Almost 15 years in the past, the development of doctor-owned hospitals largely floor to a halt. However federal lawmakers now are contemplating payments that might raise present restrictions on doctor possession — a transfer advocates mentioned may improve competitors at a time when regulators are carefully scrutinizing consolidation in healthcare.
A provision within the Reasonably priced Care Act of 2010 restricted the growth of present physician-owned hospitals (POHs) and halted the opening of recent ones. Immediately, solely about 4% of American hospitals are owned by physicians.
The proposed laws (H.R. 977/S. 470), known as the “Affected person Entry to Increased High quality Well being Care Act of 2023,” would repeal that provision. The payments stay in committee for now.
In the meantime, trade teams proceed to debate the proposed laws’s potential impression on healthcare high quality, value, and affected person entry to hospital care.
Lifting present restrictions may dramatically develop the variety of doctor-owned hospitals, now estimated at 250-265 nationally, in keeping with Doctor-Led Healthcare for America (PHA), which advocates for POHs.
Dozens of doctor teams together with PHA argued that ending the restriction would introduce extra competitors amid rising costs, hospital mergers, and different consolidation.
Permitting doctor possession additionally may give struggling rural communities “an alternative choice to take care of native high-quality care and encourage native funding in present hospitals,” proponents wrote in a Wall Avenue Journal op-ed.
The ‘Cherry-Choosing’ Debate
Hospital trade teams counter that POHs are primarily orthopedic and different specialty services that “cherry choose” more healthy, higher insured sufferers and do not compete pretty with common acute-care hospitals.
“They don’t seem to be offering full service,” mentioned Chip Kahn, president and CEO of the Federation of American Hospitals, which represents about 1000 for-profit hospitals. “They don’t seem to be offering emergency rooms. They don’t seem to be taking good care of uninsured sufferers.”
Either side cite stories or different analyses typically funded by or affiliated with their teams. They cannot agree on what number of POHs present common companies vs specialties equivalent to orthopedics.
PHA leaders mentioned barely greater than half of POHs are common service hospitals, pointing to information in a 2015 research. Kahn places the determine at roughly a handful nationally that present the complete gamut of hospital companies.
“There’s loads of robust opinions about physician-owned hospitals and never loads of current information,” mentioned Peter Cram, MD, MBA, a professor of drugs at The College of Texas Medical Department at Galveston, who authored a number of the research revealed previous to 2010.
However Cram is just not shocked that the thought has reemerged. Hospital consolidation during the last decade has ignited discussions about find out how to develop competitors, he mentioned. “In lots of markets, there are a really small variety of very giant well being techniques with huge pricing energy.”
Dueling Research Examine Price, Utilization
Amid the fierce debate, dueling information factors rapidly stack up.
One 2023 evaluation, commissioned by two physician-affiliated teams and based mostly on 2019 Medicare claims information, discovered that the price of care was 8%-15% decrease at POHs than at conventional hospitals. The tutorial researchers, who centered on the 20 costliest diagnostic-related teams handled by 186 POHs, calculated that the worth distinction would have translated to roughly $1.1 billion in Medicare financial savings for 2019.
One other evaluation, additionally revealed final 12 months and commissioned by the American Hospital Affiliation and Federation of American Hospitals, scrutinized affected person acuity, insurance coverage protection, and different elements at 163 POHs vs 3020 non-POHs. POHs had been extra more likely to garner the utmost hospital readmission penalty and handled fewer Medicaid sufferers, 3.5% vs 8.4% on the non-POHs, in keeping with the report by healthcare consulting agency Dobson DaVanzo & Associates.
Earlier than the 2010 restriction, the priority was that hospital possession would incentivize physicians to refer their sufferers there, “or an incentive to overtreat or to prioritize extra worthwhile procedures,” mentioned Katherine Hempstead, a senior healthcare coverage adviser on the Robert Wooden Johnson Basis.
