Effect of Facility Ownership on Utilization of Arthroscopic Shoulder Surgery

Eric M. Black, MD; John Reynolds, BA; Mitchell G. Maltenfort, PhD; Gerald R. Williams, MD; Joseph A. Abboud, MD; Mark D. Lazarus, MD


J Am Acad Orthop Surg. 2018;26(5):177-185. 

In This Article

Abstract and Introduction


Introduction: We examined practice patterns and surgical indications in the management of common shoulder procedures by surgeons practicing at physician-owned facilities.

Methods: This study was a retrospective analysis of 501 patients who underwent arthroscopic shoulder procedures performed by five surgeons in our practice at one of five facilities during an 18-month period. Two of the facilities were physician-owned, and three of the five surgeons were shareholders. Demographics, insurance status, symptom duration, time from injury/symptom onset to the decision to perform surgery (at which time surgical consent is obtained), and time to schedule surgery were studied to determine the influence of facility type and physician shareholder status.

Results: Median duration of symptoms before surgery was significantly shorter in workers' compensation patients than in non–workers' compensation patients (47% less; P < 0.0001) and in men than in women (31% less; P < 0.001), but was not influenced by shareholder status or facility ownership (P > 0.05). Time between presentation and surgical consent was not influenced by facility ownership (P = 0.39) or shareholder status (P = 0.50). Time from consent to procedure was 13% faster in physician-owned facilities than in non–physician-owned facilities (P = 0.03) and 35% slower with shareholder physicians than with nonshareholder physicians (P < 0.0001).

Discussion: The role of physician investment in private healthcare facilities has caused considerable debate in the orthopaedic surgery field. To our knowledge, this study is the first to examine the effects of shareholder status and facility ownership on surgeons' practice patterns, surgical timing, and measures of nonsurgical treatment before shoulder surgery.

Conclusions: Neither shareholder status nor facility ownership characteristics influenced the speed with which surgeons determined that shoulder surgery was indicated or surgeons' use of preoperative nonsurgical treatment. After the need for surgery was determined, patients underwent surgery sooner at physician-owned facilities than at non–physician-owned facilities and with nonshareholder physicians than with shareholder physicians.

Level of evidence: Level III


The emergence and increased use of physician-owned specialty hospitals has spawned intense debate.[1,2] The number of these specialty hospitals has recently increased, providing competition with general hospitals for market share in multiple medical and surgical disciplines.

Opponents of physician-owned specialty hospitals cite unfair referral patterns and suggest that inherent conflicts of interest may hinder the provision of cost-efficient, unbiased care in facilities where physicians may profit from overutilization. Studies have analyzed physician referral patterns between public and physician-owned facilities. Some authors argue that physicians refer healthier patients with better insurance plans to physician-owned facilities and sicker patients with less profitable insurance reimbursements to general hospitals.[3–5] Others have found that physician ownership of facilities may lead to an increase in unnecessary diagnostic and therapeutic procedures.[6–9]

Proponents of physician-owned facilities suggest that specialty hospitals provide better patient outcomes and satisfaction because physicians knowledgeable in a particular field are responsible for organizing and managing care processes.[10,11] Physician-owned facilities allow hospitals to streamline care delivery and minimize inefficiencies while providing healthy competition for general care hospitals, thereby improving the overall system.[12,13] Physicians cite higher provider and employee satisfaction rates that can occur when those with the most experience can closely control the work environment.[2] Finally, specialty hospitals may provide care with lower costs, higher patient satisfaction, and lower complication rates than general hospitals are able to provide.[14]

In our practice, surgeons in a university setting perform surgery at facilities belonging either to a large, multispecialty university hospital or to physician-owned orthopaedic hospitals (where some surgeons are invested shareholders). The purpose of this study was to analyze utilization patterns of physician-owned and non–physician-owned facilities by surgeons with and without an ownership stake in the specialty hospitals. The study was limited to common arthroscopic shoulder procedures. We hypothesized that patient insurance type, indications for surgery, and trials of nonsurgical treatment would be similar in patients treated at university hospitals and for-profit specialty hospitals, and that physicians' shareholder status would not affect therapeutic decisions.