Study Is Bad News For Specialty Hospitals
BY DAVID KRESSEL, OCTOBER 27, 2005
The latest issue of Health Affairs contains a troubling study for the surgeon-owned hospital industry. Jean Mitchell, a professor of public policy at Georgetown University, took an in-depth, quantitative look at heart doctors and hospitals in Arizona. In particular, she analyzed the types of cases done by physicians who did and did not have an ownership position in a specialty hospital, and where they did these cases.
The results show physicians who have invested in a specialty hospital are more likely to treat their easier, and thus more profitable, cases at the specialty hospital and treat their more complicated cases at a community hospital. In addition, these "physician-owners" also treated patients with better insurance coverage (PPOs and Medicare FFS) at their own facilities and treated people with worse insurance (commercial and Medicare HMOs) at the community hospital.
Such behavior, commonly called cherrypicking, is prohibited by the Stark Laws. Keep in mind there is a moratorium on building specialty hospitals that will come up for review again in January 2006--it's hard to believe this wouldn't be used as strong evidence supporting a continued ban. Not only are taxpayers defrauded by cherrypicking, but community hospitals also suffer when they lose the more profitable cases, as these fund the operations of inherently unprofitable departments, research, and care of the indigent.
