AMA House of Delegates

AMA: Don't extend moratorium on specialty hospitals

Delegates want to see a federal study of the policy's effect before taking a position.

By Bonnie Booth — Posted Dec. 27, 2004

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Delegates to the American Medical Association Interim Meeting here voted to oppose any extension of the 18-month moratorium imposed by last year's Medicare bill on physician referrals to specialty hospitals in which they have an ownership interest.

The moratorium is set to expire in early June 2005, and some delegates wanted to wait until they meet again in June to decide whether to oppose extending it. Congress has ordered the Medicare Payment Advisory Commission and the Health and Human Services Dept. to study the issue and report back by March 2005. Delegates who advocated waiting were hoping the reports would shed further light on the issue.

But any delay, the AMA Board of Trustees said, would leave the Association without a policy of record in a critical time. The board report on specialty hospitals was the focus of delegates' discussion.

"The hospital lobby is not waiting for the completion of these studies," said AMA Trustee Herman I. Abromowitz, MD, a family physician from Dayton, Ohio. "The board is committed to strengthening the safety net and community hospitals. But the recommendation to sit back poses significant risk."

Doctors who are opposed to specialty hospitals say the facilities threaten the viability of community hospitals because they take away lucrative procedures that community institutions need to subsidize other departments, such as emergency and obstetrics.

"In South Dakota, specialty hospitals are lifting patients with the profitable procedures," said family physician Daniel J. Heinemann, MD, of Sioux Falls. "They don't have to support less-profitable hospital departments. ... I take this report as a threat to community hospitals in our state."

Dr. Heinemann also said he found it ethically troubling for physicians to self-refer to facilities in which they have an ownership stake. But the AMA Council on Ethical and Judicial Affairs has said physicians may appropriately make referrals to such facilities if they directly provide care or services at the facility in which they have an ownership interest.

Those who support specialty hospitals say the focused mission and dedicated resources improve quality of care and reduce costs.

"Prior to opening the Dayton Heart Hospital, we had no input, not even on the drugs we used," said C. David Joffe, MD, the facility's medical director. "We take all comers, we have an emergency room, and many of us still practice at community hospitals. The reason we are a threat is because [the Dayton Heart Hospital] offers better care at a lower cost."

Several delegates argued that specialty hospitals offer patients a much-needed choice, as well as reward physicians for innovative thinking.

"We have the data that show specialty hospitals tend to deliver quality care," said Russell W. Kridel, MD, a delegate from the American Academy of Facial Plastic and Reconstructive Surgery. "Do we wish to tell [physicians] that we don't think they should be innovative?"

The moratorium applies to specialty hospitals that are "primarily or exclusively engaged in the care and treatment of patients with cardiac or orthopedic conditions, or those receiving a surgical procedure" unless the hospital was in operation or under development before Nov. 18, 2003.

According to the AMA board report, 28 states have at least one specialty hospital, but two-thirds of the 100 specialty hospitals are located in seven states: Arizona, California, Kansas, Louisiana, Oklahoma, South Dakota and Texas. According to an October 2003 Government Accountability Office report, 39% of those are orthopedic; 24%, surgical; 18%, cardiac; and 18%, women's hospitals.

Delegates also voted to make it AMA policy "to support and encourage competition between and among health facilities as a means of promoting the delivery of high-quality, cost-effective health care."

They also asked the AMA to oppose enactment of federal certificate-of-need legislation, as well as support state medical societies in advocacy efforts to repeal current CON statutes.

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