Rush for medical scans raises concerns on cost

PEABODY -- Within a half-mile of the Northshore Mall, hospitals and doctors are operating five MRI scanners, and a sixth will open next month, providing a revealing look into a high-tech medical arms race that insurers worry is driving up health care costs.

So many patients are coming for diagnostic scans that two of Peabody's MRI centers now offer appointments between at least 6:30 a.m. and 10:30 p.m., seven days a week. Still, the centers compete for more patients, with staff making sales visits to doctors to win their referrals. One center is running radio advertisements appealing to Patriots fans who have been "sidelined by an injury."

And the centers are rushing to upgrade their machines to perform cutting-edge scans. One center plans next month to install the sixth MRI in the area to cater to patients who become claustrophobic inside standard MRI machines.

The imaging explosion in this small industrial city is occurring across Massachusetts -- helped by the loosening of the state's historically strict limits on new high-tech imaging machines and by a loophole in state law. Hospitals, doctors, and companies nationwide are scurrying to install magnetic resonance imaging, positron emission tomography, and computed tomography scanners. Imaging costs are growing faster in many regions than even spending on prescription drugs. Since 1997, the number of MRI scanners in Massachusetts has tripled to 145 -- about the total for all of Canada -- according to Shields Health Care, a Massachusetts company that owns 12 MRI centers, most with hospitals.

Not surprising, the number of patients having MRIs is soaring, too; 487,700 scans in 2002, up more than 80 percent in four years, according to the most recent data from IMV Medical Information Division, an Illinois market-research company. Nationally, spending on diagnostic imaging is projected to grow to as much as $96 billion next year, a 28 percent increase since 2000, according to the BlueCross BlueShield Association. Massachusetts insurers generally pay providers between $500 and $1,400 for an MRI scan, depending on what is being scanned and how involved the process is.

Scanning is booming partly because MRI, PET, and CT machines are able to detect and guide treatment for an ever-expanding list of conditions, with less pain and fewer risks than older methods. At the same time, manufacturers roll out models with new features almost as fast as automakers.

Insurers and employers worry that the jump in imaging and accompanying advertising are leading to unnecessary scans -- as it becomes more convenient for doctors to refer patients to a center and as more physicians install machines in their own offices. Several studies have shown that doctors who own MRI scanners and other high-tech imaging equipment refer more of their patients for scans than doctors who send patients to a hospital or other outside facility.

"Part of the demand is driven by patients," said Christopher Sue-Ling, a vice president at National Imaging Associates, a company Harvard Pilgrim Health Care has hired to control imaging costs among its members. "A patient goes into their doctor's office, and their chief complaint isn't 'My arm hurts,' it's 'I want an MRI.' But use also is driven by the number of machines you have in each area."

Harvard Pilgrim's 800,000 members underwent 130,362 advanced-imaging tests last year, costing the plan $73 million -- a 62 percent increase in just two years. The plan's drug costs during those years grew 25 percent to 29 percent.

Dr. James Thrall, head of radiology at Massachusetts General Hospital, said there are spectacular new uses for MRIs. Mass. General operates eight MRIs and plans to install two more in its outpatient center when it opens next month.

And in some cases an MRI is less expensive and invasive than an older test, Thrall argued. For example, Mass. General used to perform 200 to 300 cerebral angiograms every month -- a test in which doctors inject dye into a patient's neck arteries and then take X-rays to look for narrowing. Now they do fewer than 10, because high-powered MRIs often can detect defective blood vessels that could lead to strokes.

Thrall agreed that an high-tech race exists. But, he said, it's among companies that sell imaging equipment. "As soon as a vendor announces a new capability, the sophisticated neurologist and other specialists challenge us to offer it to their patients," he said. "We're being pushed by our colleagues more than by our competitors."

PET and CT scanning are also growing at a rapid pace, but generally they are not used to diagnose as wide a variety of conditions as MRIs.

In Massachusetts, where health officials historically have limited the number of high-tech imaging machines to control costs, the number of MRI scanners is growing because state officials are allowing hospitals to install them at a more rapid clip, both to accommodate patient demand and help hospitals financially. At the same time, doctors and companies are using a loophole in Massachusetts law to buy and operate MRIs -- without state review of whether the machines are really needed.

This was the case in Peabody. Four hospitals opened an MRI center, North Shore Magnetic Imaging Center, in 1988 and gradually expanded, installing MRIs in the center next to the mall and another elsewhere in Peabody.

Last year, Lahey Clinic and Shields installed an MRI two blocks away in Lahey's satellite hospital, while in August, MRI Centers of New England, a company owned by a Florida neurologist and a California vascular surgeon, installed a scanner next door, at the behest of orthopedic surgeons who practice in the building.

Shields and MRI Centers both used something known as a "physician exemption letter" to get around the state cost-control law. In the early 1990s, the Legislature barred physicians from installing MRIs without state approval -- unless they wrote a letter saying they'd already planned to install one. These doctors were grandfathered in when the law took effect. Shields's medical director, Dr. Stephen Sweriduk, filed about 12 letters, and since then, the company has used them to install six MRIs faster than if it had waited for a state review of patient need.

Other companies and doctors' groups, like MRI Centers, bought the right to use letters, which health care lawyers say cost about $300,000 each. Public health officials say they can't stop the trade in letters. Dr. Richard Swanson, one of the company's owners, said even though the company didn't undergo state review to determine whether its Peabody MRI was needed, it clearly was.

Referring doctors, including the orthopedists who opened the clinic next to Lahey, "complained that they couldn't get their patients in for scans fast enough," he said. And, he argues, more competition tends to lower costs, not raise them.

The orthopedists who invited MRI of New England to lease space downstairs in their building now refer about half of their scans to the company -- business that used to go to the MRIs owned by four nearby hospitals. Stephen Ovren, the company's chief operating officer, said the doctors have no financial interest in the scanner.

Janet Ierardi, 40, recently saw a hand specialist in the building for a right-wrist injury. The specialist referred her downstairs for an MRI to look for soft-tissue damage. "It was so convenient," she said. After the 30-minute scan, technicians handed her the films, and she took them back upstairs for an opinion.

Lahey and the other hospitals running MRI centers were not happy about the new competition, but they say patient demand is so strong that they haven't noticed a drop-off in business.

In other instances, doctors, sometimes in partnership with companies, are installing MRIs in their own offices, a venture that is often profitable. If a doctor refers a patient for a scan in the office rather than at an outside facility, the physician collects a "facility fee" from insurers in addition to the usual payment for the office visit.

"When someone has a financial incentive to order the MRI, the barrier to ordering it is lower," said Dr. Neil Rofsky, director of MRI at Beth Israel Deaconess Medical Center.

Liz Kowalczyk can be reached at kowalczyk@globe.com.