Medicare would pay. The Affordable Care Act limited the profits insurers can make to a certain percentage of the premiums they collect, which has given insurers a perverse incentive to make premiums – and therefore, costs – higher. (For a great description of how this works, check out this piece by Marshall Allen in ProPublica.)

The prices of dermatology treatments have skyrocketed over the past decade. The retail prices of brand-name drugs increased 400% on average from 2009 to 2015, and prices of generic drugs doubled between 2011 and 2014, on average. While dermatologists themselves cannot control the price of treatment, research shows that they consistently underestimate how much these treatments cost. In a 2017 study that asked dermatologists to estimate the costs of dermatology medications, only one fifth of providers accurately estimated within 25% of the actual cost of the medications. And even though insured patients may end up paying a large chunk of the overall cost through their co-pay, only 15% of dermatologists reported discussing the cost of care with patients when they thought it would be covered by insurance.

Dermatology is not unique among specialties for overuse, high prices, and conflicts of interest. But dermatology practices are being acquired by private equity at a faster rate than other specialties, making them the canaries in the coal mine. Dermatologists are right to question the rapid privatization in their specialty, and all doctors should stand up to conflicts of interest and the abuse of power that so often goes along with it.