Specialty Hospitals

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Specialty Hospitals: A Problem or a Symptom?

Specialty hospitals are not a new thing. However, as the number of specialty hospitals increases there is a question about their financial influence on the community hospitals. This paper discusses the results of two congressionally mandated reports on specialty hospitals.

Main Concerns about Specialty Hospitals:

1. Clinical decisions made by physician-owners might be distorted by financial incentives 2. Specialty hospitals treat less complex, more profitable cases 3. Specialty hospitals do not treat uninsured or underinsured patients 4. Patient selection by specialty hospitals hurts community hospitals

Congressionally Mandated Reports:

The MedPAC report: Some of the positive findings according to MedPAC analysis on specialty hospitals are: better control over hospital operations, more organized schedule time in the operating room, operation’s room effectiveness, and more successful cooperation with the staff. In addition, MedPAC could not prove that the difference in financial performance affects efficiency at specialty hospitals. One of the main concerns that MedPAC had found was that if the number of the specialty hospitals increases significantly community hospitals could lose a lot of their patients. The other problem that MedPAC reported was that specialty hospitals are more likely to treat more- profitable patients. In order to improve payment accuracy, MedPAC recommended to refine of DRG’s and to revise the way the DRG relative weights are calculated. MedPAC also recommended to extend the moratorium until 1 January 2007 and to give HHS right to permit gain-sharing arrangements between physicians and hospitals in order to protect the quality of care and decrease the financial misunderstanding.

The HHS report: Results of the report showed that community hospitals had more complicated cardiac patients than in cardiac specialty hospitals. However, cardiac hospitals had as good...
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