Boutique Hospitals--the Hows...Tax Day

Article excerpted from USA Weekend:

People often assume this 12-bed nest is only for the rich, says Jack Sternlieb, M.D., the boyish founder and director of The Heart Hospital. In truth 80% of his patients are on Medicare. "Full service hospitals are big white elephants," he says, "bogged down in administrative costs."

Specialty Hospitals:

Proponents of physician ownership of niche, or specialty hospitals, argue that it is a model that encourages innovation, which can lead to reduced costs and increased quality of care. Opponents argue that specialty hospitals take away profitable business from community hospitals necessary to service low-income patients, leaving general hospitals the poorest and sickest patients.

Legislation:

On June 8, 2005, with the expiration of the federal moratorium, a number of specialty hospital bills were filed to be considered by the Texas Legislature. SB 872 directs the Texas Department of State Health Services (DSHS) to study the impact of niche hospitals on the State’s health care delivery system. The law prohibits providers from recommending patients to a niche hospital (generally defined as surgical, cardiac, orthopedic, or women’s hospitals) when the provider (or immediate family) has a financial interest in that hospital. An exception applies if the physician discloses that interest to the patient in writing and informs the patient that alternative choices are available. The physician is also required to notify DSHS of any ownership in niche hospitals. The bill directs DSHS to conduct a study regarding the impact of niche hospitals on the financial viability of other general hospitals in the state. In addition, the bill establishes an Advisory Panel on Health Care Associated Infections to collect and report data on infection rates and process measures, effective September 1, 2005. HB 3357 requires an application for a hospital license to include the name and social security number of any individual (including physicians) who has an ownership interest of more than 25 percent in the hospital, or is a General Partner. The bill also directs DSHS to post the names of all the individuals named in the applications to its website.

The moratorium extension into 2007 for specialty hospitals slows the progress, but an outpatient surgical center that grows...has possibilities....

Whatever is going to happen better be planned now. I would estimate that a window of opportunity will exist briefly, and that those that submit immediately after the expiration of the extension will have the best chance of approval. I can forsee as well, additional stipulations and restrictions being added in the ensuing months.

Who can put it together?

I feel that it should be a consortium of local physicians, possibly with additional capital backing. Christus did it once, however badly it turned out:

If you will remember, Christus built the Outpatient Surgical Center as a for-profit enterprise, soliciting investment from the physicians, in an effort to garner revenues from the outpatient side of healthcare. The enterprise failed, more from billing problems and management than a lack of need. The buyout, by the non-profit side, was pennies on the dollar to the physicians, and Christus ended up with a surgical center at a discounted price, with no interest. Whoever said that incompetence didn't have its rewards....

I think we can do better! Possibly with the support, if not the help of the Texas Medical Association and the AMA. A TMA article sets the 2006 goals, including:

"Strongly oppose efforts to limit investment opportunities for physicians such as limiting ownership of facilities, equipment, and services to certain types of providers."

I guess it depends on your definition of strongly....Even Baylor has gotten into the act: "Even though Baylor and THR officials want the ability to partner with physicians and construct joint ventures, not all hospital representatives share that opinion."