Specialty Hospitals Versus Community Hospitals - Research Paper Example

? Specialty Hospitals versus Community Hospitals: The Debate Developments on the Moratorium Specialty hospitals and community hospital operations spurred a big health policy debate in Congress. According to Eric Zimmerman (2006), Congress has been keenly focused on, and deeply divided over specialty hospital development. He stated that in 2003, Congress amended the Stark Law to impose an 18-month moratorium during which physician owners of specialty hospitals could not refer Medicare patients to those hospitals which they have investments. The moratorium effectively stifled development of new specialty hospitals. Lawmakers continued to debate on specialty hospitals throughout 2005, as the American Hospital Association and other lobbying organizations pressed for a permanent ban on physician self-referrals to specialty hospitals (Zimmerman, 2006). Before the moratorium ended, Congress approved more legislation on specialty hospitals, in the early of part of 2006. The legislations provisions refused to impose a ban on physician self-referrals to specialty hospitals but directed the Centers for Medicare and Medicaid Services (CMS) to withhold new provider numbers from specialty hospitals while the agency prepares a strategic and implementing plan regarding physician investment in specialty hospitals that addresses issues related to proportionality of investment return, investments, disclosure of investment information, and the provision of Medicaid and charity care by specialty hospitals (Zimmerman, 2006). The moratorium ended on August 2006 with the CMS proposing follow the recommendations by the Medical Payment Advisory Commission’s (MedPAC) of focusing more on actual hospital costs on care and not on hospitals charges. Additionally, specialty hospitals need to accept patients under the Emergency Medical Treatment and Labor Act (Mclaughlin & Maclaughlin, 2008). In 2007, Congress enacted the Children's Health and Medicare Protection Act of 2007, effectively banning physician “referrals of Medicare patients to new specialty hospitals in which they have an ownership interest; require existing hospitals to limit physician ownership to 40 percent; and limit individual physician ownership to 2 percent” (Roy, 2007). It also prohibited adding new inpatient beds and operating rooms in existing specialty hospitals that get reimbursement from Medicare. Debates regarding and studies regarding specialty hospitals continue, both for and against its operations. In Washington and Ohio, laws were passed requiring such hospitals to provide round-the-clock emergency care. Lobbying on the provisions of existing laws limiting specialty hospital operations are also continuing. The Moratorium Aftermath The debate on specialty hospitals mainly has focused on the perceived unfair competitive advantage of such hospitals over community hospitals. Community hospital advocates argue that specialty hospital physicians can select only those patients with healthcare insurance, choose healthier patients, avoid emergency duty and that these hospitals avoid surveillance under quality improvement and utilization review programs (Mclaughlin and Mclaughlin, 2008). On the other side of the debate, MedPAC studies showed that specialty hospitals do not drain profits from community hospitals and do not “cherry pick” patients. Moreover, some studies show benefits like high quality care, high patient satisfaction, and improved cost efficiency in specialty hospitals (Binder, 2010). The bottom-line of all these debates relatively lead to patient welfare. All patients should be treated equally, whether rich, low income, uninsured or Medicaid patients. The provision of services should focus on the needs of the patients, the right to be fully informed about their condition and choose where to receive the care they need. This includes whether the attending physician has ownership interests in any of the hospitals or health care facilities being recommended. As for the physicians, the utmost importance should be given to the medical condition of the patients and the best possible options they can have. They should consider adhering to the highest standard and quality health care they can give and not prioritizing percentage of ownership of the hospital when giving the patients the best possible options. With these in mind, one comes to the conclusion that providing the best health-care services is of utmost importance. Patient welfare should be promoted in both specialty and community hospitals by reaching a compromise addressing the concerns of both parties while letting the legislature address the health care cost crisis affecting patients which is the most pressing issue that the country is currently facing today. Consequently, more research should be conducted about specialty hospitals adversely affecting the financial viability of general hospitals and their capacity to care for low-income and uninsured patients. Operations of specialty hospitals should not be hindered, provided however, that sufficient safeguards be enacted through policy and legislation, ensuring patient welfare and