Limited service hospitals (also referred to as specialty hospitals and physician-owned specialty hospitals) have experienced dramatic growth in recent years. Limited-service hospitals tend to be small with only a few inpatient beds, and focus on providing a minimal set of services, typically profitable specialties, such as low-complexity cardiovascular surgery, cancer care and orthopedics. Limited-service hospitals also tend to treat far fewer Medicaid and uninsured patients than general hospitals, and many do not have an emergency department. Several studies have found that limited-service hospitals tend to primarily treat profitable and less medically complex patients, and unnecessarily increase the volume of procedures with no improvement in quality. Most limited-service hospitals are owned by physicians who may take advantage of an exception to the physician self-referral prohibition (Stark law) to refer their own patients to the hospital in which they have an ownership interest.

Limited-service hospitals have recently experienced many regulatory and statutory hurdles, many supported by CHA. Legislation passed by Congress in 2003 established a moratorium on physician investment in, and referrals to, certain specialty hospitals. However, the moratorium expired in 2006, and limited-service hospital growth has subsequently proceeded at a rapid pace. CHA continues to advocate for a permanent moratorium on limited-service hospitals.