The 18-month federal moratorium on physician ownership of specialty hospitals has only just now reached the midway mark, but a lobbying battle over its long-term fate is already heating up in the halls of Congress.
In a pre-emptive strike on single-specialty surgical facilities, the Chicago-based American Hospital Association has already corralled support from several lawmakers who want Congress to consider extending the moratorium past its scheduled expiration of June 7, 2005, perhaps making it permanent.
A bipartisan group of seven lawmakers began circulating a letter to colleagues in the House of Representatives earlier this month to express concern about "limited-service hospitals," arguing that their very existence "distorts fair competition and threatens to erode our healthcare foundation."
"Full-service hospitals are the backbone of America's communities, treating all who come through their doors-all day, every day regardless of financial status," reads the letter addressed to the House leaders. "Their ability to meet these needs is jeopardized by physician-owned limited-service providers."
The early effort to drum up support for a permanent ban on specialty hospitals was denounced by Michael Lipomi, president of the American Surgical Hospital Association and chief executive officer of Stanislaus Surgical Hospital in Modesto, Calif.
He said any legislative effort is premature because members of Congress haven't even received the two reports they ordered as part of the Medicare Modernization Act, which imposed the specialty hospital moratorium beginning Dec. 8, 2003. Those reports from HHS and the Medicare Payment Advisory Commission, aimed at helping to determine the efficiency, costs and outcomes of specialty hospitals, won't be done until March 2005. "I would think any responsible lawmaker would want to know this information before they made a decision," he said.
Lipomi, who contends that there is no evidence that specialty hospitals lead to the closure of community hospitals or to inappropriate admitting patterns by investor-physicians, also notes that the seven legislators who asked colleagues to support a tough stance represent South Carolina, Tennessee and West Virginia, states with tough certificate-of-need laws that already have made it difficult or impossible to build specialty facilities. "Obviously, they're responding to favors from the AHA," Lipomi said.
The letter from the lawmakers is regarded as the first step in an effort by the AHA to extend the moratorium or impose a permanent ban on physician investment in surgical facilities, which officials at community hospitals believe strip them of the high-margin patients necessary to underwrite money-losing services and charity care.
"This issue has continued to generate a lot of interest on both sides (of the political spectrum)," said Mary Beth Savary-Taylor, vice president of executive branch relations at the AHA. "Frankly, there's been a lot of concern about the proliferation of specialty hospitals and (Congress) needs to address this very soon next year."
She said she expects the two government-mandated studies to confirm the AMA's position that specialty hospitals do not have a place on the healthcare landscape.
The moratorium has sent shudders through the specialty hospital industry, which was expanding briskly before Congress clamped down. Though more than 100 specialty hospitals are in operation across the country, many potential investors-physicians and others-have balked at proceeding in the face of such significant hurdles.
So far 33 hospitals that are in some stage of development have asked officials at the CMS to provide an advisory ruling on whether they meet the guidelines for exceptions to the moratorium. Two facilities now under construction have received the go-ahead from the CMS, and others are expected to receive similar approval in the coming weeks.
The federal government isn't the only organization currently studying the long-term impact of specialty hospitals. Lipomi's trade group has commissioned a similar study, which is expected to be completed sometime in November. Meantime, the Chicago-based American Medical Association voted in June to conduct a comprehensive study on how these facilities affect the quality of care, patient-referral patterns and the viability of community hospitals.
Lipomi's trade group is also moving ahead with its own crusade in Congress. The group is planning to spend at least $1.5 million on a "truth campaign" leading up to a vote by lawmakers that could pull the plug on the once-booming surgical hospital industry.