New York Times Examines the ‘Raw Battle’ for Patients Between Specialty, Community Hospitals

An increase in the number of physicians who invest in "upstart" specialty hospitals has prompted many community hospitals nationwide to revoke their medical privileges in a "raw battle for profitable patients," the New York Times reports. In response to reduced reimbursements for services, some "rebellious" physicians have partnered with small companies to build hospitals that specialize in fields such a cardiology, oncology and orthopedics and send their patients to the facilities. Many hospitals have "long ignored" physician involvement with rival businesses -- such as outpatient surgery -- but an increase in the number of new specialty facilities has forced them to address "what they view as disloyalty on the part of longtime colleagues," the Times reports. Hospitals have raised concerns that specialty facilities will take many of their profitable patients and impact their ability to provide "money-losing" services such as emergency and charity care. Michael Curtin, board chair of Mount Carmel Health System in Columbus, Ohio, said, "You cannot stand by and watch people rip whatever profitable veins there are in the institution away from you." The American Hospital Association has established a task force to study the trend, which could "exacerbate the development of a two-tiered health care system," according to Carmela Coyle, a senior vice president at AHA. Some hospitals have invested in the new specialty facilities with physicians to "minimize the loss of revenues"; many hospital officials "figure they have no choice but to go along with the doctors," the Times reports.

According to physicians, hospitals that threaten to revoke the medical privileges of doctors who invest in specialty facilities "are abusing their power" and could force patients to decide between their physician and the hospital "best suited to treat them," the Times reports. Dr. Richard Corlin, a gastroenterologist in Santa Monica, Calif., and an American Medical Association trustee, said, "This is economic credentialing, and it is despicable." Physicians who invest in specialty hospitals maintain that the facilities provide patients with quality care at a lower cost than community hospitals and that regulations and the "watchful eye of insurers and the government" will prevent abuses. Dr. Carl Berasi, an orthopedic surgeon in Columbus, Ohio, said, "In order to gain control over how a hospital is run, you have to be an investor." He added that specialty facilities treat "any patient that we are medically qualified to take," not only profitable patients. Although a federal law mandates that physicians cannot refer Medicare beneficiaries to facilities in which they have a financial interest, the law has a number of exceptions, the Times reports. Rep. Pete Stark (D-Calif.) has sponsored a bill to amend the law to include specialty hospitals (Abelson, New York Times, 10/30).