A little noticed provision in the Affordable Care Act has had major consquences for Americans
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Across the United States, out-of-control health care costs continue to plague Americans. About half of our fellow citizens report difficulty affording medical care and the persistently high costs disproportionally impact the poor, uninsured adults, and Black and Hispanic communities. And continued high inflation just compounds the problem, leading to even worse health outcomes.
There is no single, simple solution to fix health care, but we can make progress to the benefit of all Americans. Lifting the ban on physician-owned hospitals is an easy starting point.
Tucked away in the massive Affordable Care Act – commonly known as ObamaCare -- was the small, seemingly insignificant provision that banned physicians from building or owning hospitals. The same provision also prohibited physicians who already owned hospitals before 2010 to expand. So, while lawyers can own law firms, plumbers can own plumbing companies, chefs can own restaurants, and so on, doctors can no longer own their own hospitals. Doesn’t make sense, does it?
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But it’s not just the lack of common sense baked into the regulation that is the issue. The real problem is that the restriction on physician-owned hospitals hurts patients. And that’s unacceptable.
Across industries, competition leads to higher quality and lower cost. Health care is no different. Yet, in today’s health care marketplace, consolidation continues, and competition remains stifled by bureaucratic red tape. With the artificial reduction in competition and continued rapid rate of hospital mergers, health care costs will continue to rise, access will become even more limited for those most in need, and quality – at best – will remain inconsistent. This is how it is playing out right now. And our fellow Americans get sicker.
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One of the concerns often voiced by opponents of physician-owned hospitals is that they fear these institutions would "cherry pick" the most lucrative, healthiest patients. However, in reality, local patient populations and referral patterns – regardless of hospital ownership – likely drive any issues related to adverse patient selection in today’s health care marketplace. In addition, in 2007, the U.S. Centers for Medicare and Medicaid Services (CMS) added an adjustment to hospital payments to account for taking care of sicker patients to lessen the financial strain of caring for such patients.
When it comes to evaluating the impact of physician-owned hospitals, the data are overwhelmingly in favor of them.
And, as physicians know, if you want to find the answer and not just make unfounded assumptions, research it. When it comes to evaluating the impact of physician-owned hospitals, the data are overwhelmingly in favor of them.
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Research out of the Mercatus Center at George Mason University found evidence that physician-owned specialty hospitals, such as those that take care of only orthopedic or cardiac conditions, have comparable or lower cost and higher quality care. Amongst community hospitals, which are vitally important in caring for patients throughout urban and rural areas of America, there were no differences found between physician- and non-physician-owned hospitals.
More recent research demonstrated that prices for eight common procedures at physician-owned hospitals were often 1/3 cheaper than those at non-physician-owned hospitals. With the promise of health care price transparency, removing the barrier to physician-owned hospitals becomes even more important in ensuring health care affordability for patients.
But research can only do so much if the findings are not put into action. The time for talk is over, and the time to act is now. Fortunately, the Patient Access to Higher Quality Health Care Act (S. 470/H.R. 977) has been re-introduced and has the potential to revive competition in health care by lifting the ban on physician-owned hospitals. The American Medical Association (AMA) and more than 90 state and medical associations see its promise.
We all want a health care system that delivers optimal quality at an affordable cost. This takes price transparency, outcomes measurement, and real competition. By lifting the ban on physician-owned hospitals, we can start the process of reversing the negative side effects of health care market consolidation. This can improve patient choice and access. We can also begin to return to a health care system not only centered around the patient-physician relationship but that promotes innovation in care delivery and an entrepreneurial spirit amongst doctors to problem-solve for the benefit of all Americans.
A competitive health care marketplace is essential to "fix" health care delivery. It’s well past time for the government to support such competition by lifting the ban on physician-owned hospitals.
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David N. Bernstein, MD, MBA, MEI is a resident physician at the Harvard Combined Orthopaedic Residency Program at Massachusetts General Hospital, Brigham and Women’s Hospital, Beth Israel Deaconess Medical Center, and Boston Children’s Hospital and a senior researcher in health care transformation at Harvard Business School. Follow him at @DNBernsteinMD.
