Battle looms over physician-owned hospitals

Concerns over how physician-owned hospitals and surgical centers will affect traditional hospitals have sparked legislative proposals aimed at stanching the proliferation of these specialty-health-care facilities.
At stake are lucrative surgical procedures and the well-to-do patients with health-care coverage who require them.
Hospitals officials worry that physician-owned centers will skim off the least-risky, best-paying procedures that traditionally have helped cover the costs of providing other care. Physicians, meanwhile, argue that in a capitalistic system, competition is healthy.
Media coverage has described Colorado as Ground Zero in the debate over physician-owned hospitals and surgical centers.
As with a handful of other states around the nation, Colorado does not require hospitals to show community need before construction. Experts say that makes Colorado prime territory for physician-owned specialty hospitals. There are about 90 such hospitals around the country, according to the Colorado Health and Hospital Association. The first such facility in this state is under construction in Durango.
For a second time in the recently ended legislative session, lawmakers have reviewed a proposal that would have affected physician-owned health-care facilities. Senate Bill 241 sought to restrict convalescent care centers, said Marty Arizumi, vice president of public affairs for the Colorado Health and Hospital Association. The bill ultimately died without a vote.
Arizumi said ambulatory surgical centers, which are licensed to treat patients requiring 23 hours or less of care, are increasingly affiliating with convalescent-care centers licensed for 72-hour stays. Those centers traditionally were designed as step-down facilities for patients who had been in a hospital and needed somewhat less-intensive care for a day or two before they could be discharged to their homes.
They were not designed for patients in need of acute medical care, Arizumi said. But as the types of surgeries allowed in ambulatory or outpatient surgical centers has grown and with them patients? recovery needs, Arizumi said ambulatory centers have aligned themselves with convalescent-care centers.
?This is aimed at the convalescent-care part,? Arizumi said of the proposed legislation. ?It is not aimed at shutting down any ambulatory surgery center. If a patient needs more than 23 hours of care, they need to be in a hospital.?
Arizumi said the state hospital association did not sponsor the legislation but its board has voted to support it.

Could shut down Loveland center
The legislation could have effectively shut down at least one physician-owned surgical center in Loveland. Dr. Edward Norman, president of the board of Big Thompson Medical Group, said the proposal would have rendered Skyline Center for Health unprofitable.
Currently under construction in east Loveland, the 78,000-square-foot medical center is planned to include a surgical center licensed for 72-hour stays. It also will include urgent care, medical imaging, laboratory and pharmacy facilities, and a pediatric clinic.
BTMG has partnered with Orthopaedic Center of the Rockies, Loveland Surgical Associates, Diversified Radiology and McKee Medical Center in building Skyline.
?It is 70 percent owned by the physicians and 30 percent owned by McKee Medical Center,? Norman said.
Passage of the proposal would not have halted construction of Skyline, Norman said. ?But we wouldn?t be able to have a surgical center there, (and) it would affect the profitability of the whole building and would cause some significant headaches.?
Senate Bill 241 wasn?t the first attempt this year to restrict physician-owned medical facilities.
Earlier in the legislative session, the Colorado Health and Hospital Association introduced a proposal that would have kept physicians from performing surgeries at surgical centers in which they had ownership. Under this legislation, if surgeons had ownership interest in a surgical center, they also would have been banned from referring patients to that facility.
That legislation would have had a dramatic effect on physician-owned surgical centers, Norman said. By federal law, ?if you are invested in a surgical center you have to perform roughly one-third of your procedures there.?
If the state passed a law forbidding owner-surgeons to practice in their facilities, ?then clearly, there would be none,? he said.

Straddling the issue
Hospitals in Northern Colorado, meanwhile, have straddled the issue. In Fort Collins, as in Loveland, the community hospital is invested in a privately-owned surgical center. Poudre Valley Hospital is a 50 percent owner of the Orthopaedic Center of the Rockies outpatient surgery center.
OCR?s 10-bed Fort Collins surgery center features a recovery center offering catered meals and other luxury aspects. Bill Cox, CEO of Orthopaedic Center of the Rockies, said that in 2003, OCR performed 771 procedures that required overnight stays. The average length of those stays was 1.4 nights.
?Our patients are very healthy patients, so the surgeries we?re doing are most often elective cases,? Cox said, explaining that many of OCR?s patients are athletes.
Cox said that, from a physician?s standpoint, the surgery center is efficient. ?When you own and manage your own facility, things get done,? he said.
From a patient?s perspective, the orthopedic surgery center offers a ?very good outcome and a pleasant experience? he said.
?The physicians at Orthopaedic Center of the Rockies have been very committed to all the programs at the hospital and value the relationship that we have with the hospital and the administrative staff and all the nursing staff there, but we can still do this better,? Cox said. ?We do orthopedic surgery at our center and orthopedic surgery only.?
Communication and cooperation between hospitals and physicians could be powerful medicine when it comes to preventing problems between hospitals and physician-owned facilities.
Physicians in Northern Colorado say the investment of hospitals in physician-owned surgical centers reflects the willingness of hospitals and physicians to work together in the region. It also shows the balancing act both face in smaller communities outside the metro area.
?You want to keep the doctors happy in town, and the doctors don?t want to financially torpedo the hospital,? Norman said.

on Facebook on LinkedIn