Physician-owned Specialty Hospitals Research Articles

Are Patients Undergoing an Anterior Cervical Discectomy and Fusion Treated Differently at a Physician-owned Hospital?

Retrospective case-control study. Physician-owned specialty hospitals focus on taking care of patients with a select group of conditions. In some instances, they may also create a potential conflict of interest for the surgeon. The effect this has on the surgical algorithm for patients with degenerative cervical spine conditions has not been determined. A retrospective review of all patients who underwent a 1- or 2-level anterior cervical discectomy and fusion between October 2009 and December 2014 at either a physician-owned specialty hospital or an independently owned community hospital were identified. Demographic information, the time course for treatment and the nonoperative treatment regimen were evaluated. In total, 115 patients undergoing surgery at a physician-owned specialty hospital and 149 patients undergoing surgery at an independent community hospital were identified. Demographic data between the groups including the presence of 12 medical comorbidities and insurance status was similar between the groups. The only difference that was identified was that patients at the surgeon-owned hospital were marginally younger than patients who had surgery at the independent hospital (49.7 vs. 50.0, P=0.048). No difference in the median number of months from the onset of symptoms to surgery (6.51 vs. 7.53 mo, respectively; P=0.55), from the onset of symptoms to the preoperative visit (6.02 vs. 6.02, P=0.64), or from the initial surgical consultation to surgery (0.99 vs. 1.02, P=0.31) was identified. No difference in the number of patients who underwent formal physical therapy (72.2% vs. 67.1%, P=0.42) or who had a cervical steroid injection (55.6% vs. 50.3%, P=0.25%) was identified between patients who had surgery at a physician-owned or independent hospital; however, patients who underwent surgery at the physician-owned hospital were more likely to have taken oral anti-inflammatories (93.0% vs. 83.9%, P=0.04). When comparing hospitals with similar resources, surgeons do not preferentially select younger, healthier patients with higher paying insurance to be treated at the physician-owned hospital. Furthermore, both the time from the onset of symptoms to surgery and the nonoperative treatment regimen were similar between patients treated at the 2 facilities.

Utilization of Total Joint Arthroplasty in Physician-Owned Specialty Hospitals vs Acute Care Facilities

BackgroundThe recent emergence of physician-owned specialty hospitals has sparked controversy about overutilization. Thus, the purpose of this study was to compare utilization patterns of total joint arthroplasty (TJA) between physician-specialty hospitals (PSHs) and acute care hospitals (ACHs). MethodsA retrospective study was conducted from January 2010 to August 2014 comparing primary TJA patients between a PSH and an ACH; 103 PSH patients were matched to 103 ACH patients by age, gender, BMI, and ASA classification with similar case distribution between facilities. All surgeons in the study operated at both hospitals and were shareholders of the PSH. Information on nonoperative treatments, and timing to the initial appointment, consent, and surgery were analyzed using univariate analysis. ResultsNonoperative treatments before surgery were similar between hospitals (P = 1.00). The time from the initial appointment to consent was longer for PSH (P = .0001). However, the time from consent to the date of surgery (P = .04) and the timing from symptoms to initial appointment (P = .006) was shorter for PSH. The time from initial appointment to the day of surgery was similar between groups (P = .20). Patients were more likely to be consented for surgery on their first clinic visit when undergoing surgery at ACH (87 of 103, 84.4%) compared to PSH (61 of 103; 59.2%; P < .001). Length of stay was significantly shorter for both total knee arthroplasty (P = .001) and total hip arthroplasty patients (P = .001) at PSH. ConclusionFacility ownership in PSH resulted in similar conservative treatment before TJA. The time to surgical consent after the initial appointment was longer PSH, whereas the time from consent to the date of surgery was shorter at the PSH.

Much ado about nothing? The financial impact of physician-owned specialty hospitals.

