Both physicians investing in specialty hospitals or ambulatory surgery centers and the general hospitals that oppose them face political and financial perils in their ongoing warfare, according to a new Health Affairs study.
Doctors who partner with friendly general hospitals or national firms to invest in specialty facilities may lose control of them or may be indirectly affected by a volatile stock market, write the authors of the study, led by Lawrence Casalino, M.D., a health studies researcher at the University of Chicago.
The authors add that specialty facilities could face a difficult future if Medicare payment rates for the lucrative services they cover fall, which has occurred for ophthalmology, or if they face stringent regulations, which Congress is expected to consider in the next few years.
On the hospital side, "if ASCs and specialty hospitals really are able to perform well as 'focused factories,' attempts to hold back this tide by regulatory means might be neither socially desirable nor successful," the authors write.
They warn that hospitals removing staff privileges from investing physicians or pressuring health plans to refuse contracts with such facilities face possible antitrust litigation or the wrath of organizations like the AMA, which has been litigating against hospitals' removal of physicians, known as "economic credentialing."
On the other hand, "if a hospital cooperates in joint ventures, it risks alienating physicians who are not involved, losing volume at its own facilities and damaging its credit rating as a result of lenders' concerns about hospital financial liability for ventures that fail," the authors write.
The new Medicare legislation, expected to be signed by President Bush on Monday, imposes a qualified moratorium on new specialty hospitals while two separate federal panels review the industry's impact on general hospitals and other issues.
At this point, the authors state, there is not enough evidence that specialty hospitals harm the financial viability of competing general hospitals, as the general hospital maintain, or that ASCs and specialty hospitals provide higher quality services at a lower cost, as specialty facilities maintain.
Meanwhile, the authors recommend taking several steps:
- CMS and the states might start measuring and comparing quality in specialty facilities and general hospitals;
- CMS should consider adjusting payment rates so that the orthopedic and cardiovascular reimbursements that many specialty hospitals thrive on are reduced to the same profitability as other hospital services;
- If more studies show that the growth of ASCs and specialty hospitals causes over-capacity, states might consider reimposing certificate of need requirements or a "more market-based approach," under which "competition would weed out the poorest performers."
For example, the authors write that it could be hard to enforce a requirement that a specialty facility treat all types of patients.