It may be a while before a Chicago company can replicate its new specialty hospital on the city’s North Side thanks to the Medicare bill signed into law last month by President Bush.
The Medicare reform package, in a nod to complaints from general acute-care hospitals, put an 18-month moratorium on the development of new specialty hospitals that focus on lucrative procedures such as certain surgical, cardiac or orthopedic care.
That’s not good news for companies like Neurosource Inc., which last year joined with some Chicago-area physicians to open a specialty hospital, known as the Neurologic and Orthopedic Institute of Chicago, in the former Ravenswood Medical Center.
The institute’s primary focus is on orthopedic surgeries such as hip and knee replacements as well as neurological care such as brain and spine surgeries.
The new law doesn’t affect existing facilities like the institute or specialty hospitals under development, but “it could have some impact on the development of new hospitals,” said Peter Breen, president of Neurosource.
The law also put a limit on the number of physician investors at existing facilities.
Such facilities, also known as “boutique hospitals,” have tripled since 1990 to more than 90, according to a recent report from the General Accounting Office, as their financial backers and physician investors tout the benefits of focusing on specific diseases and conditions. More than 20 other facilities are under development, the GAO report said.
Critics have long argued that specialty hospitals are trying to treat well-insured patients, leaving poor and uninsured patients to the care of non-profit, acute-care facilities.
The American Hospital Association was the biggest backer of the moratorium, saying the facilities need to be studied to measure their impact on general acute-care facilities.
“The issue for us is cherry-picking,” said Rick Wade, spokesman for the Chicago-based hospital group. “[Specialty hospitals] are not taking uninsured and they are not taking Medicaid. They are taking the well-insured and not taking the complicated cases.”
But Neurosource’s Breen said the Neurologic and Orthopedic Institute doesn’t cherry-pick patients and staffs an emergency room 24 hours a day to make sure all patients’ needs are met. Of the 180 physicians on the institute’s medical staff, only one-third are surgeons focused on either orthopedic or neurosurgical care, he said.
Breen and other developers of specialty hospitals say they are satisfying consumer and employer demand for cost-effective, high-quality medical care. Hospitals that specialize by treating larger numbers of patients for certain procedures tend to have better outcomes, proponents of specialty hospitals say.
Specialty hospitals say general hospitals are merely threatened at the prospect of competition.
“What this [new law] does is limit competition in this industry,” Breen said. “It’s really about quality and outcomes. In this day and age it’s difficult to do all things to all people really well.”
Breen said the institute is planning to launch its first marketing campaign later this month.
Under the new Medicare law, Medpac, an independent body that recommends Medicare payment for hospitals, and the Department of Health and Human Services will be studying the impact of specialty hospitals.
Once those studies are complete, Congress is expected to revisit the issue of specialty hospitals.
Walgreen warehouse: Walgreen Co. announced plans to build a new distribution facility in Anderson County, S.C.
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The Deerfield-based drugstore giant said it plans to invest $175 million in the project, which will employ more than 450 new workers and serve more than 200 stores in eight states throughout the South and mid-Atlantic region, Walgreens said.