Do specialty hospitals promote price competition?

Policy makers continue to debate the correct public policy toward physician-owned heart, orthopedic and surgical specialty hospitals. Do specialty hospitals offer desirable competition for general hospitals and foster improved quality, efficiency and service? Or do specialty hospitals add unneeded capacity and increased costs while threatening the ability of general hospitals to deliver community benefits? In three Center for Studying Health System Change (HSC) sites with significant specialty hospital development--Indianapolis, Little Rock and Phoenix--recent site visits found that purchasers generally believe specialty hospitals are contributing to a medical arms race that is driving up costs without demonstrating clear quality advantages.