Neurosurgeons Should Create and Own Spine Hospitals
Physician-owned specialty hospitals raise the bar, encourage competition, pay significant taxes, employ significant numbers of people, and create new businesses. More important, however, is that patients, staff and physicians embrace these hospitals because they are wonderful environments in which to give and receive care.
Physician-owned specialty hospitals have been the subject of intense scrutiny in the last few years. In 2003, the U.S. Congress passed the Medicare Prescription Drug Improvement and Modernization Act. The MMA imposed an 18-month moratorium on referrals of Medicare and Medicaid patients by physician-investors in specialty hospitals. Congress required the Medicare Payment Advisory Commission, MedPAC, in consultation with the General Accounting Office and the Department of Health and Human Services, to conduct an in-depth study concerning specialty hospitals and report the findings to Congress.
Specialty hospitals were shown to provide:
■ improved and cost-effective care;
■ lower infection rates;
■ lower complication and mortality rates;
■ shorter hospitals stays; and a
■ marked increase in patient satisfaction.
Further study results have led MedPAC to conclude that there is not evidence that physician ownership and referral to specialty hospitals lead to inappropriate utilization.
Other studies on specialty hospitals have shown that they encourage the competition — namely, community hospitals and medical centers — to deliver higher quality, more efficient, and innovative healthcare. A study for the Centers for Medicare and Medicaid Services performed by RTI International Affairs revealed that specialty hospitals contribute substantial tax revenue to the community. In fact, the RTI study reported that the total proportion of net revenue that specialty hospitals devoted to both uncompensated care and taxes exceeded the proportion of net revenue that community hospitals devoted to uncompensated care.
In addition, specialty hospitals are supported by the American Medical Association and the American College of Surgeons and by economist Regina Herzlinger, author of Market-Driven Healthcare: Who Wins, Who Loses in the Transformation of American’s Largest Service Industry.
After the congressional studies were reviewed and analyzed, the moratorium on specialty hospitals was allowed to expire earlier this year. In other words, the window of opportunity is now open for neurosurgeons to develop and own neurosurgical specialty spine hospitals.
Why Neurosurgeons Should Create and Own Spine Hospitals
While owning a specialty hospital such as a spine facility has many benefits,
the two main advantages involve control and reimbursement.
Control When neurosurgeons own a specialty facility such as a spine hospital, they literally control every aspect of the quality of care each patient receives. The neurosurgeon-owners choose the technology they want in the operating room, and they select the personnel who will assist with that technology and care for patients preoperatively and postoperatively.
The neurosurgeon-owners control the policies of the hospital, which allows for more control over their own professional lives. Streamlined policies can eliminate unnecessary, time-consuming meetings; allow for rapid intraoperative turnover times and ping-ponging; and lead to a much more productive work environment. Neurosurgeon-owners hire their own CEOs and decide how much to pay administrators. This reduces the number of “suits” who run around with clipboards and dictate policies, but who never admit a patient or take calls in the middle of the night.
Neurosurgeon-owners control the outsourcing of all support devices utilized by the hospital, so that money is not thrown down a deep dark hole for such things as unnecessary advertising or marketing campaigns. At the Oklahoma Spine Hospital in Oklahoma City, advertising is accomplished when satisfied patients are discharged from the hospital with their own OSH T-shirt, and then spread the word to friends and family members about their wonderful experience at our hospital. This kind of advertising is virtually free, but it is most effective.
Control is power, and this control allows neurosurgeon-owners of spine specialty hospitals to perform at the highest possible professional standard, provide the best quality of care for patients, and enjoy a high quality personal life.
Reimbursement In the current medical climate, there is seemingly no floor to reimbursement and no ceiling to neurosurgical expenses. The sky really is falling! Professional liability insurance premiums increase even as neurosurgeons work harder, pedal faster, and lose ground in their attempts to make a living for themselves and their families.
In addition, Medicare reimbursement since 1997 has significantly decreased. For example, reimbursement for anterior cervical fusion, code 22554, fell from $1,662 in 1997 to $1,282 in 2006. How could this happen, even as the costs associated with this procedure increased? Reimbursement for lumbar discectomy, code 63030, dropped from $1,205 in 1997 to $847 in 2006. Reimbursement for a posterior lumbar interbody fusion, code 22630, was $1,705 in 1997 and only $1,417 in 2006.
Medicare reimbursement is the benchmark for other insurance products, so declining Medicare reimbursement spills over into all reimbursement, making it difficult for neurosurgeons to maintain income. But unlike Medicare physician reimbursement, hospital or diagnosis-related group reimbursements have increased 5 percent to 6 percent virtually every year since 1997. The hospitals are getting more; the neurosurgeons are getting less. A hospital receives $12,341 for an anterior cervical fusion; $6,730 for a lumbar discectomy; and about $19,253 for a posterior lumbar interbody fusion. These reimbursement rates reflect increases since 1997. Therefore, by owning a neurosurgical spine hospital neurosurgeons not only can provide superb patient care but also can share in any profits that the hospital receives for all procedures performed at the hospital.
The Oklahoma Spine Hospital is a great example of a spine specialty hospital that is dong things right. We have assembled 25 fine, highly skilled neurosurgeons, orthopedic spine surgeons, and pain specialists, and we have hired a dedicated and professional staff that offers the quality of care that patients expect and deserve. Our hospital has paid millions of dollars in federal taxes, state income taxes, property taxes, and payroll taxes, and it has employed approximately 145 people. More than 7,000 complex spinal operations, peripheral nerve surgeries, dorsal column stimulator placements, and pain management procedures have been performed. Our hospital patient satisfaction rating is 97 percent, the infection rate is 0.139 percent, and the staff turnover rate is only 2 percent.
In summary, at Oklahoma Spine Hospital, we did it; so can you. Specialty hospitals represent the future and America at its best!
Stan Pelofsky, MD, a physician-owner of Oklahoma Spine Hospital, established practice with Neuroscience Specialists in 1973. He is the 2001–2002 AANS president