Specialty hospitals see fewer medicaid patients.(GAO Report)

Specialty hospitals cater to fewer low-income patients and emergency cases than do regular hospitals, underscoring their reputation for providing "boutique" care, a General Accounting Office report found.

The GAO identified 100 hospitals nationwide that focused on cardiac, orthopedic, or surgical procedures, or women's medicine. Only 45% had emergency departments. The specialty hospitals derived a smaller share of their revenues from inpatient services than did general hospitals. They also tended to treat a lower percentage of Medicaid inpatients among all patients with the same types of conditions.

For example, Medicaid beneficiaries constituted 28% of ob.gyn, patients at women's hospitals, but 37% of those at general hospitals. Only 3% of the patients at the cardiac hospitals were Medicaid patients, compared with 6% at general hospitals.

The pattern for Medicare patients, however, was quite different. Cardiac hospitals, for example, tended to have larger shares of Medicare cardiac patients.

"Clearly these 'hospitals' are not designed to serve all of a patient's needs," said Rep. Jerry Kleczka (D-Wis.), a member of the Ways and Means Subcommit tee on Health, the panel that commissioned the report. "Instead they are set up to meet only those needs that can provide the facility with the greatest profit."

The hospitals are based on an investment model that depends upon physicians referring patients to facilities in which the physicians have an ownership interest, said Chip Kahn, president of the Federation of American Hospitals. "What specialty hospitals call competition is in fact a playing field tilted heavily in their favor."

At press time, it was unclear how Medicare reform legislation would address these types of physician-owner self-referrals. ...