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- Anthony N. DeMaria, MD, MACC, Editor-in-Chief, Journal of the American College of Cardiology*
- ↵*Address correspondence to:
Anthony N. DeMaria, MD, MACC, Editor-in-Chief, Journal of the American College of Cardiology, 3655 Nobel Drive, Suite 400, San Diego, California 92122, USA.
My last Editor's Page dealt with physician self-referral in cardiology, a situation which raises potential conflict of interest issues that are both real and perceived. Heart hospitals are a relatively new type of medical facility on the healthcare landscape, and they typically involve partial ownership by physicians. As with physician self-referral, heart hospitals offer a number of attractive benefits to healthcare delivery but also raise concerns about possible conflict of interest and adverse effects upon community hospitals. In a sense, heart hospitals not only embody many of the issues of self-referral, but also larger issues involving the role of cardiovascular services within the universe of medical care.
The term “heart hospital” has been used to describe a variety of facilities ranging from stand-alone institutions to “hospitals within hospitals.” Some are affiliated with general hospital systems, whereas some are financially independent and partner with for-profit entities. The specialty hospitals that have attracted the greatest attention and concern share the characteristics described by a report of the U.S. General Accounting Office (GAO) (1). These hospitals are stand-alone facilities usually devoted to the narrow spectrum of diseases of one organ system, and they nearly always encompass partial physician ownership. Most specialty hospitals are devoted to cardiovascular diseases, orthopedics, or surgery—services that usually generate surplus revenues (read profits) for general hospitals. According to the GAO survey, 70% of facilities have physician ownership amounting to an average ownership of 50% of the hospital, although the average share for any individual physician was about 2%. Nearly all specialty hospitals were at least partially owned by group practices. Not surprisingly, the combination of physician ownership and profitable services raises the specter of potential self-referral and conflict of interest.
Although comprising <2% of acute-care hospitals nationwide, specialty hospitals have burst upon the medical scene with rapid growth. Thus, the number of specialty hospitals tripled between 1990 and 2003 to a total of 90 facilities, with 20 in the planning stage (1). Seventeen of these hospitals were cardiac, with five more on the drawing board. A search of the term “heart hospital” on Google yields more than 10 pages of listings. In fact, the increased number and potential impact of heart and other specialty hospitals was sufficiently great that the Medicare Modernization Act of 2003 placed an 18-month moratorium upon the exemption that these facilities were granted from the Stark Medicare Physician Self-Referral Law.
The concept of specialty hospitals is certainly not new. Hospitals devoted to pediatrics, women's health, and psychiatry have existed for many years. However, these facilities are usually not physician owned and they are generally directed at specific patient populations rather than diseases. The recent growth of heart and other specialty hospitals has been facilitated by several factors (2). The improvement in medical procedures and anesthesia has enabled care delivery to be streamlined. Health plans have been less selective in contracting. Many general hospitals have been operating near full census. From a financial standpoint, profits have been available from reimbursement, as has capital from for-profit firms such as MedCath. It is of interest that heart and other specialty hospitals have nearly always been located in areas with weak or absent Certificate of Need rules, which contain large medical groups with which to affiliate.
The proponents of heart hospitals cite a number of advantages for these institutions. Their focus upon disease of one organ system and the anticipated increased volume of these disorders treated should result in greater quality of care. Staff, management, and equipment dedicated to a specific set of disorders should result in greater efficiency of care. Thus, one would expect heart hospitals to reduce costs and increase the number of patients a physician can care for, an important consideration with an impending shortage of cardiologists. The greater physician input into and control of heart hospitals is seen as a great advantage to effective and efficient operations. Finally, the above efficiency along with the perceived convenience of smaller heart hospitals should result in greater patient satisfaction.
Despite these advantages, the proliferation of heart and specialty hospitals has produced a chorus of concerns. To begin with, heart hospitals carry the potential for an excess capacity of beds and services with the financial impact which that implies. Excess capacity along with the potential incentives of self-referral could result in overutilization. The division of patients between more institutions could lead to decreased volumes and quality at all facilities. Finally, duties at specialty hospitals may make specialists unavailable to cover emergencies at general hospitals.
