It's sweet to watch the free market at work. That delicate search for supply-and-demand equilibrium has propelled the U.S. economy to unparalleled heights. Conversely, it's disturbing when the marketplace is jostled by maneuvers that can stymie competition and thwart innovation.
Consider the federal government's drive to plow ahead with a moratorium prohibiting physicians from referring patients to specialty hospitals in which they hold financial interests. The CMS recently issued guidance helping define details of the moratorium, enacted as part of the Medicare Prescription Drug, Improvement and Modernization Act.
This is clearly a misguided attempt to keep free-market forces from working some magic in the woefully inefficient healthcare services sector. It's especially disheartening that this goofy public policy initiative was approved by a Republican-controlled Congress without clear evidence of price-gouging or linkage between increased utilization and physician ownership of hospitals.
A General Accounting Office report released while Congress was crafting the Medicare drug benefit package concluded that specialty hospitals "tended to outperform general hospitals when the costs from all lines of business and the revenues from all payers were considered."
Most patients are very satisfied with the clinical outcomes and attention to customer service provided by specialty hospitals. Furthermore, health plans, employers and referring primary-care doctors like the low incidence of medical errors and postoperative complications registered in the physician-owned inpatient facilities. And medical staff surgeons not holding investment stakes are impressed with the nimble turnarounds in operating suites, as well as the precision of the nursing staff and other support personnel working in boutique hospitals.
The best of the breed have also been able to make wise investments in medical technology and information systems. For example, El Paso (Texas) Specialty Hospital, which Modern Physician honored as the 2003 Specialty Hospital of the Year, divides its physician partners into committees that oversee operations, quality and purchasing.
The owner/operator/surgeon mind-set has helped the facility achieve impressive headway in standardizing supplies, avoiding billing snags and adopting protocols of care. While general medical-surgical hospital managers are forced to deal delicately with the technology wish list of chest-thumping staff doctors, El Paso Specialty and its ilk can count on physician partners to focus purchasing discussions on cost-effectiveness and return on investment.
It's these competitive advantages-some inherent, others earned-that have prompted full-service hospitals to attempt to derail the physician-owned hospital movement. Some of their complaints appear justified and deserve further scrutiny.
For instance, critics charge that physician owners cherry-pick the most lucrative procedures and steer insured patients with the lowest chance of postoperative complications to their own facilities, giving physician-owned hospitals a leg up. In addition to sticking community hospitals with a heavier load of problematic cases, such practices could siphon profits from full-service facilities that use the cash to subsidize other underfunded healthcare services.
That's why all healthcare services deemed vital to a community should receive finan- cial support, especially from government reimbursement programs. Simply put, acute-care hospitals should not be dependent on surgical profits to sustain essential, yet underfunded programs and procedures.
However, general hospitals must better adapt to the challenges of specialty care as the healthcare industry prepares for the invasion of the baby boomers. As a card-carrying member of the most self-centered generation in the history of mankind, I, along with my fellow boomers, will demand that providers pay full attention to personalized patient service and complete disclosure about price, quality and performance.
Savvy executives of acute-care hospitals are responding by automating, renovating, partnering with physicians and building new facilities in booming suburbs. Those free-market tactics show more character than whining to Big Daddy in Washington.
Regina Herzlinger, author of the 1997 capitalist medical manifesto Market-Driven Health Care: Who Wins, Who Loses in the Transformation of America's Largest Service Industry, also decries Washington's latest swipe at physician-owned hospitals.
The Harvard healthcare maven complained in a Nov. 26, 2003, Wall Street Journal opinion piece that the U.S. healthcare system is run Soviet style, "Where the doctors who are uniquely qualified to create and manage health service businesses are prohibited from owning most of them; where entrepreneurs often must pass a local government smell test before they are permitted to build new facilities; and, worst of all, where government dictates the prices and the exact characteristics of the insurance benefits for which it will pay."
Yes, serious problems exist about the cost, quality and access of healthcare. But handcuffing innovators who follow the rules is not the answer. Government do-gooders are better off altering inadequate, uneven reimbursement policies. Then, let the free market give everyone a chance to succeed.
Clark Bell is the former publisher of Modern Physician and the former editor/associate publisher of Modern Healthcare