Physician-owned hospitals increased just before feds put in limits

hospitals
Hospital.

The number of physician-owned hospitals in one of the most populous states in the union increased significantly before the Affordable Care Act blocked such ownership arrangements nearly six years ago, according to a new study in the journal Health Affairs.

However, the impact on healthcare delivery in Texas may have been limited by such transactions, particularly since facilities owned by doctors tended to be much smaller than the statewide average. Nevertheless, the Lone Star State contains about 40 percent of all physician-owned hospitals in the U.S., according to the study.

The ACA barred Medicare participation of any physician-owned hospitals starting on Jan. 1, 2011, although all such facilities that previously existed were grandfathered in by the federal law.

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The study, conducted by researchers at Texas Christian University, found that 20 physician-owned hospitals were formed in 2010, compared to four under other forms of ownership, and comprised 83.3 percent of new hospital formation.

Between 2004 and 2009, 65.6 percent of all hospital formations were physician-owned entities. Between 2011 and 2013, 40.9 percent of newly formed hospitals in Texas were physician-owned.

As business enterprises, physician-owned hospitals tended to be more efficient than other for-profit hospitals, with 42 percent of their revenue from outpatient procedures, versus 28 percent at other acute care facilities, the study found.

However, physician-owned hospitals are much smaller than other acute care facilities, likely diluting the overall impact of such acquisitions. The mean number of a physician-owned hospital's full-time employees were 276, versus 420 for other hospitals. The mean number of annual admissions at physician-owned facilities was 2,527, versus 4,756 at other hospitals, according to the study.

And in Texas, physician-owned facilities have had their share of difficulties. Forest Park Medical Center, which operates three physician-owned facilities in the Dallas area, filed for bankruptcy protection earlier this year. An additional hospital owned by the chain in San Antonio went bankrpupt last year. The surplus of hospital beds and the greater demand for outpatient care also prompted Christus Southeast Texas Health System to convert some of its inpatient facilities to short-stay centers last year.

- read the Health Affairs study abstract