Your doctor refers you to a diagnostic facility, specialist or hospital for some tests. What would you think? That your health demands it. You’d think it’s in your best interests; you need the test or the treatment, and the people you are being referred to are the ones best equipped to help you. Presuming that such referrals are only protecting your interests is precisely that – a presumption. In reality, your doctor may have a vested interest in referring you to another doctor or treatment facility – he may earn a proportion of the money you spend on these tests and treatments as commission. This practice in our health care system, when the referee of a patient pays out to the referrer for sending him "business", is known as "cut practice", or simply "cut" or "referral fee".

Quite simply, it means doctors have a selfish reason behind sending patients for tests to the diagnostic facility that gives out maximum commissions, or to the specialist who will give them the highest cuts, or to the hospital that will send them maximum referral fees, irrespective of the quality of these services. These financial considerations motivating a doctor pose a strong conflict of interest and the obvious fallout is that a patient can never be completely certain that he actually needs the test or the treatment.

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How bad is the situation today? Since the MCI...has explicitly banned fee sharing, such a practice can only go on covertly, without patient knowledge. It is actually a form of corruption, and many believe it to be fairly widespread and an established system in itself, one that even honest doctors get sucked into, eventually. The scale of this practice is probably embodied in a remark made by a professor of cardiology in the Indian Journal of Medical Ethics: "Pernicious as it is, cut practice has come to stay." Though almost everybody agrees it exists, its exact impact and prevalence has been a matter of some debate. For example, Dr Akash Rajpal of Ekohealth suspects patients end up paying almost 30-50 per cent more than actuals due to this practice. This is higher than an estimate published in the Indian Journal of Medical Ethics which states that as much as 20 per cent of the total expenses incurred by the patient are ‘transferred’ to the general practitioner.

Personally, on the basis of my interactions with hundreds of doctors, I think one could safely assume the figure to be somewhere in the range of 20–40 per cent.


Cut practice is a major contributor to this trust deficit. We must realise that if the reality of cut practice, as the authorities claim, is not as bad as people think it is, our task of fighting it will only become that much easier.

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This practice can take one of several forms, all of which mean that a doctor is "rewarded" for referring a patient to another doctor, diagnostic facility, nursing home or hospital. Cash, cheques (in the guise of professional fee), expensive gifts and dinners, sponsorship to attend conferences, etc., are some of the common rewards. Sometimes, this gratitude is expressed differently. Reciprocal referral amongst doctors is commonplace. For example, a general surgeon and a cardiologist could agree to send each other patients from their respective specialties. It would, of course, be justified if each of them felt that the other was the best in that field, but not if they were simply scratching each other’s backs.

Take the example of this doctor I know who works in a big hospital in a metropolitan city. He recently referred a patient to another renowned specialist in the city. A few days later, the commission duly arrived. The commission market works very efficiently and payments are made on time. There is always a lot of honesty in dishonesty. This doctor, however, did not accept the commission, or at least that is what he told me. Instead, he called this surgeon and said, "I am unable to accept this. I am sure if you referred a patient to me, you wouldn’t either." The commission was politely declined, but a relationship was forged for the future, on a very clear understanding.


What do you suspect would happen if diagnostic facilities didn’t have to pay out these commissions? The tests would become cheaper. Twice in the recent past I got indirect proof of this. Last year, one of my friends needed an MRI done on his knee. He was advised by a third friend of ours, a practicing orthopaedic surgeon, that if he wanted a discount, he should claim to be a selfreferral, not mention the name of any referring doctor and ask for a discount. My friend did precisely that and obtained 30 per cent discount. In another instance, an advertisement was aired on a radio channel in New Delhi in June 2014, where the voice claimed to be able to get you up to 50 per cent discount if you routed the tests through them (rather than the doctors). In both instances, diagnostic facilities showed their willingness to pass on the benefits to the consumer if there weren’t any intermediary doctors to deal with.

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I have heard of multiple cases where the referrer will inform the referee which tests and treatments should be recommended based on what the patient can afford. Now if that sounds like arranged loot, that is exactly what it is. Take the example of this quack from a village who showed up with a patient at the clinic of a doctor I know, and said, "He knows that he will need a CT scan." It is also common for radiologists to be asked to confirm the ‘provisional diagnosis’ so that the surgeon can safely proceed with the operation. The saddest part is that most doctors are not even shy about narrating these stories because everybody believes everyone is in it.

Specialists find it impossible to establish themselves without support from their colleagues in general practice. Life is harder when you have just qualified and have a family to feed. No matter how good you are, you need your general practitioner colleagues to back up your credentials in front of the patients. In this situation, you become the biggest surgeon in town if you give out the biggest cuts to the general practitioners. If you are "not so good" or a new surgeon in the area, you have to work harder.

So, the next time your doctor tells you about a certain Dr X being the biggest surgeon in town, you should consider asking how your doctor knows that is so. It is simply not possible to carry out evidence-based comparison of the performance results of doctors in most countries. Irrespective of the accuracy, the proclaimed results of these comparative assessments are self fulfilling prophecies and, from the point of view of a specialist, certainly worth the investment. Moreover, if specialists get the patient first, they will expect the same benefit for referring to other specialists, laboratories or hospitals. So a perverse system is born where one who gets the patient first, benefits the most. Unsurprisingly, this has led to a race to seek patient attention, and that lies at the bottom of a number of aggressive and sometimes unethical marketing practices, discussed elsewhere in this book. Patients have become commodities in this marketplace. They can be, and are, routinely exchanged for money.