Clinical Orthopaedics and Related Research®

, Volume 467, Issue 10, pp 2577–2586 | Cite as

The Impact of Physician-owned Specialty Orthopaedic Hospitals on Surgical Volume and Case Complexity in Competing Hospitals

  • Xin Lu
  • Tyson P. Hagen
  • Mary S. Vaughan-Sarrazin
  • Peter Cram
Symposium: ABJS Carl T. Brighton Workshop on Health Policy Issues in Orthopaedic Surgery


Published studies of physician-owned specialty hospitals have typically examined the impact of these hospitals on disparities, quality, and utilization at a national level. Our objective was to examine the impact of newly opened physician-owned specialty orthopaedic hospitals on individual competing general hospitals. We used Medicare Part A administrative data to identify all physician-owned specialty orthopaedic hospitals performing total hip arthroplasty (THA) and total knee arthroplasty (TKA) between 1991 and 2005. We identified newly opened specialty hospitals in three representative markets (Durham, NC, Kansas City, and Oklahoma City) and assessed their impact on surgical volume and patient case complexity for the five competing general hospitals located closest to each specialty hospital. The average general hospital maintained THA and TKA volume following the opening of the specialty hospitals. The average general hospital also did not experience an increase in patient case complexity. Thus, based on these three markets, we found no clear evidence that entry of physician-owned specialty orthopaedic hospitals resulted in declines in THA or TKA volume or increases in patient case complexity for the average competing general hospital.


