Embargoed Until:
March 18, 2008
12:00 a.m. Eastern Time



Christopher Fleming

Physician-Owners Of Ambulatory Surgical Centers Siphon Off High-Paying Privately Insured Patients, Say Researchers

In Health Affairs Web Exclusive, Gabel And Colleagues Warn Of Threat To Safety Net

Bethesda, MD -- Physicians who refer the most patients to physician-owned ambulatory surgical centers disproportionately send privately insured patients to these ASCs while sending Medicaid enrollees to hospital outpatient departments, according to a new study of referral patterns in the Pittsburgh and Philadelphia metropolitan areas, published today as a Health Affairs Web Exclusive. http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.3.w165

The study was designed to test whether having an ownership stake in an ASC would affect the types of patients a physician would refer to the facility. Because no public records identify physician-owners of ASCs, the study used high numbers of referrals to physician-owned ASCs as a proxy for ownership: Lead author Jon Gabel and colleagues analyzed the referral patterns of physicians who accounted for the top 50 percent of physician-referrers to each physician-owned ASC. The researchers compared referral patterns for these physicians with the referral patterns of high referrers to hospital outpatient departments and nonphysician-owned ASCs.

“Hospitals have traditionally used profits from privately insured patients to subsidize care for uninsured patients and Medicaid enrollees. The worry has been that physicians with ownership stakes in ASCs would unravel this safety net by directing lucrative patients to their own facilities while sending low-paying patients elsewhere. Based on our findings, that’s exactly what’s happening, and the threat to the safety net grows as the role of physician-owned ASCs in our health care system increases” said Gabel, a senior fellow in the Washington, D.C., office of the National Opinion Research Center (NORC), which is affiliated with the University of Chicago.

Gabel and his colleagues looked at the Pittsburgh and Philadelphia areas because Pennsylvania has both a large number of physician-owned ASCs and a requirement that all ASCs and hospital outpatient departments submit discharge abstracts. They found that in calendar year 2003, the top 50 percent of physician-referrers to physician-owned ASCs in the two metropolitan areas referred strikingly few Medicaid and self-pay/indigent patients either to the physician-owned ASC or to other facilities. Even though 11 percent of Pennsylvanians are enrolled in Medicaid and 10 percent of the state’s population is uninsured, Medicaid patients made up only 1.4 percent of all referrals for these high referrers/physician-owners, and self-pay indigent patients accounted for only 1.8 percent of referrals for this group.

Medicaid Patients Are Steered Away From Physician-Owned ASCs
At Twice The Rate For Nonphysician-Owned Facilities

When high referrers to physician-owned ASCs did refer Medicaid patients, they sent about 55 percent to the physician-owned ASC but almost half (about 45 percent) to hospital outpatient departments. In contrast, these physicians sent about 92 percent of patients with more lucrative commercial and Blue Cross insurance to physician-owned ASCs and only about 8 percent to hospital outpatient departments. All told, these high referrers/physician-owners at physician-owned ASCs directed lower-paying Medicaid patients away from their affiliated ASCs and to hospital outpatient departments at a rate about thirty-six percentage points higher than they directed patients with higher-paying private insurance to outpatient departments.

For top referrers to hospital outpatient departments and nonphysician-owned ASCs, the referral gap was much smaller. The top 50 percent of physician-referrers to hospital outpatient departments sent virtually all their patients to these facilities, regardless of insurance status, and in fact were slightly more likely to send a commercially insured patient than a Medicaid enrollee to a nonhospital facility. Top referrers at nonphysician-owned ASCs were more likely to refer Medicaid patients than commercially insured patients to other facilities, but the gap was only about half as large as it was for top referrers to physician-owned ASCs.

Self-Pay Patients Referred To Physician-Owned ASCs
Were Generally Insured Patients Seeking Uncovered Cosmetic Surgery

The top physician-referrers to physician-owned ASCs also sent 98 percent of patients classified as self-pay/uninsured to physician-owned ASCs. However, most of these patients received cosmetic surgery, which suggests that they were insured patients receiving services not covered by their health plans.

Even though Medicaid covers 11 percent of Pennsylvanians, in total Medicaid enrollees accounted for only 3 percent of patients at physician-owned ASCs in the Pittsburgh and Philadelphia areas in 2003. “Just as 11 a.m. on a Sunday morning might be the most segregated hour of the week in the United States, perhaps ASCs are the most payer-segregated component of our health care system,” Gabel and coauthors write.

After the embargo lifts, the article by Gabel and colleagues will be available online at


Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.


©2008 Project HOPE–The People-to-People Health Foundation, Inc.