|Physician-Owned Hospitals Linked To Shifts In Care
After physicians become part-owners of specialty
hospitals, referrals for surgery and other hospital testsand treatments
increase significantly, according to a study by a researcher at
"Given the growth in physician-owned hospitals, these
findings suggest that healthcare expenditures will be substantially
greater for patients treated at these institutions relative to persons
who obtain care from non self-referral hospitals," said Jean M.
Mitchell of Georgetown University in Washington, D.C.
Mitchell analyzed patterns in the care of Oklahoma
workers-compensation patients treated for back and spine problems from
2001 to 2004. Her focus was on how physicians’ practice patterns
changed after they became part-owners of specialty hospitals.
During the period studied, two new physician-owned
specialty hospitals — an orthopedic hospital and a spine hospital
— opened in the Tulsa area. Mitchell compared changes in practice
patterns for doctors who did and did not become part-owners of one of
these two hospitals.
The results showed a significant increase in referrals
for certain treatments and tests after physicians gained ownership
interest. The most dramatic change was a 650 percent increase in
patients referred for "complex" spinal fusion surgery: from 0.1 percent
before ownership to 6.51 percent after ownership, according to their
In contrast, for non-owner physicians, referrals for
complex spinal fusion surgery remained stable at less than 1 percent,
according to the study
At the same time, physician-owners became less likely to
refer patients for less-costly "simple" spinal fusion surgery, compared
to an increase in such referrals for non-owners. Physicians who became
owners also became more likely to refer patients for ancillary services
performed at specialty hospitals, including physical therapy and
diagnostic tests such as MRI scans, according to the study.
Specialty hospitals are generally exempted from federal
and state laws banning physicians from referring patients to facilities
where they have an investment interest, according to the study.
Proponents of specialty hospitals contend that, by
concentrating on a single area, these facilities can lower costs while
potentially enhancing quality. However, critics suggest that financial
incentives create an inherent conflict of interest for physician
According to the study, the results suggest that
physicians’ behavior changes after they become owners of
specialty hospitals, including a dramatic increase in referrals for
complex and costly spinal operations.
As the market share of physician-owned specialty
hospitals continues to rise, healthcare costs may be higher for
patients treated at these centers than for patients treated by
physicians who do not profit from self-referrals, Mitchell said.
She said, "These findings should be of interest to
policymakers and third party insurers who are concerned about increased
utilization associated with physician self-referral arrangements and
its subsequent contribution to escalating healthcare expenditures for
individuals with good insurance coverage."
The study was published in the journal Medical Care.
Address: Georgetown University, 37th and O Streets NW, Washington DC 20532; (202) 687-0100, www.georgetown.edu.