Chad Walldorf, Deputy Chief of Staff
Office of the Governor
P O Box 12267
Columbia, SC 29211

Concerning: Governor's action or inaction on H.3891 by Jan. 2005

Dear Mr. Walldorf:

I greatly appreciated your letter of July 6 acknowledging our letter to Gov. Sanford and indicating that the Governor would give it careful review. I have heard that some folks are saying that "client billing" for pathology and laboratory services is simply a form of subcontracting of services.

Importantly, processing and interpretation of Pap smears (and biopsies of other tissue) is not contracting or subcontracting a "service"; it is dealing with a critical, life-affecting technical and professional decision-making process (often warranting local correlation of Pap smear and subsequent biopsies for optimal patient care).

Subcontracting of services metaphor: If one were to unwisely deny that Pap smear interpretation was critical & life-affecting, then:

• The inclination to subcontract services would imply that quality was a universal "given"; and
• The arrangement must not include any built-in kick-back from the subcontractor to the contractor.
• The highest risk to both labs and pathologists for malpractice is related to Pap smears; so,
• Quality from lab to lab is not a "given".
• The built-in "client billing" kick-back arrangement puts quality of service in the back seat in favor of added income to the contractor. It does not result in a lowered cost to the patient/insurer.
• The payments by the physician contractor to the large commercial laboratory subcontractors are on a fee schedule way below market value (then the contractor turns around and charges full market value to the patient/insurer).
• As with all services delivered by physicians, quality is best achieved when delivered as close as possible ("point of service") to the patient. Thereby,
• The power of professional and personal relationships serves as a prime incentive for the local, physician-directed labs to place patient care at the top of the priority list.
• No such accountability exists with large commercial laboratories.

Politics is a "point of service" effort in behalf of citizens, and our elected officials have long known how unwise it would be to subcontract their responsibilities to distant substitutes. I urgently point out that quality is not a "given" and do so as one who has practiced pathology at Lexington Medical Center, West Columbia, for 30 years. Maintaining this "point of service" concept for pathology services is one of the fundamental keys to quality in pathology and laboratory medicine, as well as in the entire field of medicine.

Key point: The proposed bill does not limit the physician's choice of Pap-smear-services provider. The bill just takes away the incentive to make the choice primarily on a monitary basis rather than a quality basis.

Sincerely,

Ervin B. Shaw, M. D.
Director of Anatomic Pathology