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Understanding New Roles and a Changing Delivery Ecosystem

By Staff Reporters

It is well know that orthopedic and cardiac hospitals have experienced a development boom over the past decade.  And, according to Robert James Cimasi MHA, AVA, CMP™ of Health Capital Consultants, LLC, reimbursement levels for these specialties, and especially surgeries, have been considered to be relatively high in comparison to others, creating the perception that these services are especially profitable.

Reasons for Development

The reasons for specialty hospital development are complex and vary across markets but analysis suggests that three factors are important drivers of this trend nationally:

• relatively high reimbursements for certain procedures;
• physicians’ desire for greater control over management decisions affecting productivity; and ,
• quality and specialists’ desire to increase their income in the face of reduced reimbursement for professional services.

Perspectives

From the perspectives of some observers, the possible “overpayment” for certain specialties’ services is unintentional on the part of payors and is possibly the result of recent productivity gains in those specialties.  The promoters of this reimbursement methodology have asserted,

The challenge for policy makers is to give specialty hospitals the chance to fulfill their promise as focused factories while limiting their opportunities to prosper from cream skimming and preventing problems for patients and communities such activity might cause.

From this singularly preconceived viewpoint, productivity gains through efficient provision of quality services should be discouraged and saddled with the disincentives of lower reimbursement to allow less efficient providers to compete.  That surgical and specialty hospitals focus on a narrower range of procedures and produce quality and efficiency gains over their general acute care hospital competitors is rarely disputed.  Existing hospitals often admit this but then claim that new market entrant hospitals dilute the experience level of their facilities, which then results in a lowering of quality.  This is part of the larger argument that any quality or financial gains made by the surgical or specialty hospitals are the direct result of losses at the general acute care hospitals.  If these hospitals can’t cost shift to subsidize less profitable areas such as emergency departments and intensive care units, the argument goes, then they will be in jeopardy of closing them.

Proponents

These proponents assert: “Policy makers seek to encourage competition and give new care delivery models that have the potential to improve quality and lower costs a chance.  However, they also want to maintain quality and patient safety, avoid total as well as per-case cost increases and preserve access to basic services.”

Assessment

In response to the development of niche providers and specialty hospitals, general acute care hospitals often are competing by adding to their offerings in these specialties to create integrated specialty centers or even constructing new specialty hospitals themselves.  In many cases, hospitals seek physician involvement in these developments, through joint ventures or other means.

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Filed under: Career Development, Managed Care, Practice Management | Tagged: Niche Medical Providers | 5 Comments »