Specialty hospitals give general institutions heartache

It's not just the positive attitude the 80-year-old displays as he prepares to leave after coronary bypass surgery. "I feel great," he declares, the fresh scar from the operation peeking from above his pale blue gown.

It's also that he recuperated fast enough to check out after six days. Medicare estimates the average hospital stay for such an operation at nine days -- and pays accordingly. So Galichia Heart Hospital probably made money treating Miller, whose case helps point out the concerns raised by the proliferation of so-called specialty hospitals.

Specialty hospitals like Galichia offer services in particularly lucrative areas of medicine such as cardiology and orthopedics. Critics contend they also cherry-pick the healthiest patients, depriving general hospitals of income needed to offset losses from treating more seriously ill patients such as burn victims and the chronically sick.

While specialty hospitals have long existed, traditionally they were nonprofit centers for treatment, research and teaching of a certain, often especially challenging type of medicine. Now, they are geared to make money, and their owners often include doctors who can direct some of their own patients to these institutions.

An amendment that would forbid doctors from investing in specialty hospitals has been attached to Medicare reform legislation in Congress. The measure is designed to help lessen the impact of these facilities on general hospitals.

"Patients don't think about all the strain specialty hospitals cause," said Randall Nyp, president and chief executive of Via Christi Regional Medical Center, which runs a nonprofit acute care hospital in Wichita.

"They won't think about it until they have to go the emergency room and it isn't there" because it was shut down as too expensive to run, he said.

Doctor-owners of specialty hospitals say they grew weary of the bureaucracies at large institutions, where ordering new equipment or even scheduling surgery can be an ordeal. They deny that they are treating only profitable patients, and insist that they also care for the uninsured. Profits, they say, are derived from more efficient operations.

"Opening a specialty hospital gave me the ability to deliver better care," said Dr. Joseph Galichia, who owns 20 percent of the hospital that bears his name. "It is easier for me and the other doctors to practice in our facility. The equipment is excellent. The personnel is excellent."

Delivering better care?

Although there is some evidence that specialty hospitals provide better care, general hospitals question that claim. They have found a champion in Sen. John Breaux, D-Louisiana, who co-sponsored the Medicare amendment.

Breaux said he acted after a General Accounting Office report in May showed that about 70 percent of specialty hospitals have some physician ownership, averaging 50 percent. It also found that, in 21 of the 25 specialty hospitals studied, proportionately fewer severely ill patients were treated than in general hospitals.