Doctor-Owned Facilities Spur Competition With Hospitals
The increase in physician-owned specialty hospitals, ambulatory surgery centers and clinics in California has forced hospitals to invest in new technologies and take other steps to remain sustainable and competitive, the San Jose Business Journal reports.
Physician-owned facilities do not have to abide by the same federal guidelines as hospitals and can decline to participate in Medi-Cal, California's Medicaid program. Many of them operate on a cash-only basis, declining all insurance, or offer lower prices than full-service hospitals.
Robert Curry, CEO of O'Connor Hospital in San Jose, said that because physician-owned facilities have no emergency department, "a freestanding surgery care center only gets patients that are referred by physicians." He added, "And physicians who are owners have obvious reasons for referring patients to their own surgery center."
However, Richard Slavin -- CEO of Camino Medical Group, a 260-physician surgery and diagnostic clinic -- said physician-owned centers benefit nearby hospitals by referring patients for admissions. "We have a mutual dependence on each other," Slavin said.
To head off competition, many hospitals in California and other states have launched joint ventures with physicians. Collaborating with hospitals also can give physicians access to more capital than they could secure on their own, Curry said.
Other hospitals, meanwhile, are investing in new technologies, such as imaging systems, to attract both patients and physicians.
Good Samaritan Hospital in San Jose plans to introduce online registration for patient convenience and is lowering its prices on various procedures to compete with nearby ambulatory surgery centers, a full-service diagnostic clinic and physician office buildings (Solovitch, San Jose Business Journal, 8/3).