General Hospitals, Specialty Hospitals and Financially Vulnerable Patients

In the past decade, the rapid growth of specialty hospitals focused on profitable service lines, including cardiac and orthopedic care, has prompted concerns about general hospitals’ ability to compete. Critics contend specialty hospitals actively draw less-complicated, more-profitable patients with Medicare and private insurance away from general hospitals, threatening general hospitals’ ability to cross-subsidize less-profitable services and provide uncompensated care. A contentious debate has ensued, but little research has addressed whether specialty hospitals adversely affect the financial viability of general hospitals and their ability to care for low-income, uninsured and Medicaid patients. Despite initial challenges recruiting staff and maintaining service volumes and patient referrals, general hospitals were generally able to respond to the initial entry of specialty hospitals with few, if any, changes in the provision of care for financially vulnerable patients, according to a new study by the Center for Studying Health System Change (HSC) of three markets with established specialty hospitals—Indianapolis, Phoenix and Little Rock, Ark. In addition, safety net hospitals—general hospitals that care for a disproportionate share of financially vulnerable patients—reported limited impact from specialty hospitals since safety net hospitals generally do not compete for insured patients.