The U.S. hospital industry has recently witnessed a number of policy changes aimed at aligning hospital payments to costs and these can be traced to significant concerns regarding selection of profitable patients and procedures by physician-owned specialty hospitals. The policy responses to specialty hospitals have alternated between payment system reforms and outright moratoriums on hospital operations including one in the recently enacted Affordable Care Act. A key issue is whether physician-owned specialty hospitals pose financial strain on the larger group of general hospitals through cream-skimming of profitable patients, yet there is no study that conducts a systematic analysis relating such selection behavior by physician-owners to financial impacts within hospital markets. The current paper takes into account heterogeneity in specialty hospital behavior and finds some evidence of their adverse impact on profit margins of competitor hospitals, especially for-profit hospitals. There is also some evidence of hospital consolidation in response to competitive pressures by specialty hospitals. Overall, these findings underline the importance of the payment reforms aimed at correcting distortions in the reimbursement system that generate incentives for risk-selection among providers groups. The identification techniques will also inform empirical analysis on future data testing the efficacy of these payment reforms.

Percutaneous coronary intervention outcomes in US hospitals with varying structural characteristics: Analysis of the NCDR®

In the United States, there continues to be debate about whether certain types of hospitals deliver improved patient outcomes. We sought to assess the association between hospital organizational characteristics and in-hospital outcomes for percutaneous coronary intervention (PCI). Retrospective analysis of 2004 to 2007 data for 694 US hospitals participating in the CathPCI Registry(®). Our analysis focused on 1,113,554 patients who underwent PCI in 471 not-for-profit (NFP) hospitals, 131 major teaching hospitals, 79 for-profit (FP) hospitals, and 13 physician-owned specialty hospitals. Outcomes included in-hospital mortality, stroke, bleeding, vascular injury, and a composite representing one or more of the individual complications. We used the current CathPCI Registry mortality risk model to calculate risk-standardized mortality ratios (RSMRs) for each category of hospital and compared hospital groupings for all patients in aggregate and in subgroups stratified by patients' indications for PCI. Patients treated in major teaching hospitals were younger, whereas FP hospitals performed a greater proportion of PCI for patients with ST-elevation myocardial infarction (P < .0001). Specialty hospitals treated patients with less acuity, including a lower proportion of patients with ST-elevation myocardial infarction. In unadjusted analyses, specialty hospitals had significantly lower rates of all adverse outcomes compared with NFP, teaching, and FP hospitals including in-hospital mortality (0.7%, 1.2%, 1.4%, and 1.4%, respectively; P < .001) and the composite end point (2.4%, 4.1%, 4.6%, and 4.3%, respectively; P < .001). In adjusted analyses, RSMR was significantly lower for specialty hospitals when compared with the other 3 groups for all patients in aggregate (RSMR 1.05%, 1.30%, 1.38%, 1.39%; P < .001); these differences remained clinically significant but were no longer statistically significant in subgroup analyses. Specialty hospitals appear to have lower rates of most adverse outcomes for PCI. Specialty hospitals may have developed expertise in narrow procedural areas that could be adapted to the larger population of general hospitals.

The General NFP Hospital Model

Throughout the past 30 years, there has been a lot of controversy surrounding the proliferation of new forms of health care delivery organizations that challenge and compete with general NFP community hospitals. Traditionally, the health care system in the United States has been dominated by general NFP (NFP) voluntary hospitals. With the number of for-profit general hospitals, physician-owned specialty hospitals, and ambulatory surgical centers increasing, a question arises: “Why is the general NFP community hospital the dominant model?” In order to address this question, this paper reexamines the history of the hospital industry. By understanding how the “general NFP hospital” model emerged and dominated, we attempt to explain the current dominance of general NFP hospitals in the ever changing hospital industry in the United States.

Physician-Owned Hospitals, Neurosurgeons, and Disclosure: Lessons From Law and the Literature

Physician ownership of hospitals has been a subject of controversy for years. Opponents claim that physician ownership and the hospital profits that result from imaging, laboratory tests, and procedures create a conflict of interest for physicians in providing impartial patient care. Proponents argue that having an ownership stake in a hospital means that physicians can have control over all facets of the patient experience, which leads potentially to better patient satisfaction and outcomes. With passage of health reform legislation, physician-owned specialty hospitals have been under renewed attack and now face more restrictive limitations on their growth and expansion. The following review explores the history of physician-owned specialty hospitals, the controversy surrounding physician ownership, and the scope of neurosurgeon ownership in specialty hospitals and offers 2 models for disclosure of potential conflicts of interest.