One pre-2010 research, which checked out a number of coronary heart procedures in Medicare sufferers after a specialty cardiac hospital opened in a healthcare area, discovered that the variety of procedures elevated through the subsequent 4 years in contrast with areas who added no new coronary heart applications. For percutaneous coronary interventions — a process designed to open blocked arteries — the rise appeared to happen with sufferers who hadn’t skilled a coronary heart assault, the place the advantages “are often much less clear,” the researchers wrote.
The authors of a associated editorial, who included Cram, commented that the “present findings counsel that doctor possession of specialty hospitals could also be problematic if such possession will increase the usage of companies for sufferers with marginal indications.”
Nonetheless, Cram added in a current interview, it “must be explored as an alternative choice for mitigating [healthcare] consolidation.”
Cram additionally coauthored a peer-reviewed research, revealed final 12 months, that in contrast commercially negotiated costs between POHs and non-POHs for eight companies, together with two ranges of emergency room visits, a spinal injection, and a CT-scan of the stomach and pelvis.
PHO advocates mentioned the research’s findings present that the negotiated costs for seven out of the eight companies ran between 4% and 33% decrease at POHs. (The exception was for a complete metabolic panel.) Opponents famous that on the 156 POHs studied, simply 3% of sufferers had been lined by Medicaid in contrast with about 7% on the different hospitals.
Nonetheless, the decrease costs illustrate how POHs can introduce competitors in a market, mentioned Ge Bai, PhD, CPA, one other research creator. The analysis was supported by a grant from www.PatientRightsAdvocate.org, a nonprofit group that focuses on healthcare worth transparency.
“Allow them to compete, let the affected person select,” mentioned Bai, a professor of accounting and well being coverage at Johns Hopkins College in Baltimore. “Having these newcomers are available, they [the existing hospitals] will likely be beneath stress to carry out higher for sufferers.”
Boosting Rural Entry to Care?
Bai agrees with POH supporters that allowing doctor possession may bolster struggling rural hospitals. Provided that POHs can supply companies at a cheaper price, she mentioned, “they will afford to enter some markets {that a} non-POH will not discover engaging.”
Since 2010, practically 150 rural hospitals have closed or transformed to a extra restricted position, equivalent to offering main care or long-term care companies, in keeping with The Cecil G. Sheps Heart for Well being Companies Analysis in Chapel Hill, North Carolina. Solely 6.8% of POHs are positioned in rural areas, in keeping with the 2023 Dobson | DaVanzo evaluation, vs 24% of non-POHs.
Leaders at PHA offered an inventory of specialty hospital development tasks or growth plans halted by the possession restriction, together with practically 40 hospitals that hadn’t but been accomplished. Some affected tasks had been in rural communities, mentioned Joseph Alhadeff, MD, the group’s president, who feels that native physicians can doubtlessly step in as homeowners if the restriction is lifted.
“Physicians, they wish to deal with their neighborhood — they need the healthcare to be native,” he mentioned. “They do not wish to see individuals touring 2 and three hours to should get to healthcare.”
Kahn dismissed the argument that doctor possession may show to be the savior in rural areas as “fantastical pondering,” noting that rural hospitals usually tend to serve communities with an ageing or lower-income inhabitants primarily lined by Medicare or Medicaid.
“Frankly, Medicare and Medicaid would not pay sufficient for these hospitals to be viable,” he mentioned. “I do not assume there are that many docs on the market which might be going to come back in with some magic system.”
Hempstead would not rule out that proactive rural physicians would possibly step up for his or her native hospital. However too typically rural challenges are intractable, rooted in a declining inhabitants and thus decrease affected person quantity, she mentioned.
Neither does Hempstead maintain a place concerning whether or not increasing doctor hospital possession would enhance value and high quality. However the concept is having its second amid not solely heightened consolidation but in addition physicians’ longstanding perception that they are uniquely certified to innovate in healthcare, she mentioned.
“They’re alleged to be entrepreneurs — that is their unique position,” Hempstead mentioned. “And by not letting them personal hospitals, you are shedding an enormous alternative for physicians clearly but in addition for society as a complete. You might be sort of leaving one of the best gamers on the sidelines— I believe that might be the argument.”