Home E-Weekly June 13, 2017

New Effort to Repeal Ban on Physician-Owned Hospitals

Published: June 12, 2017

HIGH STAKES Critics of the ban say it does little but reduce competition for taxpayer-subsidized hospitals.

Lawmakers are taking aim at the Affordable Care Act's ban on new construction of physician-owned hospitals (POHs). A Senate bill that would repeal the ban was recently introduced, joining a companion bill that's been introduced repeatedly in the House of Representatives.

The ban is ostensibly intended to limit self-referral of Medicare and Medicaid patients, which is a violation of the Stark Act. Additionally, taxpayer-subsidized tertiary hospitals are at a competitive disadvantage, say proponents of the ban, because they're required to offer emergency services and can't "cherry-pick" more profitable patients.

Critics counter that the ban does little more than reduce competition for traditional investor-owned hospitals. Further, they argue, a similar conflict of interest exists when hospital-paid physicians refer patients to the hospitals that employ them.

Eliminating the ban would "increase competition … lower health care costs and expand quality of care," says Senate sponsor James Lankford (R-Okla.).

A 2015 study in the British Medical Journal found that POHs do not appear to systematically select more profitable or less-disadvantaged patients. On the contrary, the 219 POHs and 1,967 non-POHs included in the study — based on data from 2010 — were nearly identical in virtually every metric, including their proportions of Medicaid patients and those from traditionally disadvantaged groups.

Jim Burger

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