protecting the sustainability of community hospitals in terms of competitiveness with specialty hospitals. The Legislative Issue In 2006, during the Senate Finance Committee hearings, Senator Grassley noted that "it appears that 40 new specialty hospitals have opened" during the moratorium and the investigation. A study by Bruce Steinwald (2005) stated that Congress, through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), established a moratorium which, in effect, temporarily halted further development of physician-owned specialty hospitals that focus on cardiac, orthopedic, or surgical procedures and mandated additional studies of specialty hospital issues. Specialty hospitals in operation as of November 18, 2003, are grandfathered under the moratorium and are allowed to expand within limits. Specialty hospitals not opened as of that date may apply to the Centers for Medicare & Medicaid Services (CMS) and request a determination of their development status. Hospitals not open as of November 18, 2003, but sufficiently advanced in their development may be grandfathered. Steinwald’s (2005) observation needs confirmation that although; “As of April 29, 2005, CMS had received 40 applications from specialty hospitals under development seeking determinations that they were grandfathered under MMA’s moratorium. CMS received 38 applications for new specialty hospitals and 2 applications for specialty hospital expansions. Slightly more than half (22) of the 40 applications were from surgical hospitals, while the rest were from cardiac hospitals (9), orthopedic hospitals (5), or hospitals that did not indicate their specialty (4). Three-fourths of the applications came from hospitals in four states: Texas (19), Louisiana (6), California (3), and Oklahoma (3). Of the 40 applications it received, CMS issued 12 favorable opinions (approvals) and 2 unfavorable opinions (denials). One of the 40 applications had been withdrawn”. It should be noted that of the 40 hospitals being referred to by Steinwald, there is still a contention that these hospitals have operated prior to the moratorium and that they are still applying for approval. Possible Legislative Improvements In order to resolve this debate, a significant legislation addressing the issues on oligopolistic competition, administration of the system and promoting free market competition while at the same time providing for the welfare of health care patients need to be enacted. This legislation needs to undertake an in-depth study of whether specialty hospitals impact the operations of community hospitals in order to address both sides of the issue. The CMS proposal defines several guidelines, namely, mandatory hospital investment disclosure, continued enforcement of stark and anti-kickback rules for improper investment, major hospital and ambulatory surgery payment reforms to begin to align Medicare payments with costs of care, new opportunities to support hospitals and physicians working together to improve care, and required emergency service for patients when appropriate, regardless of ability to pay (Murer, 2006). As these regulations also ensure patient welfare, they should be included in the new legislation. However, free competition should also be encouraged but not to the detriment of patients. Experience has shown that this promotes an environment of service improvement and better quality care. Safeguards should however be put into place in order to ensure that there is fair competition between specialty and community hospitals. There should also be provisions that no patient shall be denied healthcare in specialty hospitals. Standardization of healthcare prices should be enacted so that there would be no significant discrepancies between community and specialty hospital price of services. As many sectors would be affected by any such legislation, the new policy should undergo public hearings and inputs from all sectors, particularly the community hospitals, specialty hospitals, government regulatory agencies and patients. References Roy, A. (2007). How Congress is Killing Competition: The Future of Specialty Hospitals. The Heritage Foundation. Retrieved from www.heritage.org/research/reports/2007/12/ Binder, J. (2010). Physician-Owned Specialty Hospitals: A Problem or a Solution?. Biomet. Retrieved from www.biomet.com/corporate/ceoblog/postDetail.cfm?postID=54. Mclaughlin, C.P. and Mclaughlin, C.D. (2008). Health Policy Analysis: An Interdisciplinary Approach. Sudbury, MA: Jones and Bartlett Publishers. Murer, C.G. (2006). Physician-Owned Specialty Hospital Moratorium Expired… Replaced with New Regulations and Continued Scrutiny. Retrieved from www.murer.com/files/uploads/docs/initivenewguidelinesspecialtyhospitals-oct06.pdf Steinwald, S. (2005). Specialty Hospitals: Information on Potential New Facilities. United States Government Accountability Office Washington, DC. Retrieved from www.gao.gov/new.items/d05647r.pdf Zimmerman, E. (2006). The Implications Of Reimbursement Changes For Specialty Hospitals. Healthcare Financial Management. Westchester, IL: Healthcare Financial Management Association. Retrieved from www.mwe.com/info/pubs/zimmerman0706.pdf. Read More