'Niche' Providers - Blast Fax

Lincoln General Hospital, Ruston, LA

Niche providers drain community health services
No matter what, no matter when, America's community hospitals are there, keeping the promise that the full spectrum of health care services will be there, 24/7, when needed. Americans expect it … and community hospitals deliver.  BUT, physician-owned boutique hospitals - “niche providers” - undermine the mission of community hospitals by providing only the most highly profitable services to the least severely ill patients.

Lincoln General Hospital, a 160-bed full-service community hospital in Ruston, LA, is facing a major threat, and it's only 200 feet away: a new boutique surgical center - the Green Clinic Surgical Hospital - being built by a 40-physician multi-specialty group practice. As a result, Lincoln General expects to lose much of its surgery business … a key loss of revenue that can harm the community hospital's ability to continue providing money-losing but important services like the emergency department. The new surgical facility's doctors have privileges at the community hospital - in fact, they make up nearly 85% of the hospital's medical staff and are responsible for the majority of admissions - and they are sure to refer surgical patients to their own facility. In 2001, Lincoln General earned a healthy $1.6 million margin. But when the surgical facility opens, the community hospital will struggle to break even. After a candid discussion, Standard & Poor's changed its outlook on Lincoln from stable to negative, calling the loss of services “a direct threat to Lincoln's long-term financial health.” And Lincoln is losing more than dollars - experienced nursing and technical staff are being lured away by big salary hikes offered by the specialty facility. For more contact Lincoln General CEO Tom Stone at (318) 254-2453.

The business model for niche providers is one in which owner- physicians refer patients to facilities in which the physicians have an ownership interest – heightening concern about conflict of interest in clinical decision-making.

  • Steering profitable cases or well-insured patients to niche providers diverts revenue from full-service community hospitals … revenue that is critical to
    keeping open money-losing services that communities need, like trauma centers, burn units and emergency departments. 
  • Hospitals lose money every day caring
    for people with complex health needs
    and little or no health insurance. Without
    revenue from profitable services to help
    offset this cost, how can hospitals continue
    caring for those who are truly in need? 
  • The Senate version of the Medicare Prescription Drug Benefit and Modernization Act of 2003 begins to address the problem by prohibiting physicians from referring patients to a specialty facility in which they have an ownership interest.

Senators and Representatives:  Help community hospitals keep the promise of care by protecting access to critical services.  Retain the Breaux-Nickles-Lincoln language on niche providers in the final Medicare Prescription Drug Benefit and Modernization Act of 2003.


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