Texas Health Resources - The Business of Healthcare

The Business of Health Care Report
Update on Specialty Hospitals - August 2005

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I'm Doug Hawthorne, President and CEO of Texas Health Resources, with "The Business of Health Care Report."

An 18-month federally imposed moratorium on new specialty hospitals has expired, but don’t expect a new flurry of specialty hospital development in Texas anytime soon.

In June, the federal agency governing Medicare and Medicaid announced it will not approve any new provider agreements with specialty hospitals until at least the end of the year. And, legislation is pending in Congress that could make the ban permanent.

Texas is at the center of the controversy because it has more specialty hospitals than any other state: 47, according to the Texas Hospital Association, with 29 others under development.

Many of my colleagues in the health care industry remain far apart on this issue. Some believe community hospitals have been hurt by competition from specialty facilities – which are typically smaller than traditional hospitals and focus on specific areas of care – usually the most profitable services attracting a healthy patient base. Others say specialty hospitals are more efficient than general hospitals and provide an equal or better level of care.

Both sides of the debate have valid positions. My hope is that all parties will collaborate to avoid potential harm to community hospitals. We need to combine the best points of each perspective to create a level playing field – enabling health care providers to fulfill their social contract to serve the community, while also meeting their financial obligations to stakeholders.

Sources:
Texas Hospital Association, Report: Doctor-Owned Businesses Create Conflicts, Threaten Health Care System. March 14, 2005.
American Surgical Hospital Association, Economics and Policy Analysis of Specialty Hospitals. February 4, 2005.
Centers for Medicare and Medicaid Services. Fact Sheet: CMS Outlines Next Steps as Moratorium on New Specialty Hospitals Expires. June 9, 2005.
The Hospital Fair Competition Act of 2005. Sponsors: U.S. Sens. Charles Grassley, R-Iowa, and Max Baucus, D-Mont.

For Texas Health Resources and its faith-based hospitals – Harris Methodist, Presbyterian and Arlington Memorial – I’m Doug Hawthorne.

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