Center for Studying Health System Change

Health Affairs' Studies Examine Specialty Facilities and Hospital Capacity

Media Advisory
Nov. 12, 2003

FURTHER INFORMATION, CONTACT:
Alwyn Cassil: (202) 264-3484
Editor’s Note - For electronic copies of these studies, contact Alwyn Cassil at acassil@hschange.org

ASHINGTON, D.C.—Two Center for Studying Health System Change (HSC) studies—one on the rapid growth of physician-owned specialty facilities, and the other examining hospital capacity issues—were released today in the November/December edition of the journal Health Affairs.

Focused Factories? Physician-Owned Specialty Facilities by Lawrence Casalino, M.D., University of Chicago; Kelly J. Devers, Ph.D., HSC health researcher; and Linda R. Brewster, HSC consulting researcher

Hospitals must decide whether to cooperate or compete with their specialists who own specialty facilities; either choice is fraught with dangers. Based on findings from HSC’s 2002-03 site visits to 12 nationally representative communities, the study describes the recent rapid increase in physician-owned specialty hospitals and ambulatory surgery centers, reasons for the increase, possible impacts and potential policy options. These facilities could lead to excess capacity, provision of unnecessary services and lower quality because of decreased volume at some facilities. They also could reduce community hospitals’ net revenue and thus their ability to subsidize socially necessary but unprofitable services. But regulatory intervention should be cautious, because data on impact are inconclusive, and these facilities could potentially function as "focused factories" that improve quality and reduce costs.

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Does U.S. Hospital Capacity Need to Be Expanded? By Gloria J. Bazzoli, Ph.D., Virginia Commonwealth University; Linda R. Brewster, HSC consulting researcher; Gigi Liu, former HSC research assistant; and Sylvia Kuo, Ph.D., Mathematica Policy Research

Before hospitals make drastic expansions, they need to consider several less costly alternatives. Some industry experts believe that U.S. hospital capacity—especially emergency and inpatient services—is being stretched to its limits. Based on findings from HSC’s 2002-03 site visits to 12 nationally representative communities, this study examines constrained hospital services, contributing factors and hospitals’ responses. Most hospitals studied had emergency capacity problems, but problems in other service areas were limited to only a few hospitals. Hospitals have added or converted capacity, improved capacity management, dealt with nursing shortages and worked with public officials to reduce emergency department diversions. Although additional capacity might be needed in some markets, better management of existing resources could be a more effective solution.

The 12 nationally representative communities are Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, Mich.; Little Rock, Ark.; Miami; northern New Jersey; Orange County, Calif.; Phoenix; Seattle; and Syracuse, N.Y.

As part of the Community Tracking Study, HSC sends a team of researchers every two years to each community to interview local health system leaders, including representatives of major health plans, hospitals, physician organizations, employers, benefit consultants and state and local policy makers. In-depth, one-on-one interviews provide insight into the changing dynamics of local health care markets.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely insights on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded exclusively by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research.