Physician-owned specialty hospitals take market share away from community hospital competitors but do not appear to hurt the community hospitals' profit margins, the Medicare Payment Advisory Commission said. As it prepares a congressionally mandated study on specialty hospitals, to be released early next year, MedPAC has periodically discussed its preliminary findings. Among its latest conclusions: Physician-owned specialty hospitals have significantly shorter-than-expected lengths of stay and higher -- but not statistically significant -- costs per discharge than their community counterparts.
MedPAC said specialty hospitals do not appear to reduce profits at community hospitals or have only a minimal effect on profits. The average profit margin at community hospitals in markets with a specialty hospital was 3.4% in 2002 compared with 2.7% in markets without a specialty hospital, MedPAC said. Through 2002, the most recent year for which data was provided, utilization "did not change a great deal with the introduction of heart hospitals into cardiac surgery markets," MedPAC said. At deadline, the report was not available online. -- by Jeff Tieman