1. Specialty Medical Center Study
81582 Mathematica
2/25/2019 6:27:22 AM2/25/2019 6:27:22 AM
Specialty Medical Center Study
Briefing to the Wyoming Health Care Commission
November 20, 2006
Cheryl Fahlman, Ph.D
Anthony

2. Outline Policy context and issues for Wyoming Objectives of this study
Potential policy approaches for Wyoming
Characteristics of market areas with medical specialty centers
The financial performance of hospitals in Wyoming
Stakeholder perceptions and recommendations

3. Policy Context What is a medical specialty center?
Also known as niche or specialty hospitals
No standard definition
GAO (2003) approach using administrative data
2/3 of claims are in 1-2 major diagnostic categories (MDCs) or are in surgical diagnosis-related groups (DRGs)

4. Policy Context Types of Hospitals Types of owners Cardiac Orthopedic
Surgical
Women’s Health (excluding obstetrics)
Types of owners
General/community hospital
Corporation
Physicians
Partnerships

5. Policy Context Issues Market competition
Potentially effect on financial ability of community hospitals
Conflict of Interest
Self-referral
Uncertain application of Stark laws prohibiting physician self-referral
Uncompensated care/Medicaid patients
Quality of Care

6. Issues for Wyoming Currently no medical specialty centers in Wyoming,
National Surgical Hospitals Inc. broke ground in Casper for a MSC in November 2006
16 ambulatory surgery centers
Medical specialty centers operate in neighboring states (NE, SD, ID)

7. Objectives of Study Better understanding of:
Medical specialty center regulation in other states and at the Federal level
Information about potential impacts of medical specialty centers on Wyoming’s healthcare delivery system
Potential impact of medical specialty centers on the cost and quality of hospital services for Wyoming residents

8. Potential Policy Approaches
Watchful Waiting
Improving Community and Facility Monitoring through Data Collection
Hospital financial and utilization data
Trauma Registry
Use information to inform policy
Adjust licensing process
Moratorium
Ownership Disclosure
CMS has recommended physician ownership disclosure to HHS
Disclosure to patients

9. Potential Policy Approaches
Self-referral
Stark laws
Wyoming has no laws governing self-referral
Level Playing Field
Patient mix
Uncompensated care fund
Emergency care obligations
Certificate-of-need
Wyoming repealed in the 1980s

10. Financial Performance of Hospitals in Wyoming
22 not-for-profit
3 for-profit
4 excluded
Not-for-profit hospitals (2000 & 2004)
Mean number of hospital beds slight decline from 52 to 50 beds
Admissions per bed remained constant
For-profit hospitals (2000 & 2004)
Mean number of hospital beds remained constant at 59 beds
Admissions per bed increased 14%

11. Financial Performance of Hospitals in Wyoming
Percentage Change in Utilization Between 2000 and 2004
Not-for-profit Hospitals
For-profit Hospitals
All Hospitals
Mean Hospital Admissions
-0.2%
7.5%
0.8%
Mean Outpatient Visits
-7.5%
48.2%
-2.4%
Mean Emergency Dept Visits
5.2%
6.7%
5.0%
Mean Total Surgeries
1.6%
30.0%
Mean Outpatient Surgeries
-5.0%
35.3%
0.1%
Mean Inpatient Surgeries
1.2%
15.0%
2.8%

12. Financial Performance of Hospitals in Wyoming
Average Payer Mix in Wyoming General Hospitals as a Percent of Total Patient Revenue, 2004

13. Financial Performance of Hospitals in Wyoming
Little difference between not-for-profit and for-profit hospitals in uncompensated care provided
Not-for-profit hospitals
Mean operating margin operated in the red
Mean total margins positive but lower than for-profit facilities
For-profit hospitals
Mean total margin and operating margin increased each year

14. Methodology Research question Data Sources:
What are market characteristics lead a MSC to open?
Data Sources:
CMS (2006) report identified market areas with MSC
U.S. Census Bureau
Area Resource File (ARF)
Wyoming Hospital Association (WHA) annual survey
American Hospital Association (AHA) annual survey

15. Methodology
Analyzed likelihood of MSC in a given market as a function of the area’s demographic and other market characteristics
In the comparison states, we used HSAs with medical specialty centers present and the MSCs reported into the AHA annual survey
Comparison States:
Texas, South Dakota, Idaho, Montana, Nebraska, Utah, and Colorado
Market areas defined by hospital service areas (HSAs)

16. Characteristics of Market Areas With MSCs
Findings
Higher probability
Total population size in the area
Number of for-profit hospitals in the area
Higher per capita income levels
Lower probability
Higher proportion of non-white population
Percent of the population who completed high school
Implications for Wyoming
If MSCs were to emerge, most likely in areas with at least 50,000 people

17. Stakeholder Perceptions
Who
Representatives from
General hospitals
Medical specialty centers
Emergency medical services
Local health departments
Health insurers
Physician specialty groups
Health centers
Health care advocacy groups
Where
Casper
Cheyenne
Rock Springs area
Gillette area

18. Stakeholder Perceptions
Impetus for Development
Physician dissatisfaction with management of general hospitals
Quality of care
Efficiency of specialization
Financial gain for physician owners

19. Stakeholder Perceptions
How would you describe the nature of competition in your market?
Physician recruitment
Salary for emergency on-call
General-hospital joint ventures to retain business
Physician owned outside facilities

20. Stakeholder Perceptions
How are the relationships between physicians, hospitals and insurers?
Hospital:
Tensions will magnify
Lure lucrative patients away
Lure needed staff
Insurers:
“Any willing provider” state
Currently monopolistic pricing so MSC may introduce bargaining
Need to understand the total impact on general hospitals

21. Stakeholder Perceptions
What do you think the impact of MSCs will be?
Financial impact on general hospitals
Worry about declining revenues and reduced insured patient volume
Worry about losing Medicare sole community provider status
Some competition seen as “not bad” but “level playing field”
Cost of Health Care
Already a high-cost health care market
Change unit prices
Create efficiencies

22. Stakeholder Perceptions
What do you think the impact of MSCs will be?
Health Care Quality
High quality care already an important part of hospital mission
MSCs could improve quality for patients
Increased cost potentially strain current quality initiatives
Access to Care
Not significantly improve access except for reducing wait times for elective surgery
May help stem out-migration of patients
Concern about uninsured and low-income
General concern about access to primary care physicians

23. Stakeholder Recommendations
No restrictions
A process to address potential excess capacity
Level playing field
MSCs accept a certain number or percentage of uninsured/Medicaid patients
Expand Stark laws
Subsidize indigent care
Mixed views on mandatory emergency department