Patient?s Death Renews Calls on Capitol Hill to Limit Specialty-Hospital Growth

The death of a patient following a visit to a Denver specialty hospital has renewed efforts on Capitol Hill to limit the growth of physician-owned hospitals as part of health care reform.

The most recent proposals to subdue the industry’s growth would, at a minimum, halt the growth of physician-owned hospitals, affecting the receivables management work they outsource. Molly Sandvig, executive director Physicians Hospitals of America (PHA) told insideARM that the legislation, if passed, ultimately could lead to the industry’s demise because existing hospitals would not be allowed to expand.

“You can’t grow, add new beds, or add new types of services,” Sandvig said. “If you can’t adjust your business to meet market needs, it becomes so stagnant that at that point it’s hard to maintain. The effect of that would be for our hospitals to wither on the vine.”

In late 2007, PHA estimated there were 150 doctor-owned hospitals in the U.S., with the industry poised to add 20 to 25 a year over the next five years, barring any unforeseen legislation (“Private Hospitals a New Business Opportunity for ARM Industry,” Dec. 11, 2007). With that growth, Sandvig foresaw the need for debt collection professionals to help industry newcomers with delinquent receivables, which typically equals about 4.5 percent of the industry’s net revenue.

Though the latest recession has led some specialty hospitals to file bankruptcy or postpone expansion plans, the industry continued to grow. Sandvig now estimates there are about 230 physician-owned hospitals – some previously unknown – and another 110 specialty hospitals under development.

But the legislative proposals included in America’s Affordable Health Choice Act has the industry focused on survival, she said. Under the proposed legislation any physician-owned hospital that does not have its Medicare Provider Number by January 1, 2009 would not be allowed to participate in the Medicare program. Sandvig said she knows of at least 20 hospitals that could be impacted because they received their provider number after January 2009 or have opened for business, but their Medicare Provider Number is still pending.

The PHA is hoping a grassroots effort supported by the industry’s patients and corporate members will help stop the latest threat to the industry’s existence. But Senate Finance committee chairs Max Baucus (D-MT) and Chuck Grassley (R-IA) have seized on the death of a patient at Colorado Orthopaedic & Surgical Hospital (COSH) in Denver, Colorado to question the safety of specialty hospitals. They say they will seek to prevent new physician-owned hospitals from participating in the Medicare program and increase safety precautions at existing facilities.

“I have long been concerned about physician-owned hospitals’ ability to respond to emergency situations, and this tragic incident heightens that concern,” Senator Baucus said in a press release.

“I remain concerned about the ability of these facilities to address emergency situations. At minimum, patients going in for surgery and other procedures ought to be able to expect that these facilities have adequate emergency capabilities,” Grassley added.

According to news reports, the patient became unresponsive shortly after being given a painkiller at COSH. The hospital staff called 911 to transport the patient to a nearby community hospital where he died four days later. Local news reports say the Colorado State Health Department has since found problems with the use of painkillers and the hospital’s immediate response to the emergency situation. Local media also have reported that the state health department’s investigation found that COSH, which opened in September 2008, lacked documentation as to whether staff members were properly trained in emergency procedures.

COSH issued a statement saying it has temporarily stopping scheduling elective surgeries “in order to complete improvements that include staff training, and the development of new processes which support their commitment to high-quality patient care.”

PHA sympathizes with the family, but Brett Gosney, President of PHA Board of Directors, said Senator Baucus and Grassley are cherry-picking tragedies for political leverage to help big box hospitals.

“As recently as last week, the US Centers for Medicare and Medicaid (CMS) released national data, which again shows significantly better outcomes for patients at hospitals owned and operated by physicians, rather than those under the control of bureaucrats and corporations,” Gosney said in a statement.

Sandvig said PHA supports any regulations that would improve patient safety, but the industry doesn’t want to be singled out.

“If there is a way to improve patient safety, then that regulation should be applied to hospitals across the board,” she said.