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Published: Sunday, 2/23/2003

Bill that targets specialty hospitals draws physician's ire

COLUMBUS - From utilities to public schools, Republicans who run the Ohio legislature and have occupied the governor's office for 12 years are the champions of competition. But don't tell that to Dr. Carl Berasi, an orthopedic surgeon who has practiced in Columbus for 18 years.

“I'm used to medicine. I'm not used to politics. In politics, you can say anything about anybody. You can throw all the mud you want. You don't need to have facts or evidence,” Dr. Berasi says.

Dr. Berasi's ire is focused on a bill that state Rep. Jon Peterson, a powerful Republican from Delaware County, introduced last week. The legislation would prohibit physicians and podiatrists from referring patients to in-patient hospital services in which they have a financial interest.

It is aimed at knocking the legs out from under physician-owned, for-profit specialty hospitals, like the one that Dr. Berasi and 29 other physicians are bankrolling in the Columbus suburb of New Albany with Surgical Alliance Corp., based in Nashville, Tenn.

Two years ago, several Toledo area physicians talked about opening a for-profit hospital to serve Medicare, orthopedics, and neurosurgery patients - but it didn't go anywhere, says Dr. William Sternfeld, a surgeon at the Toledo Clinic.

Dr. Berasi said the push for the specialty hospital in New Albany started when OhioHealth, a hospital conglomerate, closed most of a Columbus hospital.

“We really had no place to go,” says Dr. Berasi, who said there are 750 for-profit hospitals around the country, including several in Texas and Florida. “What that means is they're paying taxes and nonprofit hospitals aren't. Can you imagine what our state budget would look like if one-third of our hospitals paid taxes?”

But Mr. Peterson says he wants to make sure patient care always comes first.

“This in no way should be viewed as an anti-competitive measure,” he says.

State law prohibits physicians from referring patients to clinical laboratory services, home health-care services, and outpatient pharmacies in which they have a financial interest. Extending that ban to in-patient hospital services is common sense - especially when those services are “high-profit” like OB/GYN, orthopedics, and cardiac procedures, he says.

“This would remove the conflict of interest between good medicine and good investment,” Mr. Peterson says.

Mr. Peterson has powerful allies, namely the Ohio Hospital Association and Gov. Bob Taft, who has assigned Dr. Nick Baird, director of the state Health Department, to push for the legislation.

Dr. Baird says physician-owned, for-profit hospitals pose a threat to Ohio's nonprofit, community hospitals by skimming off the wealthiest, most profitable patients. The money drain would damage the ability of community hospitals to care for uninsured and underinsured people, and operate poison-control and trauma centers, burn units, and emergency rooms, he says.

Ohio has one physician-owned, for-profit specialty hospital, the Dayton Heart Center, and a second, the New Albany Surgical Hospital, is set to open late this year.

“They will fragment the delivery of health-care services and jeopardize community hospitals' ability to serve the entire needs of that community,” Dr. Baird says.

But Mr. Peterson and Mr. Taft also have powerful foes - the Ohio State Medical Association and physicians like Dr. Sternfeld.

Dr. Sternfeld says he's not interested in starting a for-profit specialty hospital, but he notes that physicians founded some of the nation's most prestigious hospitals, including the Cleveland Clinic and the Mayo Clinic.

The allegation that for-profit specialty hospitals will skim the most profitable patients from community hospitals is wrong, Dr. Sternfeld says. “If you have a hospital that is providing a service, the physicians don't set how much they are going to be reimbursed. The insurance companies determine what they will pay.”

Given the recent spike in malpractice insurance rates and ongoing reimbursement clashes with the insurance industry, Mr. Peterson says he understands why physicians would pursue ownership of specialty hospitals.

“But it places physicians in a very awkward position. Physicians who participate in this arrangement find themselves serving two masters - responsibility mixed with profitability.

“They have to ensure a return on investment to their shareholders. That runs in conflict with their other responsibility, their medical and ethical responsibility to provide health care decisions,” Mr. Peterson says.

But Dr. Berasi, 49, says Mr. Peterson isn't the right choice to supervise the ethics of physicians. Mr. Peterson gave up his law license in 1999 as the state Supreme Court investigated his 1997 drafting of a will for a woman who had Alzheimer's Disease - and whom he never had met. Mr. Peterson also said stress and heart bypass surgery that he underwent in 1999 also were factors in his resignation.

“I would challenge him to explain where he is ethically superior in his behavior,” says Dr. Berasi. “What he is doing would literally cripple the facilities because the reason physicians want to build them is to maintain control over their practices.

“Physicians know medicine. They know patients. They see the impact of their decisions every day. Right now, physicians have very little control over the environment in which they work. They want to be able to provide better patient care,” Dr. Berasi says.



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