Physician-owned specialty hospitals may not pose as severe a threat to community hospitals as critics have suggested they do, according to preliminary results of a study being conducted by the Medicare Payment Advisory Commission.
Specialty hospitals -- which focus exclusively on providing cardiac, orthopedic or surgical care -- initially reduce the volume of patients treated by competing community hospitals, MedPAC researchers said. However, they added, most community hospitals remained profitable over time despite competing with a new specialty facility.
When specialty hospitals enter a market, they often serve as a "wake-up call" for their traditional acute-care competitors to improve services and efficiency, according to early findings of MedPAC's study, which was mandated by the Medicare Modernization Act and will be completed in March 2005.
Specialty hospitals also serve fewer Medicaid and uninsured patients, and present possible conflicts of interest, MedPAC said.
The Medicare Modernization Act put in place a moratorium on the construction of new physician-owned specialty hospitals until June 2005. The American Hospital Association and other advocates of acute-care, community hospitals are lobbying to make the moratorium permanent.
Some lobbyists said MedPAC's early conclusions on specialty hospitals could take some of the wind out of their sails. The AHA, meanwhile, said it will continue to push for a permanent ban on the specialized facilities.