Health Law Bans New Doctor-Owned Hospitals

Health Law Bans New Doctor-Owned Hospitals, Blocks Expansion of Existing Ones
Monday, April 12, 2010
By Fred Lucas, Staff Writer

(CNSNews.com) – The new health care overhaul law – that promised increased access and efficiency in health care – will prevent doctor-owned hospitals from adding more rooms and more beds.

These hospitals are advertised as less bureaucratic and more focused on doctor-patient decision making. However, larger corporate hospitals say doctor-owned facilities discriminate in favor of high-income
patients and refer business to themselves.

The new rules single out physician-owned hospitals, making new physician-owned projects ineligible to receive payments for Medicare and Medicaid patients.

Existing doctor-owned hospitals will be grandfathered in to get government funds for patients but must seek permission from the
Department of Health and Human Services to expand.

The get the department’s permission, a doctor-owned hospital must be in a county where population growth is 150 percent of the population growth of the state in the last five years; impatient admissions must be equal to all hospitals located in the county; the bed occupancy rate must not be greater than the state average, and it must be located in a state where hospital bed capacity is less than the national average.

These rules are under Title VI, Section 6001 of the Patient Protection and Affordable Care Act. The provision is titled “Physician Ownership and Other Transparency – Limitations on Medicare Exceptions to the
Prohibition on Certain Physician Referral for Hospitals.”

More than 60 doctor-owned hospitals across the country that were in the development stage will be canceled, said Molly Sandvig, executive director of Physician Hospitals of America (PHA).

“That’s a lot of access to communities that will be denied,” Sandvig told CNSNews.com. “The existing hospitals are greatly affected. They can’t grow. They can’t add beds. They can’t add rooms. Basically, it stifles their ability to change and meet market needs. This is really an unfortunate thing as well, because we are talking about some of the
best hospitals in the country.”

The organization says physician-owned hospitals have higher patient satisfaction, greater control over medical decisions for patients and doctor, better quality care and lower costs. Further, physician-owned hospitals have an average 4-1 patient to nurse ratio, compared to the national average of 8-1 for general hospitals.

Further, these 260 doctor-owned hospitals in 38 states provide 55,000 jobs, $2.4 billion in payroll and pay $509 million in federal taxes,
according to the PHA.

In one ironic aspect, President Barack Obama’s two largest legislative achievements clashed. The Hammond Community Hospital in North Hammond, Ind., got $7 million in bond money from the federal stimulus act in 2009. It will likely be scrapped because of the new rules on physician-owned hospitals, according to the Post-Tribune newspaper in Merrillville, Ind.

These hospitals have long been a target of the American Hospital Association, which represents corporate-owned hospitals as well as non-profit hospitals.

An AHA study from 2008 says that physician owned hospitals “lessen patient access to emergency and trauma case; damage the financial health of full-service hospitals and lead to cutbacks in service; are not more efficient than full service community hospitals; use physician-owners to steer patients; cherry pick the most profitable
patients; and provide limited or no emergency services.”

Meanwhile, one AHA fact sheet asserts that physician-owned orthopedic and surgical hospitals costs are 20 percent to 30 percent higher than average hospitals. Further, these hospitals just lead to higher profits for doctors, the AHA asserts.

“We don’t cherry pick patients, period, end of story. We take patients based on their need for care, not on their ability to pay,” Sandvig
said. “It [the health care reform] puts control outside the hand of physicians and patients and into bureaucrats’ hands really.

The Association of American Physicians and Surgeons (AAPS) is one of many organizations suing to have the law declared unconstitutional on the grounds that the federal government cannot compel someone to buy a product.

While the provision on physician hospitals is not part of the lawsuit, it will affect it, Dr. said Jane Orient, AAPS executive director.

“If the law is declared unconstitutional, then the prohibition is part of the bill,” Orient told CNSNews.com. “There are vested interests in
getting rid of physician-owned hospitals because they do a better job and are more affordable.”

The provision in the legislation and efforts opposing these hospitals can be simply explained from Sandvig’s view.

“It’s anti-competitive. I think it’s pretty clear,” Sandvig said. “We’re a model that makes sense that’s affecting innovation. We’re
trying to do something better than it has been done. Anytime you do that, there’s going to be a clash between the existing and the new. Unfortunately, it’s a real David and Goliath battle.”

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2 Responses to “Health Law Bans New Doctor-Owned Hospitals”

  1. PATRIOT Says:

    Y’all make me laugh. All y’all do is complain about every single move our GENIUS President makes. Why in the world would you want the fox to protect the hen house???? Doctors owning hospitals and making patient decisions based on finance is a recipe for disaster. In fact it would be the penultimate death panel that your hero, that idiot, Palin complained about.

  2. Wanderant Says:

    Oh yes, having the GOVERNMENT make decisions for your health is much better. Just look at all the rest of the Governments success stories; such as, SS, IRS, Post office, medicare/caid, public schools, why even the ECONOMY and our national deficit. Why in the world would we want DOCTORS to make technical decisions and generate an INCOME servicing your health needs.

    Yes, Patsy with Stars in your Eyes, you are right. And, after you’ve turned over your health to a REPUBLICAN administration, will you still love them in the morning?

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