AHA: Ban Self-Referrals To Specialty Hospitals


The American Hospital Association is calling on Congress to permanently ban the practice of self-referral of patients to new physician-owned specialty hospitals.

Congress placed an 18-month moratorium on the construction of new physician-owned specialty hospitals under the Medicare Modernization Act of 2003. The moratorium is set to expire in June.

In a new report, the American Hospital Association (AHA) contends that physician-owned specialty hospitals have led to increased costs and the increased use of health care services, forced cutbacks in other services at full-service hospitals, and placed access to emergency and trauma services at risk.

“This practice strips full-service hospitals of critical resources needed to provide a full array of services that the community expects,” George Lynn, chairman of AHA's Board of Trustees and president of AtlantiCare in Atlantic City, N.J., said at a press conference.

AHA examined the impact of specialty hospitals on patients, communities, and full-service hospitals in Lincoln, Neb.; Oklahoma City; Wichita, Kan.; and the Black Hills region of South Dakota.

When these hospitals entered a community, access to emergency and trauma care was put at risk, the report found. And full-service community hospitals made cuts in areas such as behavioral health care, outpatient clinics for low-income patients, health education and awareness, and medical education.

In addition, investments in new technologies were delayed or cut altogether, Mr. Lynn said.

The report also found physician-owned specialty hospitals focused on higher-reimbursed services. “These physician-owned, limited-service hospitals seem to be experts at choosing patients and services that are most financially rewarding and steering them to their own facilities,” he said.

But Randolph B. Fenninger, Washington representative for the American Surgical Hospital Association (ASHA), the trade group for physician-owned specialty hospitals, said continuing the moratorium is unnecessary.

Instead, Mr. Fenninger said the ASHA supports making changes to the diagnosis-related-group prospective payment system to better reflect the cost of care. The Medicare Payment Advisory Commission recently recommended that Congress extend the moratorium another 18 months, to study the impact of the hospitals and implement payment changes.

However, the payment changes alone won't be enough to alter current incentives, Mr. Lynn said. AHA plans to continue to work with members of Congress to make the moratorium permanent.

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