News Brief

Physician-owned specialty hospital probe shows lapses

Following the deaths of two patients at specialty hospitals owned by physicians — in both cases, the patients suffered complications following surgery, no physician was on duty, and the specialty hospitals called 9-1-1 to respond — the Senate Finance Committee asked the Office of Inspector General (OIG) to evaluate patient care at 109 physician-owned specialty hospitals in the United States, and the OIG report, released in January, has raised concerns for patient safety.

According to the Centers for Medicare & Medicaid Services (CMS), hospitals receiving Medicare must meet standards that include: having a physician present or on call at all times; 24-hour nursing supervision; written policies for handling emergency care; and not relying on 9-1-1 as a substitute for their own emergency services.

The study drew on four primary sources of data: 1) a review of physician and nurse staffing schedules for eight sampled days; 2) a review of hospitals' staffing policies; 3) a review of hospitals' policies for managing medical emergencies; and 4) structured interviews with administrators at each hospital. The OIG found:

  • About half (55%) of all physician-owned specialty hospitals have emergency departments, the majority of which have only one emergency bed. Medicare does not require that hospitals have emergency departments, but some states do have this requirement.
  • Not all physician-owned specialty hospitals had nurses on duty and physicians on call during the eight sampled days. Based on the review of hospitals' staffing schedules, 93% of physician-owned specialty hospitals met the requirements during the eight sampled days.
  • Administrators report that less than one-third of physician-owned specialty hospitals have physicians onsite at all times. According to administrators, 28% of hospitals have a physician onsite 24 hours a day, seven days a week.
  • Two-thirds of physician-owned specialty hospitals use 9-1-1 as part of their emergency response procedures. According to administrators and the OIG review of hospital policies, 66% of hospitals instruct staff to call 9-1-1 as part of their medical emergency response procedures. Most notably, 34% of hospitals use 9-1-1 to obtain medical assistance to stabilize a patient, a practice that may violate Medicare requirements.
  • Some physician-owned specialty hospitals lack basic information in their written policies about managing medical emergencies. Almost a quarter of all physician-owned specialty hospitals have policies that do not address appraisal of emergencies, initial treatment of emergencies, or referral and transfer of patients.

Based on the findings, the OIG is recommending that CMS:

  • Develop a system to identify and regularly track physician-owned specialty hospitals.
  • Ensure that hospitals meet the current Medicare CoPs that require a registered nurse to be on duty 24 hours a day, seven days a week and a physician to be on call if one is not onsite.
  • Ensure that hospitals have the capabilities to provide for the appraisal and initial treatment of emergencies and that they are not relying on 9-1-1 as a substitute for their own ability to provide these services.
  • Require hospitals to include necessary information in their written policies for managing a medical emergency, such as the use of emergency response equipment and the life-saving protocols to be followed.

The OIG report is available on-line at