• Health reform
• EMRs
• Medicare
• Liability
• AMA House
• » More

• Contract Language
• Ethics Forum
• In the Courts
• Practice Management
• Technically Speaking
• » More

• Issue dates
• Regions
• Health plans
• Sections
• News briefs
• Columns
• Editorials
• Letters
• Series
• Writers
• Other years

• Search tips
• Email alert
• RSS
• Mobile
• Subscribe
• Institutions
• Staff directory
• Advertising
• Permissions
• Reprints
• News media
• Site guide
• Useful links
• About
• Premium
• Contact

• AMA Wire
• CPT
• DMPHP
• JAMA
• JAMA&Archives
• news@JAMA
• Virtual Mentor
• Physician jobs

GAO: Boutique hospitals treat healthier patients

The report could fuel congressional efforts to restrict referrals to specialty hospitals by physicians with ownership stakes.

By Markian Hawryluk, amednews staff. June 16, 2003.

• PRINT|
• E-MAIL|
• RESPOND|
• REPRINTS|
• SHARE
•  

Washington -- New research showing that specialty hospitals might be "cherry-picking" their patients has renewed concerns that community hospitals may be stuck with the pits.

A report released by the General Accounting Office in May found that patients at specialty or "boutique" hospitals tended to be less sick than patients at general hospitals in the same communities.

The GAO said 21 of the 25 specialty hospitals studied had a less acute mix of patients. Two of the specialty hospitals had a more acute case load, while two treated comparable patients.

The study found that 17% of cardiac patients seen by specialty hospitals could be classified as severe cases, compared with 22% in general hospitals. About 5% of orthopedic cases in specialty hospitals were severe, compared with 8% in general hospitals.

In a letter to Reps. Bill Thomas (R, Calif.) and Gerald Kleczka (D, Wis.), who requested the study, the GAO said it had not considered the clinical or economic significance of the results. Nevertheless, the study may prompt the lawmakers to try to rein in specialty hospitals as they craft Medicare reform legislation this month.

"GAO's findings are of concern because they indicated that community hospitals generally care for the sicker, higher-cost patients, and Medicare's reimbursement does not adequately account for varying acuity levels in these different settings," Thomas said. "This disparity is problematic, and needs to be corrected to maintain fairness."

The American Hospital Assn. said the report underscores the negative impact specialty hospitals are having on the health care system and, in particular, on community hospitals.

"The continued growth of niche providers could undermine access to services, draining essential resources from community hospitals," AHA Executive Vice President Rick Pollack said. "Niche providers cherry-pick the healthiest patients, leaving community hospitals to care for the sickest of the sick."

Pollack said Congress needs to close existing loopholes in federal laws prohibiting self-referral, to require specialty hospitals to publicly disclose physician ownership interests, and to mandate written transfer policies for hospitals that do not operate full-time emergency departments.

Specialty hospitals fight back

In response to the GAO's findings, MedCath Corp., which owns and operates 10 cardiac hospitals across the country, released a new report by health care consulting firm, the Lewin Group. The report found that MedCath hospitals treated patients who were 20% sicker than patients at community hospitals, but the company's facilities had lower in-hospital mortality rates and shorter average lengths of stay.

"We've shown by several objective measures that, despite our unusually higher case-mix index, our hospitals deliver better clinical outcomes on average than our peers," said David Crane, MedCath president and CEO. "We believe that involvement of our physician partners in the governance and day-to-day operations of our heart hospitals is a crucial factor that contributes to quality patient care."

The American Surgical Hospital Assn. downplayed the differences in acuity found by the GAO report. "We have always maintained that specialized hospitals don't skim the cream," ASHA President Michael Lipomi said. "GAO has confirmed that. According to their study, our patients look pretty much like the surgical patients in any other hospital."

Lipomi disputed claims that specialty hospitals were a threat to community hospitals. "Opponents of specialty hospitals have yet to identify any hospital that has closed because of competition from one of these new, innovative providers," he said.

Lipomi said Congress should wait for the second phase of the GAO's research before it decides whether to take any action affecting specialty hospitals.

Kleczka and Rep. Fortney "Pete" Stark (D, Calif.) have introduced legislation that would prohibit physicians from referring patients to hospitals in which they purchased an ownership stake at better prices than were available to the general public. The congressmen maintain that physicians with ownership stakes have an incentive to steer less-costly cases to their own facilities.

In May, the Centers for Medicare & Medicaid Services indicated that it would propose expanding prohibitions against self-referral to include certain physician investment interests in specialty hospitals.

The GAO found that about 70% of specialty hospitals have at least some physician ownership. Doctors own on average slightly more than 50% of each hospital. But individual physicians tended to hold relatively small ownership stakes. In 72% of specialty hospitals, the largest physician-held stake was less than 15%.

Representatives of specialty hospitals said small shares owned by most doctors are not enough to provide the types of incentives alleged by critics.

Several states are considering bills that could limit the growth of specialty hospitals. Legislators in Louisiana, New Mexico, Ohio, Vermont and Wisconsin are considering measures that could reinstate certificate-of-need laws or place other restraints on specialty hospital development.

Back to top

 ADDITIONAL INFORMATION: