Friday, May 13, 2005

Specialty hospitals: Good or Bad

MedPAC, CMS Studies Raise More Questions, Offer Few Answers

Proponents of physician-owned specialty hospitals -- those that provide exclusively cardiac, orthopedic and/or surgical services -- claim that such facilities take advantage of a convergence of financial incentives for physicians and hospitals, producing more efficient operations and better patient outcomes than do conventional community hospitals.

Opponents counter that physician-owners who refer patients to hospitals in which they have a financial interest are competing unfairly with nonowner physicians referring patients to community facilities. Furthermore, these critics say, specialty hospitals concentrate on only the most lucrative procedures and treat the healthiest and best-insured patients -- leaving community hospitals to shoulder the burden of providing less profitable services and caring for the poorest, sickest patients.
This article focuses mainly on the financial risk to non-specialty hospitals if the specialty hospitals siphon off the best paying cases. In addition, there is the problem that specialists will find they no longer need the non-specialty hospitals. Currently, hospitals can force certain behaviors, such as being on call, becasue the speicalists need the hospital to perform their procedures.

Medblogs (symtym for example, has a good link) have discussed the problem with poor availability of specialists on call, and the fact that many hospitals, especially trauma centers, are having to pay specialists to be on call. At my hospital, all medical staff members are required to be on call. However, if a facility, either an outatient surgery center or an independent specialty hospital, can give the specialist what he needs, he could shift his privileges to courtesy, or even resign, to avoid call responsibilities.

On the other hand, it is not the responsibility of the insurance companies to subsidize poorly reimbursed care at the "community" hospitals. I wouldn't be surprised if the insurance companies encourage this trend and then cut payments to the specialty hospitals. Anything to save money.

I was surprised by this:
The proportion of total net revenue specialty hospitals devoted to uncompensated care plus taxes exceeded the proportion community hospitals devoted to uncompensated care.
Of course, don't miss the "plus taxes" in there.
Relative to net revenue, specialty hospitals provided only about 40 percent of the amount of the uncompensated care community hospitals provided. However, specialty facilities paid various taxes nonprofit community hospitals did not pay.
So, will the communities court specialty hospitals because they pay more taxes?
Heinemann warned physicians and policy-makers not to allow themselves to be led off-target. "Payment is not the real issue; physician self-referral is the real problem here," he said.
Yeah, but why not make the physicians divest, as opposed to not opening the hospitals in the first place. If, as the article states, outcomes are better and patient satisfaction is higher, why not?