Nueterra Healthcare - David Ayers

Nueterra wages battle: Physician-owned centers take on opponents
Written by Loren Stanton, Staff writer, Sun Publications

The health care landscape is shifting, and one growing new segment of the medical industry hopes it is not undermined in the process.

Physician-owned hospitals and surgical centers have proliferated in the past decade, diverting many patients and medical procedures away from treatment at traditional community hospitals. Whether that is a good or bad thing depends on your perspective.

Critics in parts of the hospital industry as well as some political circles want to put new restrictions on the profit and growth of doctor-owned facilities because they see them as unfair competition that threatens the well-being of community hospitals.

Leawood-based Nueterra Healthcare, the management company for a number of hospitals and surgical centers around the country, is among those actively opposing any legislative efforts that it sees as potentially detrimental to physician-owned treatment facilities.

Currently, the company is behind congressional initiatives aimed at preventing a cut in the Medicare reimbursements that physician-owned clinics receive. Reimbursement levels for such centers have declined steadily in recent years from a high of 86 percent to the current 59 percent. Nueterra and others in that industry say they do not object to reimbursement rates that are less than those hospitals receive. But they say that further cuts could jeopardize these new centers and potentially deny patients a medical care option that has become increasingly popular with many patients.

Supporters add that because these physician operations receive lower Medicare payments, the financially strapped federal health insurance program is saved millions of dollars.

There currently are almost two dozen physician-owned ambulatory surgery centers, or ASCs, in Johnson County. That count includes two headache and pain centers. The only Nueterra-managed facility in the county is the St. Luke's South Surgery Center.

ASC advocates say they offer more efficient and less costly care for their patients. That is a claim that ASC critics usually will concede. It is the reasons for those savings that detractors find objectionable. They maintain that the centers concentrate on higher-profit procedures.

"Limited-service hospitals put community hospitals' ability to care for everyone else at risk," said Cindy Samuelson, a spokesperson for the Kansas Hospital Association.

"As (these) hospitals cherry-pick the most healthy, most profitable and fully insured patients, full-service community hospitals will be stretched to the breaking point."

That breaking point could be reached, she said, because the community hospital must continue providing essential services such as emergency departments, burn units, trauma care and care for the uninsured. Those services traditionally have been subsidized by the higher-profit treatment and care that now is gravitating to the physician-owned facilities, she said.

Jim Davidson, president of Nueterra Equity Partners, does not deny or apologize for the role the physicians' facilities play.

"We don't hide the fact that we are not all things to all people," Davidson said.

Nueterra and other ASC advocates cite some studies showing that community hospitals ultimately benefit from competition created by doctor-owned centers. They say the hospitals end up being more competitive, more efficient and more profitable.

Samuelson said she has heard that argument but never seen such research, and she remains unconvinced.

"This practice inequitably shifts patient care away from community hospitals and endangers the safety net for our nation's most vulnerable populations," Samuelson said.

Talk of putting a halt to physician-owned hospitals and surgical centers naturally troubles and frustrates those in the business.

"We do the same things (as hospitals), it's cheaper, there are fewer negative outcomes, and the patients like it better," said John Schario, Nueterra CEO.

The criticisms are seen by Nueterra officials as being inconsistent with calls these days for innovations and cost-cutting in health care.

Just because the centers carve out a niche of patient care should not make the concept a bad thing, they said.

"Can you name another industry where specialization is not a good thing?" Davidson said.

Physicians usually do not own ASCs outright. Private investors commonly are also part of an ownership group.

Still, advocates say that having a stake in the business end of things is beneficial both for the owner-physicians and their patients.

"They (doctors) have control over their surgical lives. In a hospital they have no control except as a staff member," Schario said.

But critics contend that there are conflict of interest dangers in these arrangements. What is to keep the doctors, opponents ask, from referring patients to their own clinics for unnecessary procedures?

Davidson said physicians and surgeons must document their reasons for procedures and treatments whether conducted at a hospital or a privately owned clinic.

Brian Levinson, vice president of marketing for Nueterra, said that of all the research done on the pros and cons of ASCs, he knows of no study documenting that ethical problems have been found involving doctors referring patients to their own centers.

A study just released for the Ambulatory Surgery Center Association by KNG Health Consulting concluded that "ASCs do not result in a higher overall surgical volume."

If the opponents of ASCs were to succeed in undermining them or having them eliminated, the ramifications could be severe, Schario said.

The centers now are so well-established and so heavily used, he said, that hospitals would be unable to handle the patient load if ASCs suddenly went away.

Levinson also cited statistics indicating that the economic impact would be considerable if the centers ceased operation.

Nueterra reports there currently are 64 ASCs in Kansas that have a total of 1,100 employees and a combined estimated payroll of $40 million. There also are 21 physician-owned hospital in the state with 1,890 employees and $84 million in payroll. In the 3rd Congressional District, which includes Johnson County and parts of Wyandotte and Douglas counties, there are 24 ASCs with an estimated payroll of $12 million.

U.S. Rep. Dennis Moore's office did not respond to requests for information regarding Moore's position on issues related to physician-owned medical facilities.

Samuelson said the association is not calling for the closing of existing physician-owned centers but an end to their expansion. She also said that many of the ASC jobs are filled by people who formerly worked at community hospitals in positions that subsequently were not re-filled.

Contact Loren Stanton at 385-6068 or lorenstanton@npgco.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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