Specialty hospitals continue to thrive — and profit

Although much smaller and lesser known, Southern Nevada’s specialty hospitals continued to financially outpace the general hospitals last year.

The 14 local facilities that filed reports with the Nevada Department of Health and Human Services showed an operating profit of $54.7 million in 2011 compared with a $28.8 million loss for the general hospitals, excluding one quarter in which the University Medical Center failed to report. This disparity happened despite the general hospital net revenues, after myriad deductions from the list prices, running eight times larger than their specialty cousins.

Moreover, no specialty hospitals reported operating losses, in keeping with the pattern of previous years. By contrast, the five general hospitals that showed deficits last year marked a recovery from the recent past, when a combination of overbuilding, recession and tighter reimbursement by several sources have injured the bottom lines.

The specialty results do not include the third and fourth quarters for the three Kindred Healthcare Inc. locations, plus the fourth quarter alone is missing from two others.

Much of the difference between the general and specialty breeds arises from the fact that they are much different operations even though both are called hospitals, said Helen Todd, spokeswoman for Birmingham, Ala.-based HealthSouth, which has three properties in Las Vegas.

While general hospitals emphasize certain practices, they are staffed and equipped to take care of a wide variety of conditions. By contrast, specialty hospitals — in keeping with the name — stick to tightly defined areas such as long-term acute care for people not needing full hospitalization but too ill to go home, physical rehabilitation, mental illness and substance abuse.

As a result, said David Tupper, the CEO of Horizon Specialty Hospital, "the biggest single difference is overhead. We have no emergency room, no trauma center, no MRIs."

In addition, hospitals are obligated to treat anyone who arrives at the emergency room, while all admissions to specialty hospitals are pre-arranged by physician referral. This allows specialty hospitals to screen people by their insurance.

"This is no different than the way (general) hospitals do it," said Josh Luke, CEO of HealthSouth Rehabilitation of Las Vegas. "We are open to any payers and take charity care cases."

Sometimes, Tupper said, Horizon will take a patient who cannot pay just to relieve the financial burden of a hospital with which it frequently works.

State statistics show local specialty hospitals wrote off just $6.1 million in bad debt, charity care and discounts for uninsured patients, compared with $1.6 billion for the general hospitals.

On a broader scale, specialty hospitals collected 53 cents of every dollar they billed, compared with 17 cents for general hospitals.

Further, specialty patients have been through extensive treatment, so their conditions are known and generally stabilized. Treatment needed and its cost are harder to predict when someone comes in through the ER. This allows the specialty hospitals to set budgets more precisely.

Contact reporter Tim O’Reiley at toreiley@reviewjournal.com or 702-387-5290.