New Analysis Reaffirms Need to Maintain Current Law Banning Self-Referral to Physician-Owned Hospitals

Data from the health care consulting firm Dobson | Davanzo, released by the Federation of American Hospitals (FAH) and the American Hospital Association (AHA), shows that physician-owned hospitals (POHs), when compared to other hospitals, treat less medically complex and more financially lucrative patients, provide fewer emergency services, and treat fewer COVID-19 cases.

Further, these arrangements have patient care margins more than 15 times those of non-POHs, they render less uncompensated care, and they treat proportionally far fewer dual-eligible (Medicaid and Medicare) patients. Even though POHs provide care to fewer patients with complex conditions, they are five times more likely to receive CMS’ maximum penalty for readmissions.  

This new analysis compares operating, financial, and patient characteristics of POHs and non-POHs. It reinforces many of the findings of earlier studies by the Department of Health and Human Services’ Office of Inspector General, the Government Accountability Office, and MedPAC, among others, documenting the conflicts of interest inherent with POHs that led to the Congressional ban in 2010. These reports concluded that POHs:

• Cherry-pick patients by avoiding the less profitable Medicaid and uninsured patients;
• Treat fewer medically complex patients; and
• Provide fewer emergency services and often rely on publicly funded 911 services and acute care, community hospitals for these services for their own patients.

“If there was ever any doubt, the evidence against POHs is as crystal clear today as it was when Congress passed the self-referral ban in 2010,” said Chip Kahn, President and CEO of the FAH. “Weakening or unwinding the current ban opens the door further to the very behaviors that Congress sought to prevent.”

“The growth of physician-owned hospitals was restricted by Congress for good reasