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Doctors walking around some hospitals own the place, a trend that's sparking calls of unfair competition in Nebraska and across the country.
Hospital groups say doctor-owned facilities are plucking the most profitable patients, like those with heart problems, and customers with the best insurance.
Such patients are essential because they help to pay for services that typically break even or lose money, such as emergency departments and mental health.
A bill in the Nebraska Legislature would place a two-year freeze on issuing licenses for new hospitals, at least temporarily scuttling plans for a hospital in Kearney mostly owned by doctors. Small rural hospitals would be exempted from the moratorium. Several amendments are pending.
The new federal health care legislation would, in effect, halt construction of new doctor-owned hospitals by keeping them from receiving Medicare reimbursements, a provision strongly supported by U.S. Sen. Chuck Grassley, R-Iowa.
Cindy Morrison of the National Coalition for Full Service Hospitals said the federal legislation is aimed at preventing a conflict of interest.
“You have a physician who controls the referrals, what do you think he's going to do?” she said. “He's going to steer patients to his hospital.”
Community hospitals oppose doctor-owned facilities because they want to keep their monopoly on patients, said Molly Sandvig, executive director of Physician Hospitals of America.
She said doctor-owned hospitals give patients another choice and provide high-quality care because the physician-owners know what's best for patients.
Doctor-owned hospitals represent a fraction of hospitals nationwide. There are 270 such hospitals nationally and more than 100 additional facilities under development in 30 states, Sandvig said.
Nebraska has four hospitals that are fully or partly doctor-owned, and all are specialty facilities offering such services as heart and orthopedic surgeries, according to the Nebraska Hospital Association.
A fifth, the Bellevue Medical Center, is a full-service hospital scheduled to open this spring and is partly physician-owned.
Iowa has no doctor-owned hospitals and has not considered legislation in recent years regarding them, according to the Iowa Hospital Association.
The Kearney Regional Medical Center would be owned by 40 doctors and a group of local investors, said Dr. Sean Denney, a Kearney cardiologist and spokesman for the proposed full-service hospital.
The hospital has prompted concerns from Kearney's Good Samaritan Hospital about unfair competition.
Denney said patients will choose his hospital because it will offer first-rate care, not because doctors are steering them there.
He said the doctor-investors want to provide the community with a locally owned hospital. Good Samaritan is owned by Denver-based Catholic Health Initiatives but governed by a local board.
Bob Smoot, a Good Samaritan official, said loss of profitable patients to the proposed hospital would hurt his facility's ability to support services that are important but lose money.
For example, Good Samaritan's cost for a certain type of hip or knee surgery is $14,909. The Medicare reimbursement is $21,537, leaving a profit of more than $6,000.
On the other end, the hospital's cost for treatment of psychosis is $46,590. The Medicare reimbursement is $29,532, for a loss of more than $17,000.
Denney said the new full-service hospital won't focus only on profitable patients.
Under the new federal legislation, he said, his hospital would need to be opened and approved for Medicare reimbursements by Dec. 31. He said it's possible a scaled-back version of the hospital could be opened in time to meet that deadline.
The Bellevue Medical Center will meet the deadline, said CEO Marty Carmody.
Bruce Rieker, an official with the Nebraska Hospital Association, said his organization has not heard concerns from other hospitals about the Bellevue facility, likely because Bellevue does not have a community hospital.
Doctor-owned hospitals stir the most controversy when they open in cities already served by a community hospital, Morrison said.
Jennifer Horton, an official with Rapid City Regional Hospital in South Dakota, said her hospital lost orthopedic, neurosurgical and other patients to Black Hills Surgical Hospital, a specialty facility.
For example, in 1996, the year before the new hospital opened, Rapid City Regional performed more than 350 outpatient neurosurgeries, according to a consultant's report done for state and national hospital organizations.
By 1998, the count had dropped to less than 50 and continued to decline for several years before starting to rise back up.
The loss of patients meant her hospital had less money to invest in improving its mental health program, trauma services and equipment, Horton said.
William May of Black Hills Surgical said his facility is good for the community.
“If it weren't for us, there wouldn't be any competition in the marketplace,'' he said.
Contact the writer:
444-1122, michael.oconnor@owh.com
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