MEDCATH: Heart Hospitals Put MD Investors in Charge

     A hospital company specializing in all-cardiac care facilities is establishing outlets around the country "where physicians are in charge," according to a profile in the current American Medical News. Dubbed "heart hospitals," each relies on a base of local physicians lured away from area facilities with the promise that MedCath Inc. would "gladly embrac[e] their ideas of how a cardiac unit should be run." Cardiologists are brought in as business partners. By year's end, MedCath Inc. will operate eight facilities, primarily in states with large elderly populations, without certificate of need requirements and primarily in company-identified "markets where physicians are unhappy." American Medical News reports that MedCath opened its first facility in McAllen, TX, in 1996 --two years after it went public -- and soon thereafter launched additional facilities in Little Rock, AR, Austin, TX, and Tucson, AZ. The company plans to open three more facilities in Dayton, OH, Albuquerque, NM, and Bakersfield, CA, later this year.

The Investment is Beside the Point
      MedCath CEO Steven Puckett emphasizes that physician input is the key to success, noting, "Many of them feel they are not being listened to by the hospitals in their markets." Dr. Lawrence Temkin, a Tucson cardiologist, said that cardiologists in his area were easily wooed by MedCath after their ideas for better facilities were turned away by local hospitals. The investment, he said, "was irrelevant. ... If I never see a dime from this investment, that will be OK with me." Temkin said MedCath officials were both "cooperative and open to physician input," saying, "We've been pretty much left to practice medicine the best way we can." Although no data are available to back up MedCath's claims of better outcomes at their facilities, "little doubt remains that MedCath hospitals are formidable competitors" because they rely on their prominent physician base to bring in patients. However, the hospitals have had trouble securing managed care contracts in most markets due to "newcomer status," and as a result, the company's impact on "existing health care systems has been less dramatic than critics had warned." In Dayton, one local hospital responded to the market entrant by deciding to "partner with the doctors and MedCath, representing a three-way ownership," and one Tucson arrangement may follow suit (Wiebe, 5/3 issue).