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Physician ownership of specialty hospitals has become commonplace in recent years in several states where certificate-of-need laws do not exist. The study examines trends in utilization rates for complex and simple spinal fusion procedures performed on injured workers with back/spine disorders in two markets in Oklahoma. During the time period we examine, physician-owned spine or orthopedic specialty hospitals entered both market areas in Oklahoma. Because there were no market areas in Oklahoma without physician-owned spine or orthopedic hospitals to use as a comparison group, we also analyzed trends in utilization for these surgical procedures performed on Medicare beneficiaries. We compared utilization for these procedures in Oklahoma and three other states with a high concentration of physician-owned specialty hospitals (Kansas, South Dakota, and Arizona) to utilization rates for back surgery performed on Medicare patients who reside in the Northeast region. States in the Northeast constitute an appropriate control group because there are no physician-owned specialty hospitals in this region. Both analyses indicate that the entry of the physician-owned specialty hospitals was followed by substantial increases in the market area utilization rates for complex spinal fusion surgery. Conversely, such dramatic changes did not occur in the Northeast where physician-owned specialty hospitals do not exist. After considering but ruling out alternative explanations, the findings imply that the financial incentives linked to ownership coincided with significant changes in physicians' practice patterns.

Background and Purpose: Thrombolysis for acute ischemic stroke saves societal costs, but hospitals that practice acute stroke care appear to shoulder the burden of the cost, which exceeds reimbursement. With creation of the diagnosis-related group (DRG) 559, the US Centers for Medicare and Medicaid Services pays hospitals approximately US $6000 more per case when thrombolysis is administered. We sought to determine the total cost of, and reimbursement for, acute stroke treatment with thrombolysis at a single stroke center and the economic impact of DRG 559., Methods: Between September 2001 and December 2004, we collected data on all patients with acute stroke who received thrombolysis. We identified all hospital costs and reimbursement per patient. Financial results were expressed as a cost-reimbursement ratio: average total cost to average total reimbursement per patient. We then reanalyzed data using the projected Medicare hospital reimbursement with DRG 559., Results: Sixty-seven patients with stroke (mean age, 72 years) were treated (mean length of stay, 4.4 days; mean stroke severity, National Institutes of Health Stroke Scale score of 15; and symptomatic intracranial hemorrhage rate, 7%). The cost-reimbursement ratio was 1.41 (95% CI=0.98 to 2.28) before DRG 559 and estimated to be 0.82 (95% CI=0.66 to 0.97) after DRG 559., Conclusions: Our hospital costs have traditionally exceeded Medicare reimbursement for the acute care of thrombolyzed patients with ischemic stroke, but with DRG 559, a new economically favorable cost-reimbursement ratio for hospitals will be established.

Objective: To examine the impact of Medicare's Prospective Payment System (PPS) on patient satisfaction at four inpatient rehabilitation hospitals., Design: Prospective study using a satisfaction survey to examine the effects of Medicare's PPS for rehabilitation hospitals. Surveys were conducted at four affiliated rehabilitation hospitals in the Midwest., Results: Patient characteristics varied only slightly pre- to post-PPS, and several characteristics were related to overall satisfaction, including motor functional gain, discharge to home, and respondent (patient or proxy). A 12-point increase on a 12-item motor function scale resulted in 1.13 greater odds (95% CI: 1.04, 1.24) of reporting excellent satisfaction. Patient respondents were 1.27 times more likely (95% CI: 1.07, 1.50) than proxies to report excellent satisfaction, and patients discharged home were 1.65 times more likely (95% CI: 1.31, 2.07) to report excellent satisfaction than patients discharged elsewhere. We found an increase in observed satisfaction from 60.3 to 63.4% (P < 0.05) after PPS implementation, despite a decrease in motor FIM gain., Conclusions: Patient characteristics such as motor FIM gain, discharge status, and respondent type were significantly associated, although only slightly, with patient satisfaction in inpatient rehabilitation. Percentage of excellent satisfaction improved at these four facilities after PPS implementation, despite declines in motor FIM gain. The improvement may be the result of numerous ongoing quality-improvement initiatives directed at improving patient satisfaction at these facilities.

