HCA, the nation's biggest hospital company, is taking aggressive steps against planned surgical hospitals that may be attempting to circumvent a moratorium that prohibits physician ownership in new inpatient specialty facilities that weren't already well under development by last November.
In one case, a $9 million, 16-bed surgical facility in Denton, Texas, has classified itself as a general hospital even though its state application describes it as a "surgical hospital" focusing on "general and selective procedures." Another facility, an Oklahoma City orthopedic hospital, is now being officially described as an "ancillary service" for the group practice that broke ground on the 80-bed facility at least three months after the federal deadline was imposed.
Together, instances like these have prompted officials with Nashville-based HCA to take the unusual step of alerting federal authorities to situations where physician owners may be circumventing the Medicare modernization act, which imposed an 18-month moratorium on physician investment in new specialty hospitals to which they refer patients.
Jeff Prescott, an HCA spokesman, said the specialty hospital in Denton is "obviously circumventing the moratorium" by classifying itself as a "general hospital" even though it will essentially serve as an inpatient surgical center owned at least in part by physicians.
Prescott would not say how many complaints HCA has lodged, nor would he disclose which projects it has questioned, saying only that company officials are aware of "a number of situations around the country" in which specialty hospitals may be disregarding the moratorium.
HCA's action is the latest in a battle between community hospitals and inpatient surgical facilities. The fight began earlier this year when acute-care hospitals in three communities-including an HCA-owned facility in Idaho-stripped physicians of privileges after they invested in competing surgical hospitals.
Community hospitals mounted an expensive campaign against specialty hospitals last year, persuading federal lawmakers to impose the moratorium on any hospital that was not "under development" as of Nov. 18, 2003.
At that time, roughly 20 to 30 were in some stage of development, said officials with the American Surgical Hospital Association. At least two-thirds of those facilities qualified under the law's exemptions, association officials said, leaving a handful to seek an opinion from the CMS before moving forward. To qualify as a facility "under development," hospitals must have received funding, completed architectural plans, met all zoning requirements and received necessary approvals from state agencies.
A CMS official said the agency has received eight requests for an expedited advisory opinion on whether projects meet the conditions to move ahead. Five of those are in Texas.
In Denton, Texas, private, for-profit North Texas Hospital broke ground in February on a site across the street from HCA's Denton Regional Medical Center. Officials with the new hospital have classified the facility as a general hospital, not a surgical hospital. Officials with the Cirrus Group, which is developing the hospital, did not respond to repeated requests for comment, but one Denton Regional official said North Texas Hospital is using semantics to skirt the law. "They renamed themselves," said Nancy Horvat, vice president of business development.
Separately, officials with the McBride Clinic, a 21-member group practice in Oklahoma City, have reclassified a planned orthopedic hospital in that city. The $20 million specialty hospital, which will feature 40 acute-care beds and 40 rehabilitation beds, is being described as an "ancillary service" of the group practice.
At least two other doctors' groups are considering a similar strategy, said Michael Joseph, a lawyer with McAfee & Taft in Oklahoma City, who represents the McBride Clinic.
While Joseph indicated that the CMS "informally" signed off on the characterization, a CMS spokeswoman said the arrangement is not likely to comply with the Medicare law. "Nobody in the world thinks of hospital services as ancillary," she said.