Leading policy-makers and scholars explain how market forces, deregulation, and consumer choice can work to improve health care for all Americans.


Grace-Marie Turner, Galen Institute, 5-13-05

Turner argues that the growth of smaller hospitals offering specialty care to patients—often superior to that offered by large hospitals—is hedged in by federal legislation that protects large hospitals from competition.

Specialty hospitals hit the news this week because the moratorium on constructing new facilities is due to expire June 8. The moratorium was imposed by the Medicare Modernization Act in 2003 when large hospitals won their legislative fight to try to quash competition from these smaller, more focused hospitals, which are at least partly owned by physicians.

This is a key battlefront between protectionists and innovators. The large, multi-specialty hospitals have argued that the focused hospitals, especially those that specialize in cardiac care, are taking the less sick and most profitable patients and leaving them with more complex cases and more uncompensated care.

Turner notes that a recent study from the Centers for Medicare and Medicaid Services debunks this argument:

“The notion that specialty cardiac hospitals are systematically screening out more severely ill patients using the ED [emergency department] is not supported by [CMS] findings.” And the notion that physicians are profiting from these referrals certainly is called into question: “The average ownership share per physician in a cardiac hospital is only 0.9%, based upon hospitals in our study,” CMS said.

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