Effect of physician ownership of specialty hospitals and ambulatory surgery centers on frequency of use of outpatient orthopedic surgery.

Background: Physician-owned specialty hospitals and ambulatory surgery centers have become commonplace in many markets throughout the United States. Little is known about whether the financial incentives linked to ownership affect frequency of outpatient surgery.

Objective: To evaluate if financial incentives linked to physician ownership influence frequency of outpatient orthopedic surgical procedures.

Design And Setting: We analyzed 5 years of claims data from a large private insurer in Idaho to compare frequency by orthopedic surgeon owners and nonowners of surgical procedures that could be performed in either ambulatory surgery centers or hospital outpatient surgery departments.

Main Outcome Measure: Frequency of use, calculated as number of patients treated with the specific diagnoses who received the surgical procedure of interest divided by the number of patients with such diagnoses treated by each physician.

Results: Age- and sex-adjusted odds ratios indicate that the likelihood of having carpal tunnel repair was 54% to 129% higher for patients of surgeon owners compared with surgeon nonowners. For rotator cuff repair, the adjusted odds ratios of having surgery were 33% to 100% higher for patients treated by physician owners. The age- and sex-adjusted probability of arthroscopic surgery was 27% to 78% higher for patients of surgeon owners compared with surgeon nonowners.

Conclusion: The consistent finding of higher use rates by physician owners across time clearly suggests that financial incentives linked to ownership of either specialty hospitals or ambulatory surgery centers influence physicians' practice patterns.