Those opposed to heart hospitals point out that they could have a substantial negative financial impact upon general hospitals. Cardiovascular procedures are profitable and subsidize money-losing but necessary community hospital services such as burn units. Syphoning off this profit could injure general hospitals. Moreover, some worry that heart and specialty hospitals skim the most financially attractive types of medical practice. They are often suspected of providing only the most profitable services to patients who may have less complicated illnesses in an environment that may be less regulated. Because many of these facilities do not have emergency departments, they may avoid caring for the very sick and the very poor. In addition, physician investors may be biased to send their most complex and unusual patients to general hospitals. Given this litany of concerns, it is perhaps understandable that a moratorium was recently placed on exemptions to the Stark Law for new specialty hospitals.
As is so often the case, there is a dearth of data to validate either the advantages or liabilities of heart and specialty hospitals. The GAO studied approximately 25% of such institutions and reported that the severity of illness was less in specialty than in general hospitals (1). However, a study by Al Dobson of the Lewin Group funded by MedCath reported that their heart hospitals had a greater case-mix severity, lower mortality, and lesser length of stay than did peer community hospitals (3). Although some community hospitals have claimed significant financial losses due to specialty hospitals, it has been pointed out that no general hospital has closed because of such competition. Interestingly, the absence of data has in no way lessened the volume of the debate.
Given the current questions regarding heart and specialty hospitals, Casalino et al. (2)have identified several potential courses of action that might be warranted in the future. If future data show that heart hospitals have resulted in neither an adverse effect on general hospitals nor overutilization, then no action should be taken. If specialty hospitals provide more efficient or better care and hurt community hospitals in the process, but the competition is fair and “cherry picking” is not found, it would not seem reasonable to take any adverse action against them. Rather reimbursement might be adjusted to reflect the costs incurred by general hospitals in providing nonremunerative but necessary services such as burn units. Conversely, if specialty hospitals adversely affect general hospitals owing to unfair competition and patient selection, then it would seem justified to include specialty hospitals in the provision of the Stark medicare, Physician Self-Referral Law, which prohibits self-referral, or to adjust payment to reflect care mix. Of significance, the concerns regarding specialty hospitals have again focused attention on why some medical services are much more remunerative than others. Major revision of the current Medicare relative value system might, of course, have more profound consequences upon cardiovascular medicine than heart hospitals ever could.
And so, as the movement toward heart hospitals gathers momentum, both the concerns and the debate about possible adverse effects continue. General hospitals worry that procedures which generate financial surpluses will be lost and unavailable to fund important nonremunerative services such as burn units, trauma care, and social services. In addition, they are concerned that physician ownership may bias decision making and lead to the referral of only low-severity, well-funded patients to heart hospitals. Proponents of specialty hospitals counter that such concerns belie a basic mistrust of doctors, and that physicians will always make the best decision regardless of self-interest (4). The data are not available to resolve the issues. Nevertheless, it seems to me that physicians are somewhat naive to believe that they can dismiss concerns regarding the obvious potential for conflict of interest that heart hospitals present by merely saying “trust me.” The recommendation of the Task Force on New Niche Medical Facilities of the American Hospital Association to eliminate the whole hospital exemption to the Stark Law for specialty hospitals is evidence of this naivety. If physician ownership is too small and potential dividends too inconsequential to influence decision making, perhaps physicians should consider donating these financial gains to some worthwhile cause. In this way they could preserve the important aspect of physician input and control of the facility as investors while defusing any issue of self-referral.
Finally, as cardiologists, we must realize that the perception of conflict of interest is often as significant as its existence. We should act aggressively to remove any perception of conflict of interest in our decision making, or someone may take that action for us.
- American College of Cardiology Foundation
- ↵U.S. General Accounting Office. Specialty hospitals: information on national market share, physician ownership and patients served. Publ. No. GAO-03-683R Washington, DC: GAO, April 18, 2003.
- Casalino L.P.,
- Devers K.J.,
- Brewster L.R.
- ↵Dobson A. A comparative study of patient severity, quality of care, and community impact at MedCath heart hospitals. Lewin.Com, May 2003.