  1. 1.
    Birkmeyer JD, Sharp SM, Finlayson SR, Fisher ES, Wennberg JE. Variation profiles of common surgical procedures. Surgery. 1998;124:917–923.PubMedGoogle Scholar
  2. 2.
    Casalino LP, Devers KJ, Brewster LR. Focused factories? Physician-owned specialty facilities. Health Aff. 2003;22:56–67.CrossRefGoogle Scholar
  3. 3.
    Casey J. The case for specialty hospitals. Mod Healthc. 2004;34:21–22.PubMedGoogle Scholar
  4. 4.
    Center for Medicare & Medicaid Services. Study of physician-owned specialty hospitals required in section 507(c)(2) of the medicare modernization act of 2003. Center for Medicare & Medicaid Services; 2005.Google Scholar
  5. 5.
    Cram P, Rosenthal GE, Vaughan-Sarrazin MS. Cardiac revascularization in specialty and general hospitals. N Engl J Med. 2005;352:1454–1462.PubMedCrossRefGoogle Scholar
  6. 6.
    Cram P, Rosenthal GE, Vaughan-Sarrazin MS, Wolf B, Katz JN. A comparison of total hip and knee replacement in specialty and general hospitals. J Bone Joint Surg Am. 2007;89:1675–1684.PubMedCrossRefGoogle Scholar
  7. 7.
    Devers KJ, Brewster LR, Ginsburg PB. Specialty hospitals: focused factories or cream skimmers? Issue Brief Cent Stud Health Syst Change. 2003;62:1–4.PubMedGoogle Scholar
  8. 8.
    Fisher ES, Wennberg DE, Stukel TA, Gottlieb DJ, Lucas FL, Pinder EL. The implications of regional variations in Medicare spending. Part 1: the content, quality, and accessibility of care. Ann Intern Med. 2003;138:273–287.PubMedGoogle Scholar
  9. 9.
    Fisher ES, Wennberg DE, Stukel TA, Gottlieb DJ, Lucas FL, Pinder EtL. The implications of regional variations in Medicare spending. Part 2: health outcomes and satisfaction with care. Ann Intern Med. 2003;138:288–298.PubMedGoogle Scholar
  10. 10.
    Fong T. Not so special. Doc ownership in specialty hospitals scrutinized by healthcare panel. Mod Healthc. 2003;33:20–21.PubMedGoogle Scholar
  11. 11.
    Government Accountability Office. Report to the Congress: Physician-owned specialty hospitals. Washington, DC: Government Accountability Office; 2005:1–51.Google Scholar
  12. 12.
    Guterman S. Specialty hospitals: a problem or a symptom? Health Aff. 2006;25:95–105.CrossRefGoogle Scholar
  13. 13.
    Herzlinger RE. Specialization and its discontents: The pernicious impact of regulations against specialization and physician ownership on the US healthcare system. Circulation. 2004;109:2376–2378.PubMedCrossRefGoogle Scholar
  14. 14.
    Hwang CW, Anderson GF, Diener-West M, Powe NR. Comorbidity and outcomes of coronary artery bypass graft surgery at cardiac specialty hospitals versus general hospitals. Med Care. 2007;45:720–728.PubMedCrossRefGoogle Scholar
  15. 15.
    Kahn CN, III. Intolerable risk, irreparable harm: the legacy of physician-owned specialty hospitals. Health Aff. 2006;25:130–133.CrossRefGoogle Scholar
  16. 16.
    Katz JN, Bierbaum BE, Losina E. Case mix and outcomes of total knee replacement in orthopaedic specialty hospitals. Med Care. 2008;46:476–480.PubMedCrossRefGoogle Scholar
  17. 17.
    Katz JN, Losina E, Barrett J, Phillips CB, Mahomed NN, Lew RA, Guadagnoli E, Harris WH, Poss R, Baron JA. Association between hospital and surgeon procedure volume and outcomes of total hip replacement in the United States medicare population. J Bone Joint Surg Am. 2001;83:1622–1629.PubMedCrossRefGoogle Scholar
  18. 18.
    Losina E, Barrett J, Baron JA, Levy M, Phillips CB, Katz JN. Utilization of low-volume hospitals for total hip replacement. Arthritis Rheum. 2004;51:836–842.PubMedCrossRefGoogle Scholar
  19. 19.
    Losina E, Barrett J, Mahomed NN, Baron JA, Katz JN. Early failures of total hip replacement: effect of surgeon volume. Arthritis Rheum. 2004;50:1338–1343.PubMedCrossRefGoogle Scholar
  20. 20.
    Mitchell JB, Bubolz T, Paul JE, Pashos CL, Escarce JJ, Muhlbaier LH, Wiesman JM, Young WW, Epstein RS, Javitt JC. Using Medicare claims for outcomes research. Med Care. 1994;32(7 Suppl):JS38–51.PubMedGoogle Scholar
  21. 21.
    Nallamothu BK, Lu X, Vaughan-Sarrazin MS, Cram P. Coronary revascularization at specialty cardiac hospitals and peer general hospitals in black Medicare beneficiaries. Circ Cardiovasc Qual Outcomes. 2008;1:116–122.CrossRefGoogle Scholar
  22. 22.
    Nallamothu BK, Wang Y, Cram P, Birkmeyer JD, Ross JS, Normand SL, Krumholz HM. Acute myocardial infarction and congestive heart failure outcomes at specialty cardiac hospitals. Circulation. 2007;116:2280–2287.PubMedCrossRefGoogle Scholar
  23. 23.
    Norton EC, Garfinkel SA, McQuay LJ, Heck DA, Wright JG, Dittus R, Lubitz RM. The effect of hospital volume on the in-hospital complication rate in knee replacement patients [see comment]. Health Serv Res. 1998;33(5 Pt 1):1191–1210.PubMedGoogle Scholar
  24. 24.
    Pham HH, Devers KJ, May JH, Berenson R. Financial pressures spur physician entrepreneurialism. Health Aff (Millwood). 2004;23:70–81.CrossRefGoogle Scholar
  25. 25.
    Quan H, Sundararajan V, Halfon P, Fong A, Burnand B, Luthi JC, Saunders LD, Beck CA, Feasby TE, Ghali WA. Coding algorithms for defining comorbidities in ICD-9-CM and ICD-10 administrative data. Med Care. 2005;43:1130–1139.PubMedCrossRefGoogle Scholar
  26. 26.
    Reilly P. Picking patients. GAO: specialty hospitals serve fewer uninsured. Mod Healthc. 2003;33:6–7.Google Scholar
  27. 27.
    Rosenthal GE, Harper DL, Quinn LM, Cooper GS. Severity-adjusted mortality and length of stay in teaching and nonteaching hospitals. Results of a regional study. JAMA. 1997;278:485–490.PubMedCrossRefGoogle Scholar
  28. 28.
    Schneider JE, Miller TR, Ohsfeldt RL, Morrisey MA, Zelner BA, Pengxiang L. The economics of specialty hospitals. Med Care Res Rev. 2008;65:531–553; discussion 554–563.PubMedCrossRefGoogle Scholar
  29. 29.
    Shahian DM, Blackstone EH, Edwards FH, Grover FL, Grunkemeier GL, Naftel DC, Nashef SA, Nugent WC, Peterson ED. Cardiac surgery risk models: a position article. Ann Thorac Surg. 2004;78:1868–1877.PubMedCrossRefGoogle Scholar
  30. 30.
    Shaw RE, Anderson HV, Brindis RG, Krone RJ, Klein LW, McKay CR, Block PC, Shaw LJ, Hewitt K, Weintraub WS. Updated risk adjustment mortality model using the complete 1.1 dataset from the American College of Cardiology National Cardiovascular Data Registry (ACC-NCDR). J Invasive Cardiol. 2003;15:578–580.PubMedGoogle Scholar
  31. 31.
    Specialty Hospitals. Specialty Hospitals: geographic location, services provided and financial performance. Vol 04-167. Washington, DC: General Accounting Office; 2003:1–41.Google Scholar
  32. 32.
    The Dartmouth Institute. The Dartmouth Atlas of Healthcare. Available at: Accessed April 5, 2009.
  33. 33.
    U.S. Census. U.S. Census 2000 Data. Available at: Accessed January 20, 2008.
  34. 34.
    Voelker R. Specialty hospitals generate revenue and controversy. JAMA. 2003;289:409-410.PubMedCrossRefGoogle Scholar
  35. 35.
    Welch WP, Miller ME, Welch HG, Fisher ES, Wennberg JE. Geographic variation in expenditures for physicians’ services in the United States. N Engl J Med. 1993;328:621–627.PubMedCrossRefGoogle Scholar
  36. 36.
    Wilson BC. My hospital was doomed. The Wall Street Journal. January 5, 2006:A, 20.Google Scholar

Copyright information

© The Association of Bone and Joint Surgeons® 2009

Authors and Affiliations

  • Xin Lu
    • 1
  • Tyson P. Hagen
    • 1
    • 2
  • Mary S. Vaughan-Sarrazin
    • 1
    • 2
  • Peter Cram
    • 1
    • 2
  1. 1.Division of General Internal Medicine, Department of Internal MedicineUniversity of Iowa Carver College of Medicine, Iowa City VA Medical CenterIowa CityIAUSA
  2. 2.Center for Research in the Implementation of Innovative Strategies for Practice (CRIISP), Iowa City Veterans Administration Medical CenterIowa CityUSA

Personalised recommendations