The Medicare Prescription Drug, Improvement and Modernization Act of 2003 included an 18-month moratorium on the development of new physician- and investor-owned surgical facilities. Those facilities, known as specialty surgical hospitals, typically focus on a few areas of surgical practice, such as heart surgery or orthopedic surgery.
In this, the first of a three-part series, Sean Parnell examines the development of specialty surgical hospitals and their role in the U.S. health care system. Part 2 will explore the claims made by opponents of specialty surgical hospitals, and Part 3 will look at the industry’s future in the U.S.
Specialty surgical hospitals in the United States trace their roots to ambulatory surgical centers (ASCs), which started to appear approximately 30 years ago. An ASC is a facility whose patients are admitted, treated, and discharged within a single day. No overnight hospitalization is included. Typically they are free-standing facilities not attached to or affiliated with a traditional general hospital.
According to the American Surgical Hospital Association (ASHA), ASCs developed for several reasons, including:
- physician dissatisfaction with the work environment, efficiency, and quality of care provided in traditional general hospitals;
- advances in medicine that allow many procedures that once required an overnight stay in the hospital for recovery to be done on an out-patient basis;
- patient dissatisfaction with the hospital environment and lack of customer service; and
- increasing costs of medical care at traditional general hospitals.
A February 2002 report by the U.S. Department of Health and Human Services Office of Inspector General attributes the growth of ASCs to “advances in medical technology, increased focus on patient convenience, and economic incentives created by changes in reimbursement systems.”
According to ASHA, the ASCs developed slowly until 1982, when Medicare first approved them for reimbursement. From that point, growth has been rapid. There are currently more than 3,500 ASCs in the U.S.
The results of this industry growth have been impressive. By freeing themselves of the bureaucracy of a traditional general hospital, ASCs have been able to provide high-quality care at a lower cost. The key is specialization: A surgeon or facility devotes all of its energies to a few specific areas of care, resulting in increased efficiency and effectiveness.
Specialty Surgical Hospitals
From the ASCs developed modern specialty surgical hospitals. By focusing on a few surgical specialties, additional gains in efficiency and quality can be realized, this time in procedures that require an overnight stay or longer while the patient recovers.
Approximately 100 specialty surgical hospitals exist in the U.S. today. Some, such as Stanislaus Surgical Hospital in Modesto, California, offer a broad range of surgical procedures, including knee and hip replacement, hysterectomy, corneal transplant, and kidney surgery. By contrast, MedCath, a chain of 13 hospitals in nine states, focuses on cardiovascular surgery.
Specialty surgical hospitals are much smaller than traditional general hospitals. Medcath’s 13 hospitals have between 32 and 112 inpatient beds each, and Stanislaus Surgical Hospital has 23 inpatient beds, while the average hospital in the U.S. has more than 160 beds. Hospitals in large urban area typically have several hundred beds, and some have more than one thousand beds.
Nurse-to-patient ratios are typically lower at specialty surgical hospitals. In a recent interview with Surgicenter Online, Stanislaus Surgical Hospital CEO Michael Lipomi said, “The nurses who prepare patients for surgery also recover patients, so patients see the same reassuring faces.” At larger traditional general hospitals, a patient may see many different nurses during the course of his or her treatment, which can interfere with the continuity of care.
Higher Quality of Care
Many specialty surgical hospitals appear to provide better care than their traditional counterparts, as measured by patient outcomes. The Lewin Group, a consulting firm specializing in health care, conducted a study in 2002 comparing patient outcomes from eight MedCath specialty surgical hospitals to 1,056 peer hospitals that perform open-heart surgery in the United States. Using the methodology employed by the Centers for Medicare & Medicaid Services to adjust for patient health, the Lewin researchers found:
- The mortality rate from open heart surgery for Medicare cases at MedCath hospitals was 16 percent lower than at community hospitals and 12.5 percent lower than at teaching hospitals.
- The average length of stay for MedCath patients was 21.9 percent shorter than at community hospitals, and 25.6 percent shorter than at teaching hospitals.
- MedCath discharged 22.9 percent more of their patients to their homes than did the community hospitals.
Lewin’s report also showed a lower rate of complications from surgery for MedCath heart patients and noted that MedCath patients’ conditions tended to be more severe than the conditions of patients at other hospitals. The findings were consistent with studies conducted by Lewin in 2000 and 2001.
Lower Rate of Nosocomial Infection
Specialty surgical hospitals also appear to have lower rates of nosocomial infection, infections that originate or occur in a hospital setting. Preliminary data from a soon-to-be-released study by the ASHA show the nosocomial infection rate is approximately two-tenths of 1 percent in specialty surgical hospitals. Lipomi says the rate at Stanislaus Surgical Hospital is one-tenth of 1 percent. According to a December 2002 report from the Centers for Disease Control, the national rate in traditional general hospitals is 5.7 percent.
A major reason for the lower rate of infection is that specialty surgical hospitals focus on elective and pre-planned surgeries. A patient who is scheduled for heart surgery and shows up at a specialty surgical hospital with a cold or the flu can be rescheduled for surgery after the illness goes away. In the Surgicenter Online interview, Lipomi noted infection rates in specialty surgical hospitals are lower because they don’t perform surgery on “someone who is throwing up or bleeding or presenting with possible infectious conditions … We think the otherwise healthy patient needs a place to go where nosocomial infection rates are less than 1 percent instead of 5 percent or more.”
Patient Comfort a Source of Pride
Specialty surgical hospitals pride themselves on a superior level of patient comfort–what observers outside the health care industry might call “customer satisfaction.” This includes rooms with VCRs, private baths, refrigerators, and soft carpeting. Stanislaus Surgical Hospital prepares food for each patient individually, with cooks who ask each patient what they would like to eat.
“Treating patients like guests in a fine hotel is a rather unusual concept in the world of health care,” said Alan Pierrot, CEO of Fresno Surgery Center, in an interview in Surgicenter Online. “The result is a major contribution to patient comfort that ultimately improves the healing process.”
Despite the luxury, specialty surgical hospitals may actually cost less than traditional hospitals. MedCath, for example, saves Medicare money due to the shorter average length of stay and reduced rate of complications among its patients. The low rate of nosocomial infections at hospitals like Stanislaus Surgical Hospital saves money by dramatically lowering the costs associated with re-admitting and treating patients who become infected while at a hospital.
Next: The Critics
Not everyone is enamored of specialty surgical hospitals. Traditional general hospitals, represented by the American Hospital Association and Federation of American Hospitals, believe they see a dark lining in the silver cloud of specialty surgical hospitals. The next issue of Health Care News will explore their claims.
Sean Parnell ([email protected]) is vice president – external affairs for The Heartland Institute.
Sean Parnell ([email protected]) is a research fellow for health policy at The Heartland Institute.
