Photo: RNZ / Rebekah Parsons-King
The High Court has dismissed a challenge against radiology practices that some doctors say are not properly independent.
The court ruling said no evidence was presented that "potential adverse implications" were actually occurring due to more surgeons and specialists taking stakes in private scanning businesses, as the radiology sector in New Zealand undergoes profound changes.
"There is no evidence of excess referrals, or unsatisfactory patient outcomes," said the ruling yesterday from Justice Cooke.
Read the full ruling: High Court: Institute of Independent Radiologists v ACC Ruling, 20 December 2022 (287KB)
At least half a dozen scanning practices owned or partly owned by health specialists - such as orthopaedic surgeons - who can or do refer patients to them, had been set up recently or were being set up, and more were expected to follow.
The Institute of Independent Radiologists was itself established last year to oppose the ownership arrangements, which it said were a threat to patient safety; it had referred in the past to international studies that suggested when a specialist (a referrer) referred a patient to a practice they had a stake in, it could lead to more scans being done than was necessary.
The institute applied for a judicial review to force the Accident Compensation Corporation to reconsider funding the new mixed-ownership practices.
Twenty-two private providers share in ACC funding of more than $100 million a year for MRI, CT and other scans.
The court said there was "potential" for adverse effects, such as financial incentives compromising clinical judgement.
There could be unnecessary scanning that drained ACC funds, it said.
It also acknowledged the concerns about competition being eroded.
"There is evidence that referrers have the tendency to refer to providers [radiology practices] in which they have ownership interests to the disadvantage of members of the applicant," Cooke said.
"But there is no evidence that this leads to any adverse outcomes, either for the patients or for the corporation.
"The applicant's case is solely based on the potential for such adverse implications.
"But the corporation is of the view that it can manage those risks in other ways, and there is nothing to demonstrate that that is not so."
The risks should not be overstated, Cooke said.
Conflicts of interest
The unprecedented healthcare scrap was seen within the sector to have implications for other commercial arrangements.
Conflicts of interest were widespread in healthcare, the ruling said.
"A private surgeon who recommends an operation can be paid for that operation by a patient, or the patient's insurer.
"Even a general practitioner who recommends that a patient come back to see him or her more regularly has a financial interest in the subsequent appointments.
"This point could be made about almost any professional who charges for their services.
"In the end all professional services depend on professional judgement."
It was the third setback for the Institute of Independent Radiologists and its seven members, established private radiology groups.
Previously, the Medical Council and Commerce Commission both dismissed its complaints against surgeon-owned practices.
In yesterday's ruling, the High Court noted that conflicts of interest had not been prohibited by the likes of the Medical Council, with the stress being on managing them.
Radiology businesses must sign up to conflict management plans to get ACC funding.
An ACC manager told the court of "significant improvements" in how the agency monitored specialist referrals of patients for scans.
The agency had picked up on some "unusual referral patterns" among three referring consultants earlier this year.
"It has met and discussed those referral practices with two of those consultants, and its investigations into those matters is continuing," the court ruling said.
Cooke said ACC should consider the market implications of the ownership moves, but it was not clearly apparent the agency was breaching its statutory duties, which included being cost efficient.
He accepted ACC's point that there were benefits under the new ownership model from closer relationships between referrers and providers.
It was not for the court to decide if the ownership arrangements "are a good idea or not", only to ensure ACC was acting lawfully.
"The applicant is well short of establishing that it is not."
The institute's case focused on three businesses: Beyond Radiology, set up in 2020 and owned by surgeons or their family members - "It has plans to expand its shareholding to include other similar medical practitioners," the ruling said; The Radiology Group or TRG, which had subsidiaries with significant ownership by referrers; and Mercy Radiology, owned by Healthcare Holdings which also had controlling interests in referrer-type businesses.
Reaction to ruling
The Institute of Independent Radiologists said it was disappointed, but noted that since it began the court proceedings, ACC had tightened its guidelines around conflicts of interests, and improved monitoring the referral patterns of "conflicted surgeons".
"We believe our actions were instrumental in ACC's change of procedures," it told RNZ in a statement today.
Similarly, the Medical Council was strengthening its guidelines governing the relationships, it said.
As for the Commerce Commission, the institute said it was looking at what further action to take, insisting the new ownership model was anti-competitive because "if surgeons only or mainly refer to practices that they are financially invested in, any practice that chooses to operate independently ... will struggle to be commercially viable".
"We continue to believe that there are serious ethical and patient outcome concerns."