Debate Over Specialty Hospitals Continues

To some observers, specialty physician-owned hospitals represent faster, safer medical care. To others, these facilities are the epitome of profit-driven, elitist healthcare that will push community hospitals over the financial precipice.

Whether this trend continues is up to Congress, which has until May 2005 to decide if specialty hospitals could adversely affect the current healthcare system. Whatever decision is made, many in academic medicine have reached their conclusion.

Congress passed a moratorium last year on Medicare and Medicaid payments for patients treated in specialty hospitals where doctors have a vested financial interest. The action was taken as part of Medicare reform legislation. The law exempts psychiatric, rehabilitation, children’s, long-term care and certain cancer hospitals while federal officials study the impact physician-owned hospitals have on healthcare delivery.

Some organizations associated with community hospitals worry these limited-service facilities, focusing mainly on cardiology or orthopedic procedures will siphon off many of the most treatable patients. According to Anne Ubl, vice president of legislative affairs for the American Hospital Association (AHA), removing these patients could threaten the average community hospital’s stability.

“We have a lot of concern with these entities because they’ll be taking procedures already performed by doctors in a community hospital and pulling them out into a competitive environment,” she said. “They pull resources from the community hospital and harmfully affect its ability to do the things it’s committed to do.”

Ubl said the AHA mounted an active grassroots campaign to demonstrate how authorizing specialty hospitals, also known as limited-service hospitals, could affect the community hospitals in smaller population centers.

Promising Efficiency

But creating specialty hospitals for specific services does have benefits, according to Gene Elder, a partner in Akin Gump’s Washington law office. Offering patients access to a hospital that focuses on only one segment of healthcare could improve efficiency, he said.

“The type of care will be the same, but it will be more efficient and less prone to error than in a multi-specialty context,” he said. “In some cases sur-geries could take less time because doctors would perform the same operations all the time and would become very good and fast at it.”

According to Randy Fenninger, a lobbyist for the American Surgical Hospital Association that represents more than 70 physician-owned hos-pitals, these facilities offer several benefits that improve patient care. Not only do the schedules run on time because most patients are healthy and undergoing elective surgery, but the nurse-to-patient ratio is 3.5 to 1, nearly half the ratio at community hospitals, Fenninger said.

“These hospitals make the patients feel special even if they’re not (wealthy), including better food than you’ll find in a typical hospital,” he said. “And if they’re scheduled to have an operation at 9, then they’ll have it at 9 rather than 12 hours later.”

However, specialty hospitals could engage in cherry-picking, accepting only the best insured and least critical patients, according to Elder. Selecting patients on such criteria would minimize financial and personnel output while leaving community hospitals with the burden of servicing the most complicated and expensive cases. This tactic includes denying treatment to Medicare or indigent patients.

In addition, removing the less complicated, highly reimbursable procedures from the community hospital could devastate its fragile financial balance, said Andrew Ziskind, M.D., vice dean of clinical affairs and associate vice president of clinical programs at the University of Washington School of Medicine. Hospitals could suffer significant financial distress if they are forced to sustain operations entirely on Medicare reimbursements.

“Overall, an academic health center is dependent upon a mix of all payers,” Dr. Ziskind said. “Currently, routine, uncomplicated procedures that require less resources, less equipment and shorter length of stay can be done in a community hospital. If those are removed, hospitals are left with the complex patient that uses more resources.”

Potential Risks

But even those patients with sufficient commercial insurance undergoing a routine procedure could encounter trouble in a specialized, limited-service facility, said Martin Nowak, the chief planning and strategy officer for the University of Alabama Health System.

If anything goes wrong during an operation, these facilities could be unprepared to handle the problem.

“These facilities will likely not have a full-service emergency room,” Nowak said. “It will be a way station, and when patients present at the hospital needing emergency care, they’ll have to transfer them on.”

Patients also run the risk of suffering a complication unrelated to the primary procedure, and the facility would not have the specialist available to render proper care, Dr. Ziskind said.

Patients are not the only individuals affected by the possible expansion of specialty hospitals. With fewer specialties on site, residents could also have difficulty getting a broad base of training at a community hospital, according to Robert Malson, president of the District of Columbia Hospital Association (DCHA).

Even if residents gain access to specialty training, there is a chance that they might not participate in or see enough of several kinds of procedures to be proficient, Dr. Ziskind said. For example, surgery residents could be denied access to gallbladder procedures, but the biggest deficit would be in cardiology and orthopedics.

—Whitney L.J. Howell

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