Physician-owned hospitals have been a contentious topic in healthcare for years, especially since the enactment of the Affordable Care Act, which placed limits on new and expanded physician ownership of hospitals.
Advocates argue that these hospitals offer significant benefits in terms of cost savings and patient outcomes, while opponents claim that they create an uneven playing field, primarily serving healthier, better-insured patients.
Here are 10 key notes to know:
1. Until 2010, physicians could own hospitals. However, the ACA closed a critical ownership exception, banning new POHs and limiting the expansion of existing ones. Only physician-owned hospitals that were grandfathered in at the time could continue to operate, but even these faced restrictions on growth.
2. Legislators are currently considering removing the ACA that limits expansion and opening of physician-owned hospitals. This potential policy shift, reported by Medscape on May 13, could significantly impact the landscape of physician-owned facilities.
3. According to January 2024 data from CMS cited by a study, among 5,221 hospitals, 40.7% have some sort of healthcare professional ownership while 84.9% have some sort of organizational ownership.
4. Family practice and internal medicine are the most common specialties among physician-owners, together comprising about 25% of all physician ownership in hospitals. Orthopedic surgeons make up 9.5% of ownership, ranking third.
5. There are more than 250 physician-led hospitals in the U.S., according to a report from Physician-Led Healthcare for America.
6. POHs saved Medicare approximately $1.1 billion in 2019, according to a recent report analyzing expenses related to 20 of the most costly conditions for Medicare patients. This cost-saving aspect is one of the primary arguments in favor of lifting restrictions on POHs.
7. Medicaid discharges represent only 3.5% of POHs' total patient discharges, in contrast to 8.4% for traditional hospitals, according to a report from American Hospital Association. The report contends that POHs generally treat a population that is younger, less complex or comorbid, and less likely to be dually eligible or non-white. These are claims that the American Medical Association refutes.
8. The federal government saved an estimated $500 million over 10 years after closing Stark law's "whole hospital" exception loophole, which allowed physicians to refer patients to hospitals in which they had an ownership interest in the entire facility, according to the Congressional Budget Office. This statistic was cited in an Oct. 18 blog post written by the American Hospital Association as a way POHs allegedly increase government costs.
9.POHs have been shown to lower total payments by 8%-15% for some of the costliest diagnostic groups when compared to traditional hospitals.
10. Industry groups remain divided over the implications of POHs. Supporters claim that easing POH restrictions could improve competition, particularly amid rising hospital consolidation, and increase healthcare access in rural areas. Opponents, however, argue that POHs "cherry-pick" healthier, well-insured patients, which they say leads to unfair competition with full-service hospitals.