Even in markets where physician-owned hospitals captured more than 10 percent of admissions, community hospitals’ profit margins appeared stable through 2004, according to a new report by the Medicare Payment Advisory Commission. Using two additional years of data and a larger number of physician-owned specialty hospitals, MedPAC issued an updated report on the cost of inpatient care at specialty hospitals. The number of physician-owned specialty hospitals doubled from 2002 to 2004, primarily in parts of the country with above-average population growth and without certificate-of-need laws, according to the report. Specialty hospitals’ inpatient services are not less costly than community hospitals, with inpatient costs at orthopedic/surgical hospitals running about 20% higher. Both types of specialty hospitals, however, have 20% to 25% shorter lengths of stay. And even though specialty hospitals took profitable procedures away from community hospitals, the study found that competing hospitals found ways to compensate by cutting staff, increasing their own profitable services, and increasing prices. Read the report.
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