After taking a political beating last year from the American Hospital Association, specialty hospitals may soon gain an influential ally: the American Medical Association.
The AHA and the AMA, whose interests often collide in the halls of Congress, will be on opposite ends of a key national policy debate if the medical group's House of Delegates approves an internal report that offers unqualified support for specialty hospitals, which are struggling for survival in a battle royal with the AHA.
In a long-anticipated report, the AMA's board of trustees will officially oppose the extension of an 18-month moratorium on physician referrals to new specialty hospitals. The moratorium, included in last year's Medicare Modernization Act, took effect in late 2003 and extends through June 7, 2005.
The AMA's House of Delegates will hear arguments on both sides of the issue before an expected vote on the 26-page report in early December at the group's midyear meeting in Atlanta. With 247,000 members and an annual lobbying and advocacy budget approaching $20 million, the AMA wields considerable clout in Washington. The report says the organization should back specialty hospitals because it "supports competition between and among healthcare facilities" as a way to promote "high-quality, cost-effective healthcare."
"I think we now have a very powerful ally," said Michael Lipomi, chief executive officer of Stanislaus Surgical Hospital in Modesto, Calif., and immediate past president of the American Surgical Hospital Association. "It's reassuring to me that the healthcare providers are stepping up and saying, `These facilities are better for consumers, they're better for patients.' "
James Grant, chief operating officer of Chicago-based National Surgical Hospitals and the current president of the surgical hospital association, said he was "cautiously optimistic" that the AMA's House of Delegates would endorse the board's report and provide specialty hospitals with a vital ally in its fight against the moratorium. "The AMA makes the same points that we've been making about specialty hospitals, that they are a positive force in the community."
Rick Pollack, executive vice president of the AHA, downplayed the impact of the medical group's report and said it would not lead to a long-term rift between the two associations. For the AHA, he said, the key issue remains ethical concerns over doctors' self-referral of patients to hospitals they own.
"We're disappointed they've put forward this report for consideration by the House of Delegates," Pollack said, noting that it is still possible for the AMA delegates to reject the board's conclusions. "We believe that many doctors share our concern about self-referral."
If the doctors' group endorses the report, Pollack said, "We'll have to agree to disagree. We would prefer to have them on our side on this. I think that's obvious."
Lipomi said he believes a strong show of support from the AMA will have a dramatic impact on next year's debate in Congress over the moratorium on specialty hospitals. The surgical hospital group is expected to spend at least $1.5 million lobbying for an end to the ban while the AHA, which was primarily responsible for the moratorium in the first place, will attempt to extend the prohibition or persuade legislators to make it permanent.
The surgical hospital industry received other positive news last week when the Medicare Payment Advisory Commission concluded that the nation's 100 or so niche facilities draw patients away from community hospitals but do not appear to hurt their profit margins.
"The more voices on our side the better," said Alan Pierrot, a physician who is president and CEO of FSC Health, in Fresno, Calif., and the first president of the 4-year-old surgical-hospital association. "Pre-viously, we'd been battling this moratorium entirely on our own. Now, we've got the approval of a major interest group."
Underscoring the impact of the AMA's report and MedPAC's findings, Lipomi suggested that Congress consider "emergency legislation to lift the moratorium" because of what he described as overwhelming evidence that surgical hospitals will not harm community hospitals. "My personal opinion is that this moratorium was imposed on this industry without any basis in fact," Lipomi said. "I think MedPAC has made it perfectly clear that surgical hospitals do not present a risk to community hospitals."
Pollack countered that MedPAC's latest report continues to support the hospital lobby's position that specialty hospitals, which focus on high-margin services such as cardiac care and orthopedic surgery, have a negative impact on community hospitals. "They can spin the MedPAC discussion any way they want, but surgical hospitals skim the cream, and it's harder for the hospitals to finance essential public services."
The AHA is scheduled to release a report in January 2005 examining the impact of specialty hospitals in five communities, said Ellen Pryga, director of policy for the AHA.
Not every specialty hospital is stripping away business from not-for-profits. Earlier this month, MedCath Corp. announced it was bailing out of a money-losing 32-bed heart hospital outside Milwaukee, and followed that news with a report last week detailing a $3.6 million net loss for the fiscal year ended Sept. 30. The loss was an improvement over the previous year, in which MedCath lost $60.3 million. Revenue increased 27.6% to $692.8 million.
If the AMA's report is endorsed by its governing body next month, it will become the first time a major medical group has weighed in on the debate over physician ownership of specialty hospitals. Several smaller specialty societies also have considered the issue along with individual state medical societies, including California's, which was considering adopting its own policy during a meeting last week.
The AMA's report is the first of several surveys of specialty hospitals that are due for release soon. As part of the law that created the moratorium, Congress asked for comprehensive studies on specialty hospitals from the CMS and MedPAC, which has provided some preliminary data already. Those reports are expected sometime next March. In its report, the AMA board criticized the AHA for "aggressive tactics" in attempting to round up support for the moratorium in Congress before legislators have had a chance to review the results of those two government-sponsored studies.