1 prepared to care: limited-service providers put at risk the standby role of hospitals
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Prepared to Care:
Limited-service Providers Put at Risk the Standby Role of Hospitals
Americans rely heavily on the “standby” role of full-service hospitals.
The Standby Role:
• 24/7 access to care
• Caring for all patients regardless of ability to pay
• Disaster readiness and response
Emergency Department Visits ,1997 – 2004, In Millions
Source: AHA Annual Survey, data for community hospitals.
The demand for emergency access to care is rising...
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006.
92.8 94.899.5 103.1 106.0 110.0 111.0 112.6
0
20
40
60
80
100
120
1997 1998 1999 2000 2001 2002 2003 2004
Em
erg
ency
D
epar
tmen
t V
isit
s
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006.
Number of Uninsured, 2000 – 2004, In Millions
39.8
45.0 45.843.6
41.2
2000 2001 2002 2003 2004
…full-service hospitals provide a medical safety net for the growing number of uninsured…
…and full-service hospitals stand ready to respond to a wide range of disasters.
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006.
PrivatePayers
ElectiveCases
LessComplex
SurgicalCare
Well-funded
IndigentCare
24/7 CapacityUnfunded
Revenue from Service to Paying Patients
Medicareand
Medicaid
EmergentCases
MoreComplex
MedicalCare
Under-funded
DisasterReadiness
Despite its importance, however, the “standby” role is not explicitly funded.
Care is shifting to the rapidly growing number of providers who do not play this role.
The bulk of these facilities involve physician ownership and self-referral.
These include ambulatory surgery centers that focus on elective outpatient procedures…
4506
24622644
27863028
33713597
38874136
0
1000
2000
3000
4000
5000
1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: MedPAC, Healthcare Spending and the Medicare Program, June 2006
Number of Medicare-approved ASCs, 1997 - 2004
Nu
mb
er o
f A
SC
s
…for well-insured patients…
Other Federal Payers2.5%
Self-Pay3.0%
Workers' Compensation5.8%
Medicare30.9%
Commercial54.0%
Charity care0.3%
Medicaid3.5%
Percent of ASC Patients by Payer, 2005
Source: Medical Group Management Association (MGMA). Ambulatory Surgery Center Performance Survey. 2005 Report.
…and the rapidly growing number of physician-owned limited service hospitals.
4049
65
89
112
130
0
25
50
75
100
125
150
2000 2001 2002 2003 2004 2005
Number of Physician-owned Limited-service Hospitals, 2000 - 2005
Source: The Centers for Medicare & Medicaid Services
Physician-owned limited-service hospitals typically do not provide 24/7 access to care…Percent of Hospitals with an Emergency Department*, Physician-owned Limited-service Hospitals versus All Community Hospitals, 2003
*Hospitals treating more than 5% of cases in emergency department.
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006
91%
21%
Physician-owned Limited-serviceHospitals*
All Community Hospitals
…nor serve as the medical safety-net for low income populations.
Medicaid as a Percent of All Patient Discharges, 2002
Source: The Chartis Group, Prepared to Care: The 24/7 Role of America’s Full-service Hospitals, 2006.
15%
1%
4%
Heart Hospitals Orthopedic Hospitals Community Hospitals
Physician-owned
Instead these facilities cherry-pick the well-funded services…
Well-funded services
Physician-ownedlimited-service
hospitals
…relying on the economically motivated referral decisions of physician-owners…
• Behaviors associated with self-referral have been well-documented, including:• Patient steering (physician-owners direct their patients to
their own facilities).• Cherry-picking:
• Offering well-reimbursed services• Selecting healthier patients• Avoiding low-income patients
• Increased utilization
…and leaving full-service hospitals without the means to subsidize the standby role.
Unfunded and under-funded
services
Left forfull-servicehospitals
Physician-owned limited-service facilities threaten the stability of the system.
Solution
• Ban self-referral to new limited-service hospitals.• Payment systems must recognize the “standby” role of
hospitals. • Facilities that serve the standby role must get reimbursed for
their added costs.• The types of payment changes proposed by CMS to date do
not address this issue.
• Facilities that do not offer the standby role must support it.• Care standards for meeting emergency patient needs for
facilities without emergency departments.• Support of physician on-call coverage.