Is Self-referral Driving Increased Utilization?

T his article by Hollingsworth and colleagues is timely and important. These 4 procedures (colonoscopy, endoscopy, and cataract and breast surgery) constitute 75% of all Medicare payments to ASCs. In defined hospital service areas, the opening of an ASC resulted in increased procedure utilization by the Medicare population for what they described as discretionary procedures (cataract surgery, colonoscopy, and upper gastrointestinal tract endoscopy) but no corresponding increase in imperative procedures, such as breast operations. While I trust the accuracy of their data analysis, the use of value-laden terms such as discretionary to describe endoscopy and cataract surgery implies that all of these procedures did not have appropriate medical indications. There are many valid reasons to relocate outpatient procedures to ASCs (cost, convenience, and efficiency), but most insurers reimburse an ASC about 35% less for the same outpatient procedure performed in a hospital. That migration, however, shifts some of the more profitable procedures out of the inpatient setting, leaving hospitals less margin to provide tertiary-level 24/7 care for a less insured patient population with more comorbid conditions. As fee-for-service payments have decreased (or at least not kept pace with inflation), physicians have seen ownership or partnership with ASCs as one method to maintain income. In light of the fact that 83% of ASCs have some form of physician investment, it is reasonable to conclude that at least some of the increase in utilization for some procedures could be financially driven by self-referral to the physician-owned ASCs for procedures with vague indications. It would be naive to think payers or the Centers for Medicare and Medicaid Services do not already know the trend toward increased utilization in ASCs. If we accept that it is less costly to perform outpatient procedures in ASCs and that some physicians may be increasing procedure utilization for financial gain, how will health care reform reconcile these competing interests? One possible outcome is that there will be further tightening of restrictions on physicianowned ASCs and physician-owned specialty hospitals. This result may drive more physicians from private practice toward employment by larger health care organizations that are able to gain a share of the technical fees recovered from procedures.

Ban on Physician-Owned Specialty Hospitals

Ban on Physician-Owned Specialty Hospitals

Hospital Specialization for Coronary Artery Bypass Grafting

A distinguishing characteristic of contemporary medicine is its continued march toward greater specialization. Medical practice has increasingly become identified by its specialized practitioners, and enhanced quality of care is widely perceived to be linked to the technically advanced care they provide. Apart from the increasing number of specialized practitioners, however, there is another trend that has received somewhat less attention: greater specialization of services among hospitals. Article see p 607 But what exactly is hospital specialization, and what implications does it have for quality and efficiency in medicine? Unfortunately, there is no easily applicable definition for what it means for a hospital to be “specialized,” although recent evidence suggests that some hospitals have begun to move in this direction.1 Examples include the recent proliferation of service lines in hospitals that are focused on a few conditions, procedures, or populations—often organized under the structure of heart institutes, cancer centers, orthopedic hospitals, women's and children's hospitals, and at its most extreme, free-standing specialty hospitals that are often physician-owned. Although physician-owned specialty hospitals are the most widely contentious and discussed of these examples,2,3 the reality is that such facilities represent only a small proportion of hospitals in the United States. The rise of hospital specialization reflects recent trends by hospitals to develop and promote key services that are frequently of great interest to the public. In general, such strategies may take very different organizational approaches—from physically distinct units or buildings that house independent staff or administration to “virtual” …

Ban on Physician-Owned Specialty Hospitals

Ban on Physician-Owned Specialty Hospitals

The Ban on Physician-Owned Specialty Hospitals

The Ban on Physician-Owned Specialty Hospitals

Effect of Physician Ownership of Specialty Hospitals and Ambulatory Surgery Centers on Frequency of Use of Outpatient Orthopedic Surgery

