Specialty hospitals typically offer a higher level of care than general hospitals because specialization allows them to be more effective and efficient. They typically have more nurses per patient, lower infection rates and high levels of patient satisfaction.

Studies by the federal government and others disprove Newt Gingrich's charge that doctors are steering patients to specialty hospitals for profit ["A Health Threat We're Not Treating," op-ed, Nov. 12]. Physicians refer patients to specialty hospitals because they feel confident in the quality of care that can be delivered in such facilities.

Mr. Gingrich would require specialty hospitals to treat all patients, but specialization in markets, including health care, is not only by service or product, but by customer need. A given specialty hospital may be efficient and capable of treating patients who are less severely ill, but some sicker patients may be better off being treated at a full-service hospital. Forcing specialty hospitals to treat patients who would be better treated elsewhere is not in the best interest of patients.

The real solution is exactly what has been proposed by the specialty hospitals: Adjust payments to better reflect the severity of patients' conditions. This would eliminate whatever small level of cherry picking may exist without endangering patients.

SEAN PARNELL

Vice President of External Affairs

Heartland Institute

Chicago

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Concern about physician investment and ownership in limited-service specialty hospitals is justified, but it threatens to obscure a more fundamental problem.

Although Congress enacted legislation in the late 1980s and early 1990s to prohibit physicians from owning or investing in services to which they referred patients, exceptions were made, for example, for entire hospitals or for in-office ancillary services. Over the past 15 years, however, what were intended to be narrow exceptions became blueprints for physicians to get around the law. These arrangements have exploded as physicians seek to offset lower fees and higher liability costs.

Physical therapy is particularly vulnerable to for-profit referral arrangements because Medicare requires that a beneficiary be under the care of a physician for covered physical therapy services. This allows physicians to refer patients to physical therapy services they own, creating a financial incentive for them to refer more patients and prescribe more services.

Newt Gingrich is right. Congress should set the rules for fair competition. But it should not limit the remedy to one health care sector. A free-market system should not enable physicians to profit from referring patients to services in which they have invested.

BEN F. MASSEY Jr.

President

American Physical Therapy Association

Alexandria