Specialty Hospitals Can Increase Health Care Costs
Specialty hospitals that focus on such areas as heart disease and cancer can lead to increased health care costs in markets in which they compete with traditional full-service facilities, according to a study published on the Health Affairs Web site, the Orlando Sentinel reports.
For the study, three physicians -- Robert Berenson, Thomas Bodenheimer and Hoangmai Pham -- examined data from 12 U.S. metropolitan areas tracked biennially since 1996 (Wessel, Orlando Sentinel, 7/26). According to the study, health care "is increasingly organized through specialty-service lines, which are already leading to early signs of increasing health care costs and having as-yet-unquantified effects on the quality of care."
Specialty hospitals have increased competition in many markets, but, in contrast to "mainstream economic theory, hospitals in more competitive environments had higher costs per case and per day than those in less competitive environments, when other factors were controlled for," the study finds (Berenson et al., Health Affairs, 7/25). The study finds that the increased number of specialty hospitals might begin to affect the profitability of full-service facilities in the future (Abruzzese, CQ HealthBeat, 7/25).
Full-service hospitals to date have compensated for the loss of market share to specialty facilities "by raising prices for profitable specialty lines," according to the study (Orlando Sentinel, 7/26).
The Center for Studying Health System Change released the study, funded primarily by the Robert Wood Johnson Foundation (CQ HealthBeat, 7/25).
Specialty hospitals are "not focusing on less-profitable services," Pham said, adding, "You don't see anyone building mental health centers or more ED services. Those aren't profitable."
Pham also said that increased availability of certain services, in combination with marketing to consumers, might increase demand for medically unnecessary procedures. She added that, because specialty hospitals compete on services rather than on prices, they do not lead to reduced health care costs in most cases (Orlando Sentinel, 7/26).