Do physician-owned cardiac hospitals increase utilization?

Health Affairs

Volumn 25, Issue 1, 2006, Pages 119-129

  Stensland, Jeffrey ^a   Winter, Ariel ^a  

^a Medicare Payment Advisory Commission   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

CONFERENCE PAPER; CORONARY CARE UNIT; ECONOMICS; HEALTH SERVICES RESEARCH; HOSPITAL ORGANIZATION; HUMAN; UNITED STATES; UTILIZATION REVIEW;

CARDIAC CARE FACILITIES; HEALTH SERVICES RESEARCH; HOSPITAL-PHYSICIAN JOINT VENTURES; HUMANS; UNITED STATES;

EID: 32044466976     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.25.1.119     Document Type: Conference Paper

References (36)

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2. and GAO, Specialty Hospitals: Geographic Location, Services Provided, and Financial Performance, Pub. no. GAO-04-167 (Washington: GAO, 2004).
3. Specialty Hospitals: Geographic Location, Services Provided, and Financial Performance, Ibid. 2004.
4. Regina Herzlinger, Harvard University, testimony before the U.S. Senate Homeland Security and Government Affairs Subcommittee on Federal Financial Management, Government Information, and International Security, 24 May 2005, http://hsgac.senate.gov/_files/Herzlingertestimony.pdf (accessed 16 November 2005).
5. Jamie Harris, MedCath Corporation, testimony before the U.S. House Ways and Means Subcommittee on Health, 8 March 2005, http://waysandmeans.house.gov/ hearings.asp?formula=view&id=2533 (accessed 16 November 2005).
6. Jon Foster, St. David's Healthcare Partnership, testimony before the U.S. House Ways and Means Subcommittee on Health, 8 March 2005, http://waysandmeans. house.gov/hearings.asp?formula=view&id=2530 (accessed 16 November 2005).
7. J.K. Iglehart, "The Emergence of Physician-Owned Specialty Hospitals," New England Journal of Medicine 352, no. 1 (2005): 78-84.
8. E.S. Fisher et al., "The Implications of Regional Variations in Medicare Spending, Part 1: The Content, Quality, and Accessibility of Care," Annals of Internal Medicine 138, no. 4 (2003): 273-287.
9. T. Rice, "Physician-Induced Demand for Medical Care: New Evidence from the Medicare Program," Advances in Health Economics and Health Services Research 5 (1984): 129-160.
10. R. Labelle, G. Stoddart, and T. Rice, "A Re-Examination of the Meaning and Importance of Supplier-Induced Demand," Journal of Health Economics 13, no. 3 (1994): 347-368.
11. D. Dranove, "Demand Inducement and the Physician/Patient Relationship," Economic Inquiry 26, no. 2 (1988): 281-298;
12. and Rice, "Physician-Induced Demand for Medical Care."
13. An online exhibit illustrates the financial incentives associated, with the two types of inducement and summarizes the evidence from the literature on whether these incentives are associated with additional service use. See http://content.healthaffairs.org/cgi/content/full/25/1/119/DCl.
14. G.R. Wilensky and L.F. Rossiter, "The Relative Importance of Physician-Induced Demand in the Demand for Medical Care," Milbank Quarterly 61, no. 2 (1983): 252-277.
15. J. Cromwell and J.B. Mitchell, "Physician-Induced Demand for Surgery," Journal of Health Economics 5, no. 4 (1986): 293-313.
16. Labelle et al., "A Re-Examination."
17. C.E. Phelps, "Induced Demand - Can We Ever Know Its Extent?" Journal of Health Economics 5, no. 4 (1986): 355-365.
18. GAO, Medicare: Referrals to Physician-Owned Imaging Facilities Warrant HCFA's Scrutiny, Pub. no. GAO/HES-95-2 (Washington: GAO, 1994).
19. B.J. Hillman et al., "Physicians' Utilization and Charges for Outpatient Diagnostic Imaging in a Medicare Population," Journal of the American Medical Association 268, no. 15 (1992): 2050-2054.
20. Office of Inspector General, U.S. Department of Health and Human Services, Financial Arrangements between Physicians and Health Care Businesses: Report to Congress (Washington: OIG, HHS, 1989);
21. and J.M. Mitchell and E. Scott, "Physician Ownership of Physical Therapy Services: Effects on Charges, Utilization, Profits, and Service Characteristics," Journal of the American Medical Association 268, no. 15 (1992): 2055-2059.
22. D. Dranove et al., "Is More Information Better? The Effects of 'Report Cards' on Health Care Providers," Journal of Political Economy 111, no. 3 (2003): 555-588.
23. E.C. Schneider and A.M. Epstein, "Influence of Cardiac-Surgery Performance Reports on Referral Practices and Access to Care: A Survey of Cardiovascular Specialists," New England Journal of Medicine 335, no. 4 (1996): 251-256.
24. M.O. Leavitt, Study of Physician-Owned Specialty Hospitals Required in Section 507(c)(2) of the Medicare Prescription Drug, Improvement, and Modernisation Act of 2003, May 2005, http://www.cms.hhs.gov/media/press/files/ 052005/RTC-StudyofPhysOwnedSpecHosp.pdf (accessed 24 October 2005).
25. Our review of Medicare cost report data suggests that roughly 50-75 percent of the revenue from the Medicare CABG surgeries covers hospitals' marginal costs, which implies a marginal profit of $6,000-$12,000 on a CABG surgery that paid $24,000. Although the literature presents a range of marginal cost estimates for CABG surgery, CABG is consistently seen as having high marginal profits. M.J. Eisenberg et al., "Outcomes and Cost of Coronary Artery Bypass Graft Surgery in the United States and Canada," Archives of Internal Medicine 165, no. 13 (2005): 1506-1513;
26. and R.S. Huckman, "Hospital Integration and Vertical Consolidation: An Analysis of Acquisitions in New York State," Journal of Health Economics (forthcoming).
27. Huckman, "Hospital Integration."
28. A.I. Mushlin et al., "The Cost-Effectiveness of Automatic Implantable Cardiac Defibrillators: Results from MADIT," Circulation 97, no. 21 (1998): 2129-2135.
29. P. Cram, G.E. Rosenthal, and M.S. Vaughan-Sarrazin, "Cardiac Revascularization in Specialty and General Hospitals," New England Journal of Medicine 352, no. 14 (2005): 1454-1462;
30. Medicare Payment Advisory Commission, Report to the Congress: Physician-Owned Specialty Hospitals (Washington: MedPAC, 2005);
31. and Leavitt, Study of Physician-Owned Specialty Hospitals.
32. See the Dartmouth Atlas of Health Care Web site, http://www. dartmouthatlas.org.
33. MedPAC, Report to the Congress.
34. D. Wennberg et al., "Outcomes of Percutaneous Coronary Interventions Performed at Centers Without and With Onsite Coronary Artery Bypass Graft Surgery," Journal of the American Medical Association 292, no. 16 (2005): 1961-1968.
35. Fisher et al., "The Implications of Regional Variations in Medicare Spending."
36. Carol Carter, consultant, MedPAC, public meeting transcript, 10 September 2004, http://www.medpac.gov/public_meetings/transcripts/ 091004_specialty_aw_transc.pdf (accessed 16 November 2005).