Luxury Hospitals Pose Threat to Trauma Centers

Luxury Hospitals Pose Threat to Trauma Centers

News Mar 05, 2006

IN the rooms at Thousand Oaks Surgical Hospital, wood-crafted cabinetry hides ugly wires and oxygen lines. Wall-to-wall windows offer a serene panorama of the Santa Monica Mountains.

There is a couch that pulls out into a bed for family members, a carpeted floor, a flat-screen television set and a roomy bathroom stocked with plenty of plush towels and a cozy waffle-quilt bathrobe. "The rooms are bigger, the food is like eating in a fancy restaurant....There's no comparison," says Jack Light, 70, of Westlake Village, who had a partial knee replacement there in late 2005.

"The service at the hotel ... "

Whoops. He meant to say hospital.

His verbal slip could have come straight out of the hospital's marketing plan. Thousand Oaks Surgical Hospital, one of a new breed of doctor-owned, for-profit specialty hospitals, was designed to look and feel like a vacation resort. "They're like four-star hotels," says Gerald Kominski, associate director of the UCLA Center for Health Policy Research. "They're offering a luxury experience."

Hospitals like this might be the wave of the future, providing patients with care that is highly specialized, excellent, comfortable, efficient, courteous and largely infection-free. They might also be part of an economic tsunami that flattens the revenue general hospitals need to keep their emergency rooms, trauma centers, intensive care units and medical wards open -- services that no one covets, but anyone could need, at any unexpected, vulnerable moment.

Such a threat prompted Congress, in 2003, to impose an 18-month moratorium on building more for-profit specialty hospitals. (Right now there are about 100 nationwide, including at least eight in California and one -- Thousand Oaks -- in Southern California.) Congress also worried that physicians referring patients to hospitals they owned could represent a conflict of interest that might affect medical care.

The moratorium was lifted in June 2005, but it could be an additional six to eight months before the next crop of medical entrepreneurs might start breaking ground and pouring concrete. That's because the government is reexamining payment formulas for medical procedures before it gives the go-ahead for Medicare patients to be treated at any new specialty hospitals.

But when the government's work is done, the physician-owned specialty hospitals that already exist will likely be joined by others. "They were growing at the rate of 30% to 40% a year before the moratorium," says Caroline Steinberg, vice president for trends analysis at the American Hospital Assn. "I think if they lift any kind of moratorium, they'll proliferate very rapidly."

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To understand why that might present a problem, one has only to look at the types of patients the new hospitals serve -- and also understand how profit is distributed in America's healthcare system. The new specialty hospitals of concern are heart hospitals partially owned by cardiac surgeons, and surgical hospitals partially owned by orthopedic and other surgeons, and urologists.

They concentrate on bypass surgery, angioplasty, knee and hip replacements, stomach stapling, prostate removal and sports medicine -- all of which turn a tidy profit.

None of them serve traditional money-losers for hospitals such as patients who require not procedures but extended medical care -- for AIDS, cancer, diabetes or pneumonia. They don't serve victims of violence, auto accidents, skiing mishaps and fires, none of whom are money-makers. No one is scrambling to open for-profit trauma centers or for-profit AIDS hospitals.

Instead, critics charge, these doctor entrepreneurs are skimming the cream, building palace-like facilities and referring their most healthy and profitable patients to their own hospitals. Sicker, more costly patients continue to go to community hospitals, skewing the mix of patients and putting already financially strapped local hospitals in an even deeper bind.

The California Hospital Assn., which represents the state's 430 general hospitals, thinks destabilization is well underway. "We think [specialty hospitals] create an unfair playing field," says association spokeswoman Jan Emerson.

Don't blame hospitals that try to respond to patients' desires, counters Dr. Alan Pierrot, a Fresno orthopedic surgeon who is the state's pioneer in surgery hospitals. He opened the Fresno Surgery Center in 1988 as a pilot project. In 1993, it became a licensed specialty hospital. He was also the driving force behind Thousand Oaks Surgical Hospital, which opened in 2004.

Such hospitals, he says, may push community hospitals to start paying attention to what patients want. And what would be so awful about that? "Here I am, trying to be a responsible citizen, and having my patients tell me they love it," he says. "And I'm told I've done something bad for my community."

A sense of ownership

It wasn't money that fueled the dreams of a lot of Fresno's surgeons. What they wanted -- and built -- were hospitals they could call their own. They created the concrete embodiment of their every professional fantasy, places where they could work unencumbered by department bureaucracies and where their patients' care and comfort would be the top priority.

One group of surgeons invested in the Fresno Surgery Center. Later, in 2003, a group of cardiac surgeons opened the Fresno Heart Hospital.

They were frustrated at their local hospitals because they kept getting bumped from operating rooms by emergencies, they had to continually explain delays to annoyed patients, and the nursing staff kept changing.

"There was a sense that we were being disenfranchised. It was hard to get our patients in, hard to get the hospital to work with us," says Dr. Robert Chambers, a cardiac surgeon in Fresno who with colleagues opened the Fresno Heart Hospital. "We wanted more nurses, more involvement, more [operating room] time."

