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Group Plans Surgery Facility

Times Staff Writer

A group of doctors and investors has submitted plans to build a $40-million surgical hospital in Loma Linda, a project criticized by those who fear it would draw well-insured patients away from community hospitals.

The 66,000-square-foot, 28-bed hospital proposed on vacant land midway between Loma Linda University Medical Center and Redlands Community Hospital would be called California Heart & Surgical Hospital and would specialize in surgical services, including cardiovascular and orthopedic operations, and recovery care.

Backers describe it as a new kind of hospital that would offer specialized services and a high level of personal care in a small-hospital setting.

“We are not trying to be rebels,” said Allen Gustafson, an orthopedic surgeon from the university medical center who is spearheading the private venture. “We are trying something new. This can be a model for the whole country.”

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But hospital groups, including the California Health Care Assn. and the Hospital Assn. of Southern California, say the proposed facility would be a specialty hospital -- one of a growing number in the nation -- designed to cherry-pick well-insured patients needing expensive procedures, leaving neighboring hospitals to serve the poor and uninsured.

“They are not serving the community,” Jan Emerson, a spokeswoman for the California Health Care Assn., which represents about 500 hospitals statewide, said about the proposed hospital. “They are there to serve a segment of the community that will make their investors wealthy.”

The number of specialty hospitals in the country jumped from 29 in 1990 to 92 in 2003, according to a government study. Most of these hospitals specialize in cardiac, orthopedic, surgical and women’s services -- among the most expensive procedures offered by hospitals, according to the study.

Concerned that specialty hospitals are drawing well-insured patients away from community hospitals, Congress included an 18-month moratorium on them in last year’s Medicare bill to give officials time to study the issue. Critics have complained that doctors who invest in specialty hospitals can refer wealthy patients who need expensive procedures to the specialty hospitals.

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During the moratorium, which runs through June 2005, doctors are forbidden to bill Medicare or Medicaid for services performed at specialty hospitals that are wholly or partly owned by physicians.

Unless it was extended, the moratorium would not affect the proposed Loma Linda hospital, which is not scheduled to open until late next year.

But a spokesman for California Heart & Surgical Hospital said the hospital would not fall under Congress’ definition of a specialty hospital in any case because it would offer more than heart and surgical care.

William Arsenault, a spokesman for the hospital investors, said the hospital would employ 36 doctors who specialize in other services, including thoracic treatment and ear, nose and throat ailments. He said the hospital would include a small emergency room with one bed and one procedure room.

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Mickey Forrest, a representative of the Hospital Assn. of Southern California, said the investors and developers of the proposed hospital had added the small emergency room to escape Congress’ definition of a “specialty hospital,” thus avoiding the moratorium -- a charge Arsenault denies.

Arsenault concedes that the new hospital would compete with local hospitals for patients. But he said the region’s population is growing fast enough to sustain the new hospital without adversely affecting existing medical centers.


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