The regional discrepancies of physician supply have been a growing concern in Japan. To find out how hospitals are responding in terms of physician payment (by monthly salaries and additional benefits), we conducted a survey of acute care hospitals in Yamagata, Japan. We asked about the salary and additional benefits of full-time physicians and the structural and functional characteristics of health care service provision. From these data we set out to assemble a model that can explain effectively the variability of physician payment in acute care hospitals within the prefecture. We found that physician payment was associated with variables such as type of management, staff employed per bed, full time doctors employed per bed and average length of stay. Hospital location was found to have a significant effect on payment. Variables expressing workload, like number of in-patients per doctor and number of surgical operations per doctor were inversely related. Our results suggest that hospitals may have adapted to physician preferences of workplace in terms of physician payment. To further address the problems of unbalanced geographic distribution of physicians in rural areas, work-sharing and educational and technical support schemes may also help.

Background: If decisions on health care spending are to be as rational and objective as possible, knowledge on cost-effectiveness of routine care is essential. Our aim, therefore, was to evaluate the cost-utility of routine cataract surgery in a real-world setting., Methods: Prospective assessment of health-related quality of life (HRQoL) of patients undergoing cataract surgery. 219 patients (mean (SD) age 71 (11) years) entering cataract surgery (in 87 only first eye operated, in 73 both eyes operated, in 59 first eye had been operated earlier) filled in the 15D HRQoL questionnaire before and six months after operation. Direct hospital costs were obtained from a clinical patient administration database and cost-utility analysis performed from the perspective of the secondary care provider extrapolating benefits of surgery to the remaining statistical life-expectancy of the patients., Results: Mean (SD) utility score (on a 0-1 scale) increased statistically insignificantly from 0.82 (0.13) to 0.83 (0.14). Of the 15 dimensions of the HRQoL instrument, only seeing improved significantly after operation. Mean utility score improved statistically significantly only in patients reporting significant or major preoperative seeing problems. Of the subgroups, only those whose both eyes were operated during follow-up showed a statistically significant (p < 0.001) improvement. Cost per quality-adjusted life year (QALY) gained was euro5128 for patients whose both eyes were operated and euro8212 for patients with only one eye operated during the 6-month follow-up. In patients whose first eye had been operated earlier mean HRQoL deteriorated after surgery precluding the establishment of the cost per QALY., Conclusion: Mean utility gain after routine cataract surgery in a real-world setting was relatively small and confined mostly to patients whose both eyes were operated. The cost of cataract surgery per quality-adjusted life year gained was much higher than previously reported and associated with considerable uncertainty.

The recent rise of specialty hospitals--typically for-profit firms that are at least partially owned by physicians--has led to substantial debate about their effects on the cost and quality of care. Advocates of specialty hospitals claim they improve quality and lower cost; critics contend they concentrate on providing profitable procedures and attracting relatively healthy patients, leaving (predominantly nonprofit) general hospitals with a less-remunerative, sicker patient population. We find support for both sides of this debate. Markets experiencing entry by a cardiac specialty hospital have lower spending for cardiac care without significantly worse clinical outcomes. In markets with a specialty hospital, however, specialty hospitals tend to attract healthier patients and provide higher levels of intensive procedures than general hospitals.

Although proposed Medicare reimbursement changes may reduce financial incentives to develop specialty hospitals, other anticipated reimbursement changes, such as pay for performance, could perpetuate current growth trends. Hospital executives will need to develop new tools for coping with the continued development of specialty hospitals.

Insurers assert that by designating centers of excellence, they direct patients to the best care. Critics charge the concept is a contracting gimmick and will hurt small hospitals.

The battle over specialty hospitals got more bruising last week, with two powerful senators seeking more oversight data, and a hospital that's become a symbol of the controversy fighting for its life. The AMA's William Plested, left, says the problem isn't specialty hospitals, but how hospitals are paid. "The way all payments are figured makes winners and losers," he says, noting for-profits contribute to communities through taxes.

