Limiting physician-owned hospitals could stall competition, quality care

Physician-owned hospitals (POHs) can provide consumer choice, innovation, high-quality care, and patient satisfaction. Yet, restrictions in the reform law could virtually halt future expansion.

By eliminating the competition POHs bring to the healthcare industry, economic activity and patient access to quality care will be jeopardized, cautions the Texas Public Policy Foundation in its new report.

According to the report, the growth of POHs often forces competing hospitals to improve their own performance, productivity, and ef­ficiency, which translates to lower costs and better quality.

"[S]everal community hospitals in these markets made constructive improvements, including improved operating room sched­uling and upgrades in equipment and supplies. This is clear evidence that many of the community hospitals are reacting to the competitive pressures from POHs in a way that benefits both patients and doctors," the report states.

Restricting POH growth also will affect local economies, as the 260 POHs serving patients nationwide employ more than 75,000 full- and part-time workers, and each pays more than $3 mil­lion in federal, state, and local taxes every year.

That economic activity could be weakened as the growth restrictions in the reform law are leading some hospitals to remove physician ownership, including two Indiana University Health facilities.

Instead of preventing new or expanding physician-owned hospitals from qualifying for Medicare, the report suggests an overhaul of the "complex and confusing health care payment system."

For more:
- read the report (.pdf)