A funny thing happened on the way to the specialty hospital. Turns out, most of the ones being built are owned or co-owned by not-for-profit hospitals or healthcare systems.
The last time I wrote an editorial about the boom in specialty inpatient facilities (July 22, p. 18), this magazine received a large number of calls and letters extremely critical of my position. I wrote then that the growth of specialty hospitals ultimately would be good for patients, who would have greater choice of facilities from which they could receive care, and good for healthcare costs, which would be controlled through the competition between specialty and full-service hospitals.
I will concede one point that was made by many readers: that a hospital whose physicians open a competing specialty hospital that might steal patients should be able to toss those physicians off its medical staff without legal repercussions. The doctors can't have it both ways. They can't cry foul over economic credentialing on one hand while eagerly becoming co-owners of a medical business venture on the other, a situation that's the embodiment of economic credentialing by equating staff privileges with ownership.
But what struck me was the fervor of the position of the not-for-profit healthcare executives. The enemy is greedy doctors, they said. The victims were benevolent not-for-profit hospitals left holding poorer, sicker and less insured patients while wealthy, healthier and highly insured patients flooded the specialty hospitals. And where there's angry rhetoric, there's often a story behind the story. As reporter Patrick Reilly reveals in this week's special report, many of the specialty hospitals being built across the country are being built by not-for-profit systems through for-profit joint ventures with physicians (See story, p. 26). Basically, the not-for-profits are scrambling to build specialty hospitals before their competitors beat them to the punch.
"You are not going to give up your profitability to somebody else," William Corley, president and chief executive officer of Community Health Network in Indianapolis, says in Reilly's piece. Corley's operation is building a heart hospital through a joint venture with physicians.
Many other not-for-profits are doing it themselves without physician investors to bankroll their diversification into the specialty hospital business. In last week's issue, reporter Laura B. Benko reported on nine heart hospitals that have been built or are being built in Minnesota and the surrounding region alone-all by not-for-profit systems (Sept. 23, p. 6). Just weeks ago, the University of Michigan Health System in Ann Arbor announced plans to build a $168 million heart hospital.
That's one of the characteristics of competition. Everyone with a strong competitive position loves competition because they'll likely win. Those with a weak competitive position cry foul and run for the protection of regulation because they may lose. That's what the specialty hospital debate is all about. It's not always doctor vs. hospital or for-profit vs. not-for-profit. In many healthcare markets it's the not-for-profit hospital "haves" against the not-for-profit hospital "have-nots."
Regulating specialty hospitals is a sexy cause that will attract a handful of publicity-seeking lawmakers because of the easily identifiable good guys (the not-for-profit hospitals) and bad guys (those greedy docs). But the reality of the situation will make it difficult for federal and state lawmakers to pass such laws, as some not-for-profit hospitals are advocating. State and national hospital lobbies will be immobilized by the split in their not-for-profit membership. Protectionist legislation to one not-for-profit healthcare system is a deal-killer to another. And in this down economy, what lawmaker is going to stand in the way of job-producing construction projects?