Where do you go to get an oil change? Where do you go to get gas? Odds are, for oil you go to a franchise that specializes in changing oil. For gas, you may be one of a growing number of people filling up their tanks at their local department store chain, which has added cheap gas to its roster of goods and services.
Such is the nature of competition in a free-market economy. In one case, specialization is used to attract business. In the other, one-stop shopping is the hook that draws people into the store. In each case, the customer wins. You want oil, you can go get oil. You want cleaning supplies, diapers, a lawn chair, dog food AND gas? You have a place to go.
That's why I don't understand the backlash against for-profit specialty hospitals. Healthcare companies are building inpatient facilities that specialize in specific services, most commonly cardiac, orthopedic, and women's and children's care. In many cases, the local investors in these new hospitals are physicians on staff at a soon-to-be competing not-for-profit hospital in town. Nothing could be better for patients (and their employers and insurance carriers) than to have an array of specialty and full-service hospitals of various ownership models in their market to serve all their healthcare needs. But that's not how it's playing out.
In our July 15 issue, reporter Mark Taylor disclosed that the boards of two Columbus, Ohio, health systems recently voted to restrict the staff privileges of physicians who invest in competing for-profit specialty hospitals ("Doc investors in for-profit hospitals denied staff privileges," p. 12). The systems, Mount Carmel Health System and OhioHealth, took the actions in response to a 30-bed, $38 million for-profit orthopedic hospital being built in the Columbus suburb of New Albany. Local physician investors will own 60% of the new hospital through a joint venture with Nashville-based Surgical Alliance Corp., which will own the remaining 40%. The new hospital is scheduled to open next year.
Knee-jerk reactions to new competitive threats rarely work from a public relations-and often legal-standpoint. In 1995, Quorum Health Group, the Brentwood, Tenn.-based hospital chain, acquired a 50% interest in formerly not-for-profit Mary Black Hospital in Spartanburg, S.C. After Quorum began soliciting local physicians to invest in the new for-profit joint venture, Mary Black's competitor, Spartanburg Regional Medical Center, stripped physician investors of their privileges. The physicians sued, and Spartanburg Regional relented. More recently, reporter Susanna Duff described a similar hard stance against physician investors by Central Maine Medical Center in Lewiston that later was softened (April 1, p. 20).
The heated certificate-of-need fight between Wellmont Health System in Kingsport, Tenn., and Mountain States Health Alliance in Johnson City, Tenn., is over a for-profit hospital, as reporter Vince Galloro has covered. Wellmont wants to build a $56 million, 65-bed hospital in Johnson City. The hospital would be a for-profit joint venture between Wellmont and a 70-physician multispecialty group practice. To paraphrase Dennis Vonderfecht, president and chief executive officer of Mountain States, in a recent letter to Modern Healthcare, such cream-skimming specialty hospitals are stripping community-owned not-for-profit hospitals of their insured patients (June 17, p. 58). That dispute is now in state court.
Why not embrace competition? Rather than acting like spoiled brats whose best friend went to play at someone else's house, why not offer the same service, albeit better and cheaper? If these for-profit specialty hospitals are simply patient mills like their competitors allege, service will be poor and prices high. The incumbent hospitals will get their patients back. In the meantime, they should heavily market themselves as full-service facilities. What's more reassuring to a patient than knowing that the hospital can handle any medical problem that pops up during a stay?