The Boutique Lure

Dr. Hospitalist

The Boutique Lure

Question: I recently received a brochure in the mail about a hospital that caters only to cardiac patients. While I think this job sounds intriguing, I’m concerned that this may be a boutique hospital. What do you think of the movement toward boutique hospitals? Do you think they are ethical?

Curious in Boston

Dr. Hospitalist responds: Boutique or specialty hospitals have been hotly debated among healthcare policymakers over the past few years. Compared with the number of general hospitals, the numbers of specialty hospitals—typically those that focus on cardiac, orthopedic, surgical, and women’s procedures—are small.

A Government Accounting Office (GAO) report in 2003 identified 100 such hospitals in the country. More than two-thirds of the hospitals are in seven states (Arizona, California, Kansas, Oklahoma, Louisiana, South Dakota, and Texas).

The GAO found that compared with general hospitals, specialty hospitals are “much less likely to have emergency departments, treated smaller percentages of Medicaid patients and derived a smaller share of their revenues from inpatient services.” Although small, this is a growing segment of the healthcare industry.

Specialty hospitals are controversial because many are for-profit and often owned by some of the physicians who work at the hospital. Specialty hospital supporters believe competition between specialty and general hospitals for services can lower costs and improve care.

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A 2005 Medicare Payment Advisory Commission study found that physician-owned specialty hospitals decreased lengths of stay but didn’t lower costs for Medicare patients.

In general, specialty hospitals treated less-severe cases and tended to have lower numbers of Medicaid patients than community hospitals.

Specialty care hospital critics are concerned that specialty hospitals take care of the most profitable patients (those who are less ill) and leave the general hospital with the sicker patients who incur higher costs.

They fear growing numbers of specialty hospitals will make it financially difficult for general hospitals to meet all of a community’s needs, including charity care and emergency services.

Critics are also concerned that physician ownership of specialty hospitals could affect physicians’ clinical behavior by driving inappropriate referrals.

You may remember that the federal Stark law (named after Rep. Peter Stark, D-Calif.) generally prohibits physicians from referring Medicare patients for healthcare services to facilities where they have financial interests.

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