In this paper we compare physician referral patterns, quality, patient satisfaction, and community benefits of physician-owned specialty versus peer competitor hospitals. Our results are based on evidence gathered from site visits to six markets, 2003 Medicare claims, patient focus groups, and Internal Revenue Service data. Although physician-owners are more likely than others to refer to their own facilities and treat a healthier population, there are rationales for these patterns aside from motives for profit. Specialty hospitals provide generally high-quality care to satisfied patients. Uncompensated care plus specialty hospitals' taxes represent a greater burden, in percentage terms, than community benefits provided by nonprofit providers.

Policy makers continue to debate the correct public policy toward physician-owned heart, orthopedic and surgical specialty hospitals. Do specialty hospitals offer desirable competition for general hospitals and foster improved quality, efficiency and service? Or do specialty hospitals add unneeded capacity and increased costs while threatening the ability of general hospitals to deliver community benefits? In three Center for Studying Health System Change (HSC) sites with significant specialty hospital development--Indianapolis, Little Rock and Phoenix--recent site visits found that purchasers generally believe specialty hospitals are contributing to a medical arms race that is driving up costs without demonstrating clear quality advantages.

The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 imposed a moratorium on new physician-owned specialty hospitals, which expired in June 2005. Recent administrative decisions have effectively extended the moratorium as it applies to Medicare payment, and the debate continues over whether specialty hospitals are good, bad, or indifferent. This paper reviews the findings in two congressionally mandated reports on specialty hospitals, the services they provide, and their impact on their patients and communities. These findings are used to highlight the major policy issues to be addressed-issues that go beyond whether specialty hospitals should be allowed.

Background: A cost-effectiveness evaluation comparing home-based and hospital-based treatment with intravenous antibiotics for respiratory exacerbations in adults with cystic fibrosis (CF) has not been previously undertaken., Methods: The study was conducted in a UK adult CF centre from a health service perspective. Clinical outcome and resource use data were obtained from a retrospective one-year study and combined with unit cost data in an incremental economic analysis. The primary outcome measure was percentage change in FEV(1); "effectiveness" was defined as maintenance of baseline average FEV(1) over the one-year study period., Results: 116 patients received 454 courses of intravenous antibiotics. At the end of 1 year, there had been a mean percentage decline in FEV(1) compared with baseline average for home-treated patients but an improvement for hospital-treated patients (Tukey's HSD mean difference 10.1%, 95% CI 2.9 to 17.2, p = 0.003). Treatment was deemed "effective" in more hospital (58.8%) than home (42.6%) patients. The cost of hospital treatment was higher than home treatment (mean difference 9,005 pounds, 95% CI 3,507 to 14,700, p<0.001). The mean ICER was 46,098 pounds (2.5th and 97.5th percentiles -374,044 and 362,472)., Conclusions: Hospital treatment was more effective but more expensive than home treatment. Potential methods to improve outcome at home should be considered but these may have resource implications.

Objectives: This study aimed to produce valid patient-based UK National Health Service (NHS) costs for adults with cystic fibrosis to identify differences between hospital- and home-based treatments for infections., Methods: A costing study was carried out in adults with cystic fibrosis (CF) in the United Kingdom, who required intravenous antibiotic treatments for respiratory infections, administered either at home or in the hospital. The perspective was that of the NHS hospital trust. Data were collected retrospectively for each patient for 1 year using clinical records. Data were collected for 116 adults with CF between 2000 and 2001, when 42,382 treatment days (454 courses) of intravenous antibiotics were administered; 213 courses with intention-to-treat at home and 241 courses with intention-to-treat in the hospital. The mean length of a course was 15.3 days., Results: Patients who had >60 percent of courses at home over 1 year had a mean cost of 13,528 UK pounds, compared with 22,609 pounds for patients who had > 60 percent of courses in the hospital, and a mean cost of 19,927 UK pounds for patients who had an equal mix of home and hospital care (p = .0001)., Conclusions: The key cost-generating events in CF respiratory infections are hospital admissions. Future studies assessing costs should concentrate on factors affecting admissions, length of stay, staff input, and alternative methods of home-care provision, rather than marginal effects, such as using different antibiotics.

