NEW TREND: DOCTOR-OWNED SPECIALTY HOSPITALS
The Wall Street Journal (August 29, 2006) reports that doctor-owned hospitals are being developed in Texas, California, Pennsylvania, and Indiana and that 130 such hospitals are already in existence. Why doctor-owned hospitals? Profit, of course! These facilities, while providing above average care, are taking the most profitable procedures and patients away from the community hospitals. Typically, these specialty hospitals focus on profitable procedures like heart care or back surgery and refuse to offer the less financially lucrative medical services like emergency rooms and maternity services.
Federal law prohibits doctors from referring patients to businesses in which they have a financial interest. However, a loophole allows doctors to invest in hospitals where they practice. Critics of doctor-owned specialty hospitals claim community hospitals are left with treating sicker patients with a reduced ability to pay for medical services. These same critics assert that specialty hospitals drive up the costs for medical care, pointing to reports that the number of procedures goes up when such specialty hospitals open in a community.
Two companies which develop specialty hospitals, Nueterra Healthcare, LLC and National Surgical Hospitals, Inc. are actively involved with current projects. Interestingly, Charles Grassley, an Iowa Republican who chairs the Senate Finance Committee and the American Hospital Association oppose the increase in doctor-owned specialty hospitals