Costs May Be Higher at Doctor-Owned Hospitals

Ownership is linked to more frequent use of surgery, diagnostic and ancillary services

MONDAY, July 14 (HealthDay News) -- At physician-owned specialty hospitals, financial incentives linked to ownership may significantly alter practice patterns in ways that increase patient health care expenditures, according to an article published in the July issue of Medical Care.

Jean M. Mitchell, Ph.D., of Georgetown University in Washington, D.C., and colleagues studied the practice patterns of physician owners of specialty hospitals in Oklahoma, before and after ownership. They compared these patterns with those of physician non-owners who treated similar cases over the same time period in Oklahoma markets without physician-owned specialty hospitals. To evaluate the differences, they constructed episodes of care for injured workers with a primary diagnosis of back/spine disorders.

The researchers found that physician ownership was associated with significantly more frequent use of surgery, diagnostic and ancillary services for injured workers. They also found that there were no changes in the frequency of such use among similar back/spine cases treated by physician non-owners.

"Given the substantial increases in utilization linked to physician ownership, the costs of treating such cases are likely to be significantly higher in comparison to those who obtain care from nonself-referral providers," the authors conclude. "These findings should be of interest to policymakers and third-party insurers who are concerned about increased utilization associated with physician self-referral arrangements and its subsequent contribution to escalating health care expenditures for individuals with good insurance coverage."

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