In another sign of a hostile climate for specialty hospitals, Florida has banned the creation of any facility that focuses on cardiac care, orthopedic services or cancer treatment.
It was the first time a state has prohibited such facilities, adding another hurdle for would-be investors stymied at least temporarily by the 2003 Medicare act that banned physician investment in boutique hospitals nationwide until May 2005. The tough new law in Florida-a state that currently has no speciality hospitals in operation-was viewed as a defensive measure orchestrated by traditional hospitals wary of future competition.
"It's a pre-emptive strike," said Michael Lipomi, president of the American Surgical Hospital Association and chief executive officer of Stanislaus Surgical Hospital in Modesto, Calif. "And it's anticompetitive."
The ban on specialty hospitals, included in a bill that also relaxes certificate-of-need regulations for open-heart surgery programs across Florida, prohibits any hospital that restricts its medical and surgical services primarily to cardiac, orthopedic, surgical or oncology practices.
At least a half-dozen states, including Colorado and California, have tried unsuccessfully to ban physician-owned specialty hospitals, but Florida took the matter a step further by shutting out specialty hospitals regardless of ownership. The federal moratorium, meanwhile, effectively limits physician investment in facilities doing business with Medicare or Medicaid.
"This law is much broader than the moratorium," said Ralph Glatfelter, senior vice president of the Florida Hospital Association, a strong proponent of the legislation. "A few other states have tried to prohibit physician ownership. We didn't limit it to doctors. It made more sense to us to deal directly with the issue of specialty hospitals.
"We think it's extremely important," he said of the law, which took effect July 1. "There are no single-specialty niche hospitals in the state of Florida at this time, and this legislation would prevent any development."
Randy Fenninger, a lobbyist in Washington for the surgical-hospital association, said he was surprised that Florida lawmakers took the steps necessary to ban specialty hospitals when the state's strict certificate-of-need laws have thus far had the same effect. While Florida is the first state to mandate a permanent prohibition, several municipalities, acting at the insistence of local community hospitals, have used zoning regulations to restrict specialty hospitals, Fenninger said.
The Florida law, Fenninger said, might be the first step in a long-term effort to eventually limit the proliferation of another fast-growing niche in healthcare: ambulatory surgery centers.
"You wonder why somebody would waste the legislative energy to do this unless they had another purpose in mind," he said.
But Peter Lohrengel, executive director of the Florida Society of Ambulatory Surgical Centers, whose 160 members represent about half of the estimated 300 outpatient centers in the Sunshine State, said he isn't unduly concerned that outpatient facilities will be lawmakers' next target. He said outpatient surgery centers, already tightly regulated by the state, are being increasingly viewed by hospital administrators as potential partners-not competitors.
"I'm not saying I don't see somebody trying (to limit outpatient centers)," he said. "But I can't see that as anything but trying to carry out a political agenda. There is no trouble in this state with ASCs. The only motivation would be trying to maintain market share, but smart hospitals are partnering with ASCs these days."