Physician-owned specialty hospitals have flourished in today's healthcare arena, but also have been the subject of a great deal of controversy. The author argues that the rise of specialty hospitals has been the result of a confluence of two healthcare policies: (1) skewed DRG payment methodologies and (2) the misapplication of exemptions to the Stark Law's ban on physician self-referral. This Article examines the aspects of these healthcare policies that have allowed for the explosion of specialty hospitals, as well as the arguments for and against the creation and need for specialty hospitals. The Article also analyzes the reform proposals to correct the Stark and DRG methodologies and how those proposals will affect both specialty and general hospitals.

Many developments in local health care markets appear to be setting the stage for additional health care cost increases and access-to-care problems, according to initial findings from the Center for Studying Health System Change's (HSC) 2005 site visits to 12 nationally representative communities. Hospitals and physicians are competing more broadly and intensely for profitable specialty services, making costly investments to expand capacity and offer the latest medical technologies, especially in more affluent areas with well-insured populations. Employers and health plans have launched few initiatives to control rising costs beyond increasing patient cost sharing. As rapidly rising costs continue to push private health insurance out of reach for more people, state and local governments are struggling to meet the needs of low-income people and an increasing number of uninsured people.

The rapid increase in specialty cardiac, surgical, and orthopedic hospitals has captured the attention of general hospitals and policymakers. Although the number of specialty hospitals remains small in absolute terms, their entry into certain health care markets has fueled arguments about the rules of "fair" competition among health care providers. To allow the smoke to clear, Congress effectively stalled the growth in new specialty hospitals by temporarily prohibiting physicians from referring Medicare or Medicaid patients to specialty hospitals in which they had an ownership interest. During this 18-month moratorium, which expired June 8, 2005, two mandated studies of specialty hospitals provided information to help assess their potential effect on health care delivery. This issue brief discusses the research on specialty hospitals, including their payments under Medicare's hospital inpatient payment system, the quality and cost of care they deliver, their effect on general hospitals and on overall health care delivery, and the regulatory and legal environment in which they have proliferated. It concludes with open issues concerning physician self-referral and the role of general hospitals in providing a range of health care services.

U.S. health care has long featured a struggle between regulation and markets as vehicles of reform, and the community hospital is at the center of this struggle. The key to its financial viability is cross-subsidization, whereby revenues from insured patients subsidize the care of the uninsured and underinsured, and profits from well-compensated services support those operating at a loss. Cross-subsidization has been challenged by efforts to move highly compensated services and well-insured patients to ambulatory surgical centers and specialty hospitals. We review the ongoing battle between through a legal lens and offer conjectures about the outcome. Refined certificate-of-need regulation may be the preferable policy choice.

Background: The number of surgical specialty hospitals with physician investors in the United States has increased in the last ten years. Opponents to these hospitals have argued that surgeon investors will perform more surgery in order to maintain the hospital's profitability. The purpose of the present study was to determine whether the surgical volume or the surgical rate increased for a group of ten orthopaedic surgeons after the opening of an orthopaedic surgery specialty hospital in which they held a financial interest., Methods: We analyzed the practice data for ten orthopaedic surgeons during an interval spanning seven years before and eight years after the opening of an orthopaedic surgery specialty hospital in which they held a financial interest. The average rates of change in the number of surgical procedures per year for each period were computed and compared with use of regression analysis. The percentages of patients who underwent surgery before and after the opening of the specialty hospital were also compared., Results: The ten orthopaedic surgeons did not increase their surgical volume or surgical rate after the specialty hospital opened. The ten surgeons performed an average of 4399 surgical procedures per year before the hospital opened and 4542 surgical procedures per year after the hospital opened. The rate of change in the number of surgical procedures per year (19.1 compared with 8.9 procedures per year) did not increase after the specialty hospital opened. The annual patient volume (16,019 compared with 15,982 patients) and the percentage of patients who underwent surgery (27.5% compared with 28.4%) did not significantly change after the specialty hospital opened., Conclusions: The opening of an orthopaedic surgery specialty hospital did not increase the surgical volume or the surgical rate for ten orthopaedic surgeons who held a financial interest in the facility.

A Kansas specialty hospital is accusing HCA of pressuring managed-care companies to exclude rivals from networks and is suing the chain. "This is another mechanism by which (specialty hospitals) can get relief from the conduct of larger hospitals that are doing everything they can to put them out of business," says Norman Siegel, left, attorney for Heartland Spine & Specialty Hospital.