In their dream-come-true hospitals, administrators don't scramble to hire nurses. They have the cream of the crop pounding on their doors. Doctors are in charge of scheduling the operating rooms, and when they walk in, they get handed patient files, updates on their conditions -- all in an uncluttered work area.

"You walk into a regular hospital, and you have to find your charts. Nurses and technicians have purses and backpacks spread all over, and there's no place to sit. Then you have to try to find your patient, find out who your nurse is," says Chambers.

"Suddenly, you say, 'By God, I'm going to do it my way.' "

In building the new hospitals, physicians also drew on every patient complaint they'd heard. They hung drapes, not blinds, hid ugly equipment in cabinets designed by architects and hired chefs, not cooks. When Pierrot first stepped into one of the rooms, he was taken aback.

"I felt like I was walking into someone's home," he says. "I felt it was \o7their \f7place, not \o7my \f7place." It was just what he had in mind.

If hospitals, like hotels, could rate four stars, these facilities would be contenders. Doctors, nurses and patients love them.

But economically, they're not thriving. Profits from Fresno's two specialty hospitals have not been high, and lately each has operated in the red because advances in technology and pressure from insurers have resulted in fewer, shorter hospital stays.

Now the federal government is tinkering with how much Medicare will pay to hospitals. With private insurers likely to follow Medicare's lead, its decisions could significantly affect the profitability of the specialty hospital enterprise.

Traditionally, Medicare has paid an average cost per procedure, say, cardiac bypass surgery, and hospitals have learned to balance the books with that formula. An average payment might be too low to cover a patient who developed an infection, or had a complicating condition. But patients in and out of surgery with no complicating problems would cost less than the average payment and compensate for the trickier cases.

The assumption was that if hospitals had a typical mix of very sick and relatively healthy patients, the payments would even out to cover everyone.

But now, with its eye on specialty hospitals, Medicare has begun to adjust that formula. As of October 2005, it has altered what it will pay for many heart procedures to more accurately reflect the severity of a patient's condition. Hospitals will receive less payment for healthier patients and more for sicker ones.

That means specialty hospitals, developed specifically for healthier patients under the old payment plan, will end up with less profit than their business plans anticipated.

Currently, Medicare is examining other payment formulas. In the process, it may begin to shift the long-standing equation that paid doctors and hospitals more for procedures involving scalpels and machines than for care involving medicine and advice.

Better results?

It's a treat to drive to a hospital, find ample parking, potted orchids and a sky-lit reception area. But what patients mostly expect is top-notch care. Proponents of specialty hospitals say the care at their facilities \o7is \f7better, for two reasons: one, fewer bugs; two, more experience.

The vast majority of specialty hospital patients walk in under their own steam. They don't have pneumonia, the flu or other bacteria and viruses. With fewer germs to spread around, there are fewer infections to pick up.

The doctors also reason that these facilities are focused factories, doing high volumes of only a handful of procedures. They cite the medical truism, borne out in numerous studies, that the more of a specific procedure a doctor, nursing team or institution does, the better results they get.

But the contention that specialty hospitals are better because they're specialized is largely unproven. The first study to compare quality between specialty and general hospitals was published last April in the New England Journal of Medicine.

Researchers led by Dr. Peter Cram at the University of Iowa College of Medicine looked at the outcomes of almost 70,000 Medicare patients who had bypass surgery or angioplasty at either general hospitals or specialty centers. They initially found a slightly lower mortality rate for patients treated at specialty hospitals. "But after accounting for the fact that the specialty hospitals were taking care of healthier patients and a higher volume of patients, they really didn't do significantly better," Cram says. "They did about the same."

Beyond excellent care, patients want comfort and privacy -- but in general hospitals, their requests usually fall on deaf ears. "Patients want a private room," Pierrot says. "They want it to feel like home, or at least like a hotel. They want a nurse to answer the bell when they ring. They want a comfortable environment for their visitors. They want good food. And they want control over the temperature, light and sound in their rooms.

"If you take those six things, and match it up against the typical hospital, they often don't get even one. The customer is saying, 'This is what I want' and the hospitals are saying, 'Too bad,' " he says. "Specialty hospitals are a response to that." They are designed to offer six out of six.

Trauma centers' role

Fluffy towels, gourmet meals and flat-screen TVs may be part of what patients want. But what they need in the midst of tragedy is not luxury. It is no-frills grit.

No one would confuse the place that saved Andrew Tatro's life with a hotel. The Level I trauma center at University Medical Center, the only trauma center in the Central Valley region, was built in 1947. It is scheduled to relocate into newer quarters, but financial constraints have slowed the move. For now, everything in the old building looks like it needs a coat of paint.

The hallways are crowded with gurneys, rolling file cabinets and, most weekend nights, patients. One of the elevators has a dial telephone -- technology that puzzles younger patients.

Andrew, son of Sandy and Todd Tatro, was fully insured under his father's health plan when he had a car accident.

