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Report Questions the Value of Surgical Centers

March 11, 2005 – The Medicare Payment Advisory Commission recommended this week that Congress extend a ban on new, physician-owned hospitals until Jan. 1, 2007. Officials from Roy Lester Scneider Hospital say this could affect the ambulatory surgical center for St. Thomas. The moratorium was set to expire June 8. The commission presented its findings in a 100-page report about physician-owned specialty hospitals.
Officials at Roy L. Schneider Hospital are using the report to bring attention to the proposed Ambulatory Surgical Center, which they are contesting in court. (See "Hospital Sues Over Health Commissioner's Decision"). Their case has gone to Superior Court Judge Cabret on St. Croix for consideration.
"This is a very timely and informative report that shows that ambulatory surgical centers in small markets like ours are very similar to specialty hospitals," said hospital CEO Rodney E. Miller Sr. "I found it also interesting that the report reveals what we've been saying for a long time – that the main motivation physicians develop these specialty health facilities is to increase their incomes."
However David Bornn, the attorney for the doctor developers of the proposed center, says there is a distinction between specialty surgical hospitals and ambulatory surgical centers. "They are not the same," Bornn said Friday over the phone. "The federal legislation does have a moratorium on the construction of specialty surgical hospitals, which are overnight-stay, recuperative facilities. There is no such moratorium … for ambulatory surgical centers. Ambulatory surgical centers are in fact favored by Medicare as a cost effective means of rendering house services."
An article published this week in amednews.com (The online edition of American Medical News, a publication by the American Medical Association) lumps ambulatory surgical centers and physician-owned specialty hospitals into the same category.(See " http://www.ama-assn.org/amednews/2005/03/07/bisb0307.htm "). The same article talks about the backlash physicians face from hospitals that view them as competitors.
The MedPac study finds "as physicians expand into activities where they compete directly with local hospitals, hospitals are exploring whether and under what circumstances they can restrict privileges of physicians who are competing with them. One type of restriction prohibits medical staff members from having certain enumerated financial conflicts of interest, such as investments in competing hospitals or ambulatory surgical centers."
Glenn M. Hackbarth, J.D., chairman of the Medicare Payment Advisory Commission stated in the MedPAC report that "because physicians can refer patients to their own hospital they can compete unfairly, and that such hospitals concentrate on only the most lucrative procedures and treat the healthiest and best insured patients–leaving the community hospitals to take care of the poorest, sickest patients and provide services that are less profitable."
Michael Burton, RLS spokesperson, says if the ASC opens, it would be taking the profitable procedures out of the hospital. "Those are the procedures that subsidize the things like the emergency room, dialysis–the things that don't make any money."
The full report is available at"www.medpac.gov".
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