It’s Time to Sink or Swim

It’s Time to Sink or Swim

A study conducted by researchers at RTI International, funded by the Centers for Medicare and Medicaid Services (CMS) and published in mid-February in the healthcare policy journal Health Affairs, confirms what our industry has known all along: physician-owned orthopedic, cardiac, and surgical specialty hospitals provide high-quality patient care and offer valuable services to their communities despite being more likely than community hospitals to self-refer patients. RTI’s study director, Jerry Cromwell, PhD, comments, “Specialty hospitals actually stimulate a competitive environment that could have positive effects on the quality of care.”

Detractors of specialty hospitals will never be convinced and will continue to spew their propaganda, but for the true believers, this confirmation serves as yet another valuable piece of arsenal for the battle. Even the American Medical Association (AMA) has seen the light. AMA president-elect William G. Plested III, MD, comments, “The AMA supports specialty hospitals as an innovative way to promote high quality, cost-effective care. Specialty hospitals can and should be part of an integrated healthcare system dedicated to providing patients with high-quality and choice in care. HSC’s subjective impressions are gleaned from conversations in three communities, while studies based on hard data by both the government and private sector support the AMA’s position that specialty hospitals provide high quality care to patients. In fact, (the RTI) study ... finds clear quality advantages in specialty hospitals. Risk-adjusted 30-day mortality rates were significantly lower for specialty hospitals than for community hospitals, and Medicare patients reported very high satisfaction. The study also found that specialty hospitals provide more net community benefits through uncompensated care and taxes than not-for-profit competitors as a share of total revenues. Specialty hospitals give patients more choice, forcing existing hospitals to innovate to keep attracting new patients. (The study) found that specialty hospitals stimulate a competitive environment in some markets. As we strive to provide patients with the highest quality care, innovation — not stagnation — is the way of the future.”

Just a quick glance at the recent headlines in Health Affairs signals an introspection among hospitals contemplating their future along the healthcare delivery continuum. In the paper, “Could U.S. Hospitals Go the Way of U.S. Airlines?” the authors state that increased price transparency and focused competition can squeeze out inefficiencies, restraining prices and making some consumers better off, but that competition has a dark side. They say that hospitals can treat Medicare and Medicaid patients at less than cost, care for the uninsured, and provide other money-losing services because they can cross-subsidize. By 2025 the need for general hospitals to cross-subsidize will greatly increase, but their ability to do so will be diminished, and so U.S. hospitals could begin to resemble U.S. airlines: severely cutting costs, eliminating services, and suffering financial instability.

If hospitals are merely surviving rather than thriving, of course they will latch onto any anti-competition doctrine they can use as a lifeboat. Perhaps the hospital association’s lobbyists can throw out a lifeline from their yachts, because the old way of providing healthcare is sinking fast.

Until next month,

Kelly M. Pyrek
Editor in Chief
kpyrek@vpico.com