Long-term care hospitals

Long-term care hospitals also had a higher incidence of bedsores and infections than regular hospitals in 2006, the most recent year for which federal data is available.

Fewer than 10 hospitals dedicated to long-term care existed in the early 1980s, according to Medicare officials. But many such hospitals have sprouted since then, driven by Medicare rules that offer high payments for hospitals that treat patients for an average of 25 days or more. Long-term care hospitals now treat about 200,000 patients a year, including 130,000 Medicare patients — at a projected cost of $4.8 billion to the government this year, up from $400 million in 1993.

Unlike other specialized hospitals, like psychiatric or children’s hospitals, long-term care hospitals do not treat specific types of patients or offer services unavailable in regular hospitals. They are defined solely by the fact that they keep patients longer than other hospitals. They are also smaller than a typical hospital, averaging about 60 beds.

Many patients at hospitals that specialize in long-term care are very sick. While usually in stable condition, they may be on dialysis, need a ventilator or have wounds that will not heal. If patients need surgery or suffer serious medical emergencies, they are usually transferred back to general hospitals.

Nontraditional Hospitals

Despite the rapid expansion of long-term care hospitals and the serious illnesses they treat, Medicare has never closely examined their care. Unlike traditional hospitals, Medicare does not penalize them financially if they fail to submit quality data.

Supporters of long-term hospitals say that even without staff physicians, they provide high-quality care and play an important role by treating patients who are too sick for nursing homes but are not improving at traditional hospitals. Hospital intensive care units help patients survive acute illnesses, heart attacks and trauma, but they are not intended to treat patients for weeks or months.

Of course, traditional hospitals can move those patients to regular medical wards for treatment. But under Medicare payment rules, traditional hospitals often lose money on patients who stay for long periods. So they have a financial incentive to discharge patients to long-term hospitals, which then receive new Medicare payments for admitting the patients. Both hospitals benefit financially.

That dynamic, rather than evidence that long-term hospitals benefit patients, has driven their expansion, said Dr. Jeremy M. Kahn of the University of Pennsylvania, who has received a federal grant to study the hospitals. The industry’s growth is an example of how health care companies can exploit the $450 billion Medicare program, he added.

“The U.S. health care system allows unintentional financial incentives to drive sweeping changes,” Dr. Kahn said.

The questions about long-term care hospitals center on the for-profit side of the industry, led by Select and Kindred Healthcare, another publicly traded company.

For-profit long-term hospitals generally spend less on patients and have higher margins than comparable nonprofits, according to data from the Medicare Payment Advisory Commission, a Congressional research agency.

In 2007, for-profit long-term care hospitals had margins of 6 percent on Medicare patients, while regular hospitals lost an average of 6 percent on Medicare patients, according to the commission.

In a presentation to investors last month, Select Medical reported that it improved its margins by monitoring staffing levels and lowering supply costs.

Medicare inspection reports, however, describe preventable patient injuries and deaths, and they portray Select’s hospitals as understaffed and with high turnover.

In the last three years, inspectors have found 22 violations of care standards at 12 Select hospitals so serious that, if uncorrected, could lead Medicare to ban those hospitals from admitting Medicare patients.

Howard McGowan
MaldenSenior