[Mb-civic] A Health Threat We're Not Treating - Newt Gingrich - Washington Post Op-Ed

[William Swiggard]

A Health Threat We're Not Treating
Don't Let Doctors Rig the Market for Specialty Hospitals

By Newt Gingrich
Saturday, November 12, 2005; Page A25

A growing number of hospitals in America are setting themselves up to 
deal with just one particular area of medicine, such as cardiovascular 
procedures or orthopedics. The spread of these specialty hospitals, as 
they are called, demands our attention. They could be a force for good, 
providing better health care at lower cost for consumers. Or they could 
end up distorting the health care system in ways that impose heavier 
costs on taxpayers.

The rules that define legitimate behavior by specialty hospitals will 
play a decisive role in determining whether they become primarily 
instruments of high profits -- profits produced by clever schemes to 
minimize risk and leave all the expensive cases to community hospitals 
and taxpayers.

I'm strongly in favor of legitimately designed specialty hospitals in 
which a focus on a specific set of skills and procedures enables doctors 
and staffs to maximize their efficiency. But I am just as strongly 
opposed to the emergence of specialty hospitals that create special 
relationships with doctors designed to cherry-pick only the easy cases 
for certain hospitals.

The greatest dangers arise when doctors have a direct financial interest 
in a specialty hospital. It's just human nature for them to increase 
their own income by the simple act of giving the specialty hospital -- 
with which they are associated and from which they draw compensation -- 
all the easy and inexpensive cases, while sending everything risky and 
expensive to the larger community hospital. It's not hard to see the 
financial damage this could do to community hospitals.

Congress recognized years ago that there are certain hazards in 
situations where there is an economic relationship between a hospital 
and a doctor. Hospitals that provide economic rewards and incentives to 
doctors could distort medical decisions. As a result, Congress passed 
what is known as the Stark anti-kickback legislation to protect the 
integrity of medical decision making by preventing hospitals from 
influencing the distribution of patients through economic inducements.

But Congress has not taken account of the fact that a direct doctor 
investment in a specialty hospital gives the physician a greater 
economic incentive to distort medical decisions for economic 
self-interest than anything ever envisioned by Stark. Some doctors are 
making as much or more money out of their ownership of stock in 
specialty hospitals as they make practicing medicine.

Clearly the danger of community hospitals being undermined and 
economically crippled while specialty hospitals realize profits not 
through greater efficiency and effectiveness (which would be good) but 
through more clever cherry-picking of low-risk, high-profit cases is a 
real threat to the integrity of the health system. It is also a threat 
to individuals who might find themselves with complex illnesses and no 
appropriately specialized hospital willing to take them in for treatment.

Congress should insist on hospital ownership rules that allow doctors to 
invest in specialty hospitals in which they do not practice but that 
forbid doctors from having ownership in a hospital in which they do 
practice.

Alternatively Congress should consider establishing a law requiring that 
specialty hospitals take all the cases in their area of specialization, 
the difficult and complex (and expensive) as well as the simple and 
profitable. What Congress should not do is allow the current 
market-distorting and community hospital-destroying system to continue 
unchecked.

As a free-market conservative I strongly favor competition. In fact, I 
think Adam Smith's description of markets creating more choices of 
higher quality at lower cost was one of the great breakthroughs in human 
productivity. His publication of "The Wealth of Nations" in 1776 was as 
liberating as our own Declaration of Independence the same year.

Yet Smith recognized that sellers often try to create phony markets. He 
warned that when businesses get together they are often conspiring 
against the consumer. Businesses can see a financial interest in rigging 
the market so that it minimizes competition or sets prices. This same 
temptation to conspire against the consumer can be found in the emerging 
specialty hospital movement.

Congress should act now to protect our health system by establishing the 
right rules for fair competition.

The writer, a former Republican representative from Georgia and speaker 
of the House, is the founder of the Center for Health Transformation.

http://www.washingtonpost.com/wp-dyn/content/article/2005/11/11/AR2005111101407.html?nav=hcmodule
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