1. The specialty hospitals have significantly lower costs due to lower overhead, high occupancy rates (volume) and greater efficiency because they do only a small number of different procedures many times. This is similar in concept to the high volume focused factory in the manufacturing world.

2. The lower costs are reflected in proportionately lower prices to the consumer / payer vs what general purpose hospitals would charge.

3. If many fewer beds are then needed within general purpose hospitals and the excess beds were removed from the system, payments for low profitability procedures could be raised somewhat to allow the hospitals to breakeven or earn a modest profit (assuming respectable occupancy rates and sound management), and total system costs could be lower because of the significant reduction in the number of beds.

4. To mitigate the potential conflict of interest in referring patients to a facility in which the doctor has a financial interest, he/she could be required to certify in writing the medical necessity (in his or her professional opinion) of the procedure. If a large number of a given procedure are performed relative to the area population compared to other geographies, there should at least be some explaining to do.