Physicians fight to end ban on doc-owned hospitals while AHA advocates for status quo
Medical societies are fighting to end a moratorium on physician-owned hospitals, or POHs, while others stress the importance of maintaining status quo to avoid degrading the quality of care.
Earlier this year, Rep. Michael C. Burgess, MD, R-Texas, introduced legislation to repeal the Affordable Care Act’s “needless restriction” on new POHs. The proposal was among several discussed during a House Energy & Commerce Committee hearing Oct. 19, exploring ways to improve healthcare access for Medicare beneficiaries.
Lobbying group Physician-Led Healthcare for America on Oct. 18 praised Burgess and others for continuing the conversation while questioning why the restriction should remain.
“Corporate interests, nonprofit entities, and even lawyers are allowed to own a hospital. However, the individual with the highest level of training, a physician, is prohibited from owning a hospital,” Joseph Alhadeff, MD, an orthopedic surgeon and president of Physician-Led Healthcare for America, said in a statement. “Meanwhile, the Medicare program allows physicians to own ambulatory surgery centers and ancillary services. It is clear that opponents of physician-led hospitals are simply using the 2010 ban as a tool to protect their monopoly.”
On the other side, the American Hospital Association and Federation of American Hospitals this week reiterated strong opposition to ending the ban. Leaders from the two lobbying groups penned an Oct. 18 editorial, listing some of their reasons against any further proliferation of physician-owned hospitals.
POHs do not increase competition, they contend, but can pose risks for patients. The Office of the Inspector General reported in 2008 that two-thirds of such hospitals use 911 as part of their emergency response procedures while 34% use it to obtain medical assistance to stabilize patients, underlining their inability to provide the full range of care. They also allegedly cherry-pick patients, which can create inequities in access and choice, according to a 2023 report commissioned by the two hospital groups. And POHs also do not improve hospital quality, according to another report commissioned by the two hospital groups.
AHA and the FHA refuted a white paper from earlier this year, which concluded that eliminating Medicare’s prohibition on physician self-referral to new POHs and restrictions on their growth would reduce costs and bolster competition.
“When it comes to POHs, the facts are clear—POHs cherry-pick healthy and wealthy patients, they provide limited emergency services and are ill-equipped to respond to public health crises, and they increase costs for patients, other providers, and the federal government,” AHA Executive VP Stacey Hughes and FAH President and CEO Chip Kahn wrote Oct. 18. “It is therefore imperative that we maintain the current law, which protects the Medicare program from expansion of POH practices, and not roll-back protections under false, theoretical arguments,” they added later.
Rep. Michael C. Burgess’ proposed bill would allow physician ownership of rural hospitals for those that are more than a 35-mile drive from the main patient campus or a critical access hospital. It also would allow existing POHs that have been “handcuffed” since the 2010 law to meet their community needs and expand, advocates noted. Eighty-five national organizations have backed the bill, including the American Medical Association and several other influential doc groups.
“Policy experts and national and state organizations agree: Physician-led hospitals offer vital competition in the healthcare landscape, offering numerous advantages in terms of cost efficiency, quality of care and innovative practices,” Alhadeff said Wednesday.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.