It was just before midnight Jan. 23, 2005. Sandy had been pacing the floor and futilely dialing her son's cellphone for two hours when she got the late-night call that every parent dreads. It was the University Medical Center's trauma center with the news that their son was with them. No one could assure her that he would make it.

Andrew, now 18, was on his way home from a movie, alone, sober and on schedule for his 10 p.m. curfew, when he turned a corner that wet, foggy night and lost control of the car. Witnesses said he swerved as if to avoid hitting something and his car went airborne. "He T-boned a tree, and a branch from the tree pushed him into the passenger seat," says Sandy. He suffered multiple head injuries, a broken collarbone, fractured ribs, dental injuries and a ruptured spleen.

University Medical Center used to be the county hospital, and most people in Fresno still think of it as the place where the poor go. That night, the Tatros, who live just a few miles away in Madera, didn't even know where it was. They couldn't have cared less what it looked like.

Andrew had emergency neurosurgery, was in a coma for three weeks, and has had rehabilitation therapy to learn to walk again. But he lived. More than a year later, he's back in high school, working out in a swimming pool and continuing to make improvements.

"He's, quite frankly, a miracle," says Todd Tatro.

Trauma centers like the one that saved Andrew's life are probably the nation's most intense healthcare settings, with patients arriving via ambulance or helicopter after having been pulled from car wrecks, injured in skiing accidents, shot in crimes or crushed in earthquakes. While regular emergency rooms are prepared for heart attacks and broken bones, trauma centers are ready for sudden, multiple-organ damage caused by glass, steel, bullets or malfunctioning parachutes. To qualify as the highest-level trauma center, a facility must have round-the-clock staffing that includes on-call physicians in up to 16 subspecialties, and surgeons specializing in brains, spines, hearts, eyes and bones.

That expertise pays off. Nationally, according to a January study in the New England Journal of Medicine, 7.6% of patients brought to trauma centers died, compared with 9.5% of patients with the same level of injuries treated at non-trauma centers.

Along with emergency rooms, trauma centers are the only segment of America's healthcare system legally required to take all comers, insured or not. But their existence is threatened. Largely because of growing numbers of uninsured patients, 32 trauma centers have closed since 2001, including two in California, leaving 521 nationwide, according to the National Foundation for Trauma Care. The organization believes 10% to 20% are at risk for closure within two years.

Vulnerable trauma centers are just one piece of what many experts see as a looming crisis for acute care hospitals because of an ongoing trend to pull lucrative aspects of healthcare out of hospitals. Ambulatory care centers, outpatient surgery centers -- even physicians buying their own imaging equipment for private offices -- all take money-making procedures out of general hospitals' revenue pools. Specialty hospitals are part of that trend and, critics say, could be the last straw.

In California, 54% of hospitals are operating in the red, says Emerson of the California Hospital Assn. In the last decade, 70 acute care hospitals have closed, 10 in the last two years alone. "They're all closing as a result of financial problems," she says.

Dr. Jerome Kassirer, former editor of the New England Journal of Medicine and author of a 2004 book, "On the Take: How Medicine's Complicity With Big Business Can Endanger Your Health," says he is skeptical of doctors' motives when they set up their own hospitals. "The idea of these hospitals is money," he says. "They'll tell you it's about patient care, but there's a lot of money involved."

Even some physician-investors are concerned. "When this started happening, I was outraged," says Dr. Henning Rasmussen, a cardiologist at Community Medical Centers in Fresno. "A general hospital like this, that takes care of all comers, really takes it in the shorts when patients who are going to do better and pay better go someplace else."

Still, he saw the handwriting on the wall and invested in the Fresno Heart Hospital.

It's not just money that community hospitals are losing. With the opening of each specialty hospital, they may lose critical on-call services of specialists, some of whom cut ties with the local hospital to work only in their own hospitals.

"Fewer high-end specialists need hospital privileges any more," says Dr. Gene Kallsen, chief of emergency medicine at Fresno's University Medical Center. He says it's getting more difficult to find the round-the-clock staffing the center needs among orthopedic surgeons and neurosurgeons, for example.

Some community hospitals are fighting back, avoiding crushing competition by joining the fray. The nonprofit Community Medical Centers of Fresno, worried that an outside corporation would work with local surgeons to open a competing facility, took a defensive stance -- joining the cardiac doctors in their for-profit venture for a specialty heart hospital. The outside corporation was sent packing.

Still, a percentage of the profits in a venture that has yet to turn a profit is hardly enough to give a cash-strapped hospital security.

Jack Light is walking around comfortably on his new knee. At 70, he still travels the country playing in a senior softball league. His insurance covered his care at Thousand Oaks Surgical Hospital, and he loved the food, professional attention of nurses and the medical results.

Like almost all patients, he didn't think about the overall healthcare system when he made his personal decision about where to go for surgery.

"Everyone there knows your situation, what you've had done, what you need," he says. "And I hate to put it this way, but you're not in with a lot of sick people."

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