by Marene Gustin
Daily Court Review
On March 8 the House of Representatives passed the Paul Wellstone Mental Health and Addiction Equity Act of 2007, a bill sponsored by U.S. Rep. Patrick Kennedy, D-R.I to safeguard the rights of the mentally ill.
But inside the text of the bill, specifically Section 6 of H.R. 1424, is a funding mechanism for the increased coverage that would severely restrict physician-owned facilities, mandating that no physician can own more than two percent of the business and no more than 40 percent in aggregate.
“Name one other industry where employees aren’t allowed to have a stake in their industry,” said Doug Abel, director of public affairs with Harris County Medical Society. “If the doctors believe they can build a better mousetrap, then why can’t they put their own money behind it?”
A statement from the Texas Medical Association concurred: “TMA strongly supports responsible physician investment in technology, facilities, services or equipment. The focus should be not on who owns the medical facility —a physician, a nonprofit entity, or a for-profit company — but on the quality of the facility and appropriateness of patient care.”
While the White House has voiced opposition to the current bill and the restrictions on physician-owned hospitals, this type of legislation isn’t new. In 2003 Congress passed a moratorium on new physician-owned facilities that lasted until 2006. This, despite the fact that a Congressional report by the Centers for Medicare and Medicaid Services and a University of Iowa study in 2007 found that patient care and outcomes were better in physician-owned facilities.
“You have to look at who is going to benefit from this,” Dr. Keith Bourgeois, an eye surgeon who is on the board of directors of St. Joseph Medical Center and is the hospital’s chief of staff elect, said. “And it’s for-profit hospitals without physician ownership that want to get rid of the competition.”
Most proponents of ending physician-owned facilities talk about the problems with self-referrals and lack of indigent care, particularly with specialty surgical centers and diagnostic clinics owned by physicians. But the proposed federal legislation makes no distinction between those and full-service hospitals.
“They’re using too broad a brush trying to lump hospitals in with those,” said Bourgeois.
SJMC, long known simply as “St. Joes,” the downtown hospital founded by the Sisters of Charity of the Incarnate Word in 1887, was sold in August of 2006 to Hospital Partners of America, a privately-held healthcare company that partners with physicians to own and operate general acute care hospitals in the U.S. Besides SJMC, HPA operates Shasta Regional Medical Center in California, the Austin Surgical Hospital and the two-campus River Oaks Hospital, formerly Twelve Oaks Hospital here in Houston.
“St. Joes has been a success story,” Bourgeois, himself an investor, said. “The hospital has made money every quarter since the sale.” SJMC posted an $8 million profit the first quarter in December 2006. While the provisions in H.R. 1424 don’t specifically apply to SJMC — which is currently only about 20 percent physician owned — Bourgeois fears it’s a “foot in the door” that could eventually affect SJMC.
SJMC isn’t the only physician-owned facility in Harris County. Estimates put physician-owned surgery centers in the area around 80 and there are a few other hospitals, including the state-of-the-art, 72-bed, acute care University General Hospital in the Texas Medical Center. But none garnered the criticism that came when HPA bought the hospital they renamed SJMC and turned in into a physician-owned, for-profit.
“People don’t realize that we still provide indigent care,” Dr. Bourgeois said. “And, in fact, we’re still a Catholic hospital, we got permission from the Vatican to have a Catholic priest and keep the chapel open. We’re just a for-profit Catholic hospital now. “
HPA and the physician owners have also been able to pump funds into the ageing 1.2-million-square-foot facility, including a new wound care center, a short-stay pediatric unit, blood conservation services and new PET and CT scanners.
“Those alone cost more than $5 million,” Bourgeois said. “And we’re gutting and renovating an entire floor of the George W. Strake Building, plus we’re getting Luby’s to come in and replace the hospital cafeteria on the ground floor. We’re really excited about that. It will be open to the public with a street entrance but it will also serve the patients. Before the cafeteria had set hours for meals, now if a patient arrives after dinner they can order from Luby’s anytime. They don’t have to eat a bag of potato chips.”
Bourgeois, like many of the doctors at SJMC, is pleased with the physician participation. When HPA first offered shares, or “units”, to physicians, 77 out of 300 doctors ponied up close to $4 million to invest at $25,000 a unit. Today there are more than 100 doctors involved and a waiting list to buy units. The last time the medical center offered units they were selling at $30,000 each.
“When you’re talking about hospitals, it should be about quality of care,” Dr. Bourgeois said. “No matter who owns the hospital.”