Ambulatory Service Centers and Physican Owned Hospitals

For the past several weeks I have been reading about "specialty hospitals" and "ambulatory service centers" (ASCs), or what some refer to as "boutique hospitals." These facilities began emerging in the 1990s as 1) a way for physicans to become partial owners, and 2) a way to improve efficiency by specializing in a specific area, mostly orthopedics and cardiology. Regina Herzlinger, professor at Harvard Business School, coined the term "focus factories" for such facilities. She argues that traditional American hospitals have not been patient or consumer focused and instead have been organized to make things easier for providers. Focused factories, she argues, not only improve care because they specialize in a single area and are able to improve efficiency, but they also are designed around the consumer (big rooms, low nurse to patient ratio, etc.).

While much can be learned from the design of specialty hospitals that improve patient-satisfaction, there are many concerns about such models of care

-Conflict of interest: Specialty hospitals are unique in that they are owned (partially or wholly) by physicians, unlike community or teaching hospitals. Physicians have been increasingly less satisfied with hospital bureaucracy in traditional hospitals, and such specialty facilities allow physicians to participate in the organization's managment - which they argue makes them more efficient in providing care and more invested in improving the facility. While having ownership in one's workplace likely increases one's committment, there is a potential conflict of interest for health financing when doctor's own hospitals. When doctors are (partial) owners and are paid more when the hospital profits, there is a potential that physicans will over-treat and use more expensive technology that may not be necessary.

-Drain on community hospitals: Community hospitals rely on things like orthopedics and cardiology to pay for other services, such as uncompensated care for the uninsured, burn and trauma units that are expensive to maintain, etc. Many community hospitals fear such specialty hospitals and ASCs opening in their community because their profitable patients will go elsewhere and this will put a further drain on safety-net services. Check out this issue brief at the Center for Studying Health Systems Change.

-Dealing with those with multiple chronic conditions: 83 percent of Medicare beneficiaries have at least one chronic condition; 65 percent have multiple chronic conditions (and these account for 95 percent of all Medicare expenditures). Having specialty hospitals that focus on one aspect of care (i.e. heart hospitals such as Medcath that specialize in angioplasties or coronary artery bypass grafts, CABGs) presents challenges because people who have one chronic condition (i.e. heart disease) are likely to have other chronic conditions (i.e. diabetes, asthma, arthritis, etc.). If care continues to be divided into specialty facilities, this might cause problems for those who manage multiple chronic conditions. Already, those with multiple chronic conditions face difficulty navigating the U.S. health delivery system. Gerard Anderson at Johns Hopkins published article on July 21, 2005 in the New England Journal of Medicine that discussed how the current organizational health system is unprepared to deal with patients with multiple chronic conditions. It is important to consider what a further division of care through "focused factories" might do for this portion of the population.

-Labor issues: It is clear that physicians are satisfied by working in such specialty facilities because of increased salaries, more control over the work environment, etc. However, I wonder about support staff and nurses. Medcath (a specialty hospital that owns many heart hospitals in the U.S.) boasts of high salaries, low patient to staff ratios, etc. in its "employment" section on their website. It seems many support staff like the increased patient contact and more training that such facilities provide staff. However, it does not appear specialty hospitals are unionized, and I doubt they could become "the norm" without support from SEIU or Nurses Unions. Such unions, that are committed not only to labor issues for union employees, but also to maintaining a solid community health system, will resist specialization of care. The role that such unions may play in the future of the a changing health market place has not been investigated, and I think it is interesting to consider. On a personal note, I take comfort knowing that labor still has some power over changes in the health system.


A friend of mine recently had surgery at an orthopedic ASC and was very satisfied with his treatment (I do not believe he understood at the time of surgery the market forces of specialty facilities and threats on the community health system). He sent me this website that his doctor gave him a password and he could log in to see graphics of his specific surgery before the operation. The fact that health education materials are a becoming a profitable industry does not sit well with me, especially because only a certain subset of physicians (who are practicing at specialty facilities) are giving these services to these patients. Such expensive services are probably not accessible to community hospitals. I did some investigation on this company after he sent me this webpage. To make it more upsetting, this company also contracts out to devise manufacturers. So, not only are they profiting off of health education, but they are also marketing new expensive technology to specialty physicians and patients, driving up the cost of care.

Summing up: I will not take a totally negative stand against specialty hospitals; I do believe that hospitals need to be more organized around patients. Specialty hospitals offer a new model of delivering care that seems to improve patient satisfaction and provider satisfaction. While I strongly support community hospitals, I do believe many need to make improvements in the way they deliver care. Nevertheless, I do not feel like outsourcing and dividing care into different sections is necessarily the answer. Specialty hospitals do present a problem for the viability of the community hospitals, a threat for over-treatment, unnecessary cost-drivers because of technology, and a challenge for dealing with those with multiple chronic conditions. Serious efforts need to be invested in re-organizing community hospital care, not outsourcing care to for-profit facilities.