Physician-owned specialty hospitals and ambulatory surgery centers have become commonplace in many markets throughout the United States. Little is known about whether the financial incentives linked to ownership affect frequency of outpatient surgery. To evaluate if financial incentives linked to physician ownership influence frequency of outpatient orthopedic surgical procedures. We analyzed 5 years of claims data from a large private insurer in Idaho to compare frequency by orthopedic surgeon owners and nonowners of surgical procedures that could be performed in either ambulatory surgery centers or hospital outpatient surgery departments. Frequency of use, calculated as number of patients treated with the specific diagnoses who received the surgical procedure of interest divided by the number of patients with such diagnoses treated by each physician. Age- and sex-adjusted odds ratios indicate that the likelihood of having carpal tunnel repair was 54% to 129% higher for patients of surgeon owners compared with surgeon nonowners. For rotator cuff repair, the adjusted odds ratios of having surgery were 33% to 100% higher for patients treated by physician owners. The age- and sex-adjusted probability of arthroscopic surgery was 27% to 78% higher for patients of surgeon owners compared with surgeon nonowners. The consistent finding of higher use rates by physician owners across time clearly suggests that financial incentives linked to ownership of either specialty hospitals or ambulatory surgery centers influence physicians' practice patterns.

The Impact of New Hospital Orthopaedic Surgery Programs on Total Joint Arthroplasty Utilization

Utilization of arthroplasty is increasing, but there are little data exploring the causes of this increase. The objective of this study was to examine the relationship between new programs for arthroplasty of the lower extremity joints and the utilization of arthroplasty. We identified twenty-four markets (hospital referral regions) that experienced the entry of new physician-owned specialty hospitals, using 1991 to 2005 Medicare data. We matched each market with a new specialty hospital to two different control markets (one market with a new arthroplasty program in a general hospital and one market without a new arthroplasty program), using a propensity score that accounted for market supply and demand for orthopaedic surgery and the regulatory environment. We compared the utilization of arthroplasty of the lower extremity joints (total hip arthroplasty and total knee arthroplasty) in each group of markets over a five-year window, extending from two years before to three years after the entry of new orthopaedic surgery programs. The twenty-four markets with new specialty orthopaedic hospitals had higher utilization of arthroplasty at baseline (10.9 arthroplasties per 1000 Medicare beneficiaries per year) and follow-up (12.7 per 1000 beneficiaries) compared with the twenty-four markets with new arthroplasty programs in general hospitals (9.7 and 11.4, respectively) and the twenty-four markets with no new programs (9.9 and 11.3), although the differences were not significant (p > 0.05). Growth in the utilization of arthroplasty was similar in markets with new specialty hospitals before (an increase of 0.63 procedure per 1000 beneficiaries per year) and after the entry of new specialty hospitals (an increase of 0.39) compared with markets with new surgery programs in general hospitals (an increase of 0.24 before and 0.43 after) and markets with no new programs (an increase of 0.38 before and 0.33 after the entry of new specialty hospitals) (p > 0.05 for all comparisons). The utilization of arthroplasty is increasing at similar rates in markets with and without new arthroplasty programs.

A Mortal Wound for Physician-Owned Specialty Hospitals? The Legal and Ethical Prognosis for Market-Driven, Entrepreneurial Medicine in the Wake of 2010 Health Care Insurance Reforms

As of March 2010, approximately 265 physician-owned hospitals operate throughout the United States. These health care delivery centers constitute big businesses that provide approximately 75,000 jobs, $3.4 billion in cumulative payroll, and hundreds of millions of dollars in state and federal tax revenues. Moreover, a 2009 Consumer Reports analysis rated physician-owned hospitals as the “Number One Hospital” in 19 of the 30 states in which they operate, illustrating their popularity with patients.Yet, research suggests that physician-owned hospitals generate disproportionately higher overall health care costs, due in large part to compensation schemes that incentivize physicians to over-utilize hospital diagnostic tests, services, and procedures in which the physicians have an ownership interest. In addition to these conflicts of interest, unfair competition with other “general” hospitals is also an issue, as these physician-owned “specialty” facilities do not typically offer unprofitable services or treat uninsured, Medicaid-eligible, or severely ill patients. Tragically, patients have died when these specialty hospitals, operating without costly emergency departments, had to dial 9-1-1 to attempt rescues on their patients. Motivated by these economic and ethical concerns, provisions were written into the recently passed “Patient Protection and Affordable Care Act” (“Act”) that will sharply curtail the expansion of physician-owned specialty hospitals by prohibiting future Medicare contracts after December 31, 2010, and restrict any future increases in aggregate percentage of physician ownership and patient capacity. This paper argues that this most recent congressional action constitutes a move in the right direction, but that more government regulation of the hospital marketplace may be warranted.The paper begins with the issue of patient safety before moving in Part II to a brief review of pertinent historical policy and legislative actions, including antitrust precedents, anti-kickback laws, and Stark I & II that were intended to prohibit physicians from referring their Medicare or Medicaid patients for specific health care services to facilities in which they or members of their immediate family have an ownership interest. Part III of the paper describes physician-owned specialty hospitals, examines the language and intent of the Act, and reviews a pending legal challenge against the new law. In Part IV, ethical issues triggered by physician-ownership of specialty hospitals, self-referral incentives, and the intersection of professional duties and personal business self-interests are explored. Premised upon these ethical considerations and an analysis of the Act that explores the notion of ethical health policy, the conclusion of the paper in Part V argues that the recent legislation is a model of reasonable government regulation that is largely consistent with principles grounded in clinical medical ethics and appropriately sensitive to medicine’s uniqueness among free-market institutions.

The Impact of Physician-owned Specialty Orthopaedic Hospitals on Surgical Volume and Case Complexity in Competing Hospitals

Published studies of physician-owned specialty hospitals have typically examined the impact of these hospitals on disparities, quality, and utilization at a national level. Our objective was to examine the impact of newly opened physician-owned specialty orthopaedic hospitals on individual competing general hospitals. We used Medicare Part A administrative data to identify all physician-owned specialty orthopaedic hospitals performing total hip arthroplasty (THA) and total knee arthroplasty (TKA) between 1991 and 2005. We identified newly opened specialty hospitals in three representative markets (Durham, NC, Kansas City, and Oklahoma City) and assessed their impact on surgical volume and patient case complexity for the five competing general hospitals located closest to each specialty hospital. The average general hospital maintained THA and TKA volume following the opening of the specialty hospitals. The average general hospital also did not experience an increase in patient case complexity. Thus, based on these three markets, we found no clear evidence that entry of physician-owned specialty orthopaedic hospitals resulted in declines in THA or TKA volume or increases in patient case complexity for the average competing general hospital.

The Misdirected Debate Over Physician-Owned Specialty Hospitals

The Misdirected Debate Over Physician-Owned Specialty Hospitals

In defiance of death: exposing the real costs of end-of-life care

List of Illustrations Foreword by Dr. Benjamin Brown Preface Acknowledgments Chapter One: Dying in America Today Chapter Two: Roots of the Problem: The Patient Self-Determination Act, Advance Directives, and the Americans with Disabilities Act Chapter Three: Why We Need Appropriate Care Committees Chapter Four: The Three Most Typical End-of-life Populations Chapter Five: Hospitals, Escalating Costs, and End-of-Life Care Chapter Six: Nursing Homes Chapter Seven: Palliative Care and Hospice Chapter Eight: A Big Step in The Right Direction: The VA Transforms End-of-Life Care Chapter Nine: Results of My Non-Scientific, Revealing Survey Chapter Ten: The Winds of Change: Suggestions for New Directions in End-of-life Care Appendix I: The Survey Questionnaires Appendix II : Family-Physician Interactions Appendix III: The Baby K Case Appendix IV: In Support of Appropriate Care Committees Cardiologists Get Wake-up Call on Stents by Mike Mitkam, (selected text) Journal of the American Medical Association. Geographical Variations in Medicare Spending, Editorial by Kenneth I. Shine, MD, Annals of Internal Medicine. Physician-Owned Specialty Hospitals and Coronary Revascularization Utilization Too Much of a Good Thing? By Peter Cram, MD, MBA Gary E. Rosenthal, MD (Selected Text) Journal of the American Medical Association. How Physicians Can Change the Future of Health Care by Michael E. Porter, PhD, MBA Elizabeth Olmsted Teisberg, PhD, MEngr, MS, (Selected Text) Journal of the American Medical Association. For Further Reading: A Selection of Titles for Further Investigation Appendix V: American Medical Education American Medical Education 100 Years after the Flexner Report by Molly Cooke, M.D., David M. Irby, Ph.D., William Sullivan, Ph.D., and Kenneth M. Ludmerer, M.D., New England Journal of Medicine. Appendix VI: Pharmaceutical Company Issues Surviving Sepsis--Practice Guidelines, Mar Campaigns, and Eli Lilly by Eichacker PQ, Natanson C, Danner RL. New England Journal of Medicine. Appendix VII: The Economic Impact of Our Health Care if We Do Not Change Aging Baby Boom Generation Will Increase Demand and Burden on Federal and State Budgets, GAO Report Appendix VIII: The Truth About Americas Health Care System--Most Expensive Bad Results What Cannot Be Said on Television About Health Care by E.J. Emanuel, MD. (abstract) Journal of the American Medical Association. Appendix IX: Dying in America National Institutes of Health State-of-the-Science Conference Statement on Improving End-of-Life Care, National Institutes of Health,State-of-the-Science Conference Statement Appendix X: Universal Health Care in America: TheLure of a Quick Fix Universal Health Care in America: The Lure of a Quick Fix by Kenneth A. Fisher, M.D. Glossary Index

Do Financial Incentives Linked to Ownership of Specialty Hospitals Affect Physicians’ Practice Patterns?

Although physician-owned specialty hospitals have become increasingly prevalent in recent years, little research has examined whether the financial incentives linked to ownership influence physicians' referral rates for services performed at the specialty hospital. We compared the practice patterns of physician owners of specialty hospitals in Oklahoma, before and after ownership, to the practice patterns of physician nonowners who treated similar cases over the same time period in Oklahoma markets without physician-owned specialty hospitals. We constructed episodes of care for injured workers with a primary diagnosis of back/spine disorders. We used pre-post comparisons and difference-in-differences analysis to evaluate changes in practice patterns for physician owners and nonowners over the time period spanned by the entry of the specialty hospital. Findings suggest the introduction of financial incentives linked to ownership coincided with a significant change in the practice patterns of physician owners, whereas such changes were not evident among physician nonowners. After physicians established ownership interests in a specialty hospital, the frequency of use of surgery, diagnostic, and ancillary services used in the treatment of injured workers with back/spine disorders increased significantly. Physician ownership of specialty hospitals altered the frequency of use for an array of procedures rendered to patients treated at these hospitals. Given the growth in physician-owned specialty hospitals, these findings suggest that health care expenditures will be substantially greater for patients treated at these institutions relative to persons who obtain care from nonself-referral providers.

Commentary on “The Economics of Specialty Hospitals”

There are two major aims of this commentary on “The Economics of Specialty Hospitals” by Schneider and colleagues (this issue). The first aim is to identify and discuss the policy, market, and organizational context in which physician-owned specialty hospitals have emerged and now exist in the United States. This context is critical for understanding aspects of the economic model and the potential advantages and disadvantages of physician-owned specialty (or limited-service) hospitals relative to general (or full-service) hospitals now and over time. The second aim is to discuss the six specific elements of the model (i.e., consumer demand, procedural operating margins, clinical efficiencies, procedural economies of scale, economies or diseconomies of scope, and competencies and learning). Specifically, to raise some key questions and to point to other ideas and empirical evidence that suggest that in practice, physician-owned specialty hospitals may not have all the advantages that the economic theory described seems to imply.

Specialization and physician-ownership in the US hospital industry: beyond the moratorium

A moratorium in the US on referrals of Medicare and Medicaid patients to new cardiac, orthopedic, or surgical specialty hospitals by physician-investors was recently lifted, yet the considerable controversy stirred by this growing hospital organizational form continues. This paper calls attention to the peculiar trade-offs introduced by entry of these specialty hospitals, and highlights distinctions among their different types. New policy approaches should be open to the notion that all physician-owned specialty hospitals need not necessarily be regulated in the same way. And caution will be required not to compromise the capacity of community general hospitals to service more complex patients and to maintain the social safety net.