The American Hospital Association task force studying the specialty hospital issue has developed several proposed policy changes that would restrict the ability of specialty-care providers to open the controversial facilities, such as cardiovascular, orthopedic and women's and children's hospitals.
Physician investors, however, feel the proposals limit competition and ultimately would affect the healthcare patients receive.
The proposals come after several months of studying the issue prompted by a boom in joint ventures between not-for-profit hospitals and physician-investor groups. The changing landscape has some of the AHA's members calling for tighter regulations to control the growth of specialty hospitals (Sept. 30, p. 26).
"Last year, this was an issue affecting a number of communities," said Carmela Coyle, the AHA's senior vice president of policy. "This year, it is affecting every community."
The 27-member committee drafted recommendations ranging from amending the Stark laws governing conflicts of interest between physicians and hospitals to ensuring public disclosure of physicians' financial interests in specialty hospitals. The AHA board supported the recommendations in a November vote.
The association is "figuring out what is the best way to pursue some of these recommendations" and expects specialty hospital regulation to be a hot legislative issue in 2003, Coyle said. "This is a very important issue for hospitals, and we will continue to aggressively pursue that."
Rep. Pete Stark (D-Calif.), who authored the physician conflict laws, said new legislation would be difficult to approve in the Republican-controlled House and Senate. "This is going to be a delicate political strategy," Stark said. "My chances as a member of the minority are very slim unless the AHA takes it on as its cause."
Stark and Rep. Gerald Kleczka (D-Wis.) co-sponsored a bill in 2001 that would limit physician investments in specialty hospitals to "terms generally available to the public," according to the legislation. The measure is stalled in the House Ways and Means health subcommittee.
Bruce Wilson, M.D., an investor in the Heart Hospital of Milwaukee, a 32-bed hospital scheduled to open in fall 2003, said the AHA recommendations are unnecessary.
"Competition should be able to produce the best results," Wilson said. "If you try to put up a roadblock, you will be stopping progress. This proposed legislation has the potential for being counterproductive."
Wilson's partner in the heart hospital is MedCath Corp., a Charlotte, N.C.-based cardiovascular-care provider that has eight heart hospitals around the country and plans for five more in 2003. In a study comparing MedCath with 946 community hospitals, the cardiac specialist had a 12.3% lower in-hospital mortality rate. MedCath patients also had a 17% shorter hospital stay.
"Partnering with physicians and focusing on one specialty is the best way, based on clinical outcomes and patient satisfaction," said Dennis Kelly, MedCath's executive vice president of development and government relations.
Headlining the task force's recommendations is a push to amend the Stark laws governing conflicts of interest between physicians and hospitals. The AHA wants to change the 1989 law so doctors cannot use the "whole-hospital exemption," which allows them to make self-referrals to general hospitals. The intent of the law was to allow doctors to invest in large hospitals because their investments likely would be too diluted to benefit from their own referrals. But doctors are getting around the exemption by claiming the specialty facilities are part of the larger "whole" hospital, leading them to invest in and refer patients to those specialty enterprises.
"We want to tighten up the legal and regulatory framework so it eliminates loopholes," said George Lynn, chairman of the task force and president of AtlantiCare Health System, Egg Harbor Township, N.J. "We want to create a more level playing field."
"One of the ways to keep the game honest is to say we are going to put some restrictions on the whole-hospital exemption," Stark said.
The task force also wants doctors to be required to disclose any financial interest they have in a healthcare organization to which they refer patients. Doctors would be required to tell their patients and the general public in which facilities they have invested.
"We are looking for consistent standards that would eliminate a lot of problems," Lynn said. "Competition needs fairness and equity to it to protect the patients."
Specialty hospitals also should have to meet comparable federal quality standards when they perform services similar to those of acute-care hospitals, the task force recommended. The standards should be measured regularly and enforced through state survey agencies acting on behalf of the Centers for Medicare and Medicaid Services. "Our concern is that they be subject to the same public health standards as everybody else," said task force member John Rivers, president and chief executive officer of the Arizona Hospital and Healthcare Association.
Another recommendation proposes equal Medicare payments for surgical procedures at hospital outpatient departments and the ambulatory surgery centers that have physician investors. Medicare would pay $433 for a prostate biopsy performed at an ambulatory surgery center, but only $246 if it was performed in a hospital outpatient department, the task force found.
The task force also is calling for specialty hospitals that do not provide emergency services to have transfer agreements with the community hospital it intends to use as a backup. Physicians at the specialty hospitals also should have staff privileges at local hospitals, the task force recommended. Such a requirement could allow more use of economic credentialing, which already has been used by acute-care hospitals in Columbus, Ohio, against physician investors in specialty hospitals there (July 15, p. 12).