Reality of physician-ownership ban hitting home for hospitals

Health reform's ban on physician-owned hospitals has so far halted construction on 27 facilities, according to Molly Sandvig, executive director of the Physician Hospitals of America. Another 40 or so physician-owned hospitals are either pushing ahead with construction or have transferred ownership to hospitals, which alleviates the need to be up and running by the Dec. 31 deadline, she adds.

As for the nation's 260 existing physician-owned hospitals, the new law limits expansion and construction, restricts new investments and requires new annual reports to the government, with fines for hospitals that don't disclose physicians' ownership stake on the hospital's website and advertisements.

One of the casualties of the restrictions is McBride Orthopedic Hospital in Oklahoma City, highlighted in an editorial in the Washington Examiner by Rob Bluey, director of the Center for Media and Public Policy at the Heritage Foundation. According to Bluey, the hospital canceled plans for two new operating rooms and a four-bed intensive care unit to supplement its existing 40 acute care beds, 40 rehab beds and six operating rooms as soon as the law was signed. The multi-million dollar project promised to bring competition and more healthcare choices to the community, he says.

And then there's Indiana Orthopaedic Hospital, with 42 inpatient beds and 10 operating rooms on a main campus in Indianapolis. The hospital had spent about $300,000 toward a $47 million expansion and was two-thirds finished with an outpatient facility before halting the construction amid well-founded fears of a federal hold, John Dietz, a spine specialist and chairman of the hospital, told HealthLeaders Media last month. "From the overall perspective, this legislation throws ice water on some of the most valuable and innovative hospitals in the country; they are completely shut off [from the funding]," he said. "These physicians--like us--represent 1 percent ownership-and they have completely turned around many of these hospitals. And that's going on throughout the country."

While supporters of the ban, including the American Hospital Association, say it's necessary to avoid conflicts of interest, physician-owners contend that their vested interest in their hospitals run much deeper than finances. "Our goal is to serve the people sitting in the big hospitals with more dignity and respect--and to get them prompt care," Dr. Yasin Kahn, chief executive of Westfield Hospital in Allentown, Pa., told Bluey, adding that his hospital takes pride in a lower nurse-to-patient ratio than the community hospital and an just a 15-minute wait for the emergency room.

To learn more:
- read this Becker's Hospital Review piece
- here's the Washington Examiner editorial
- read this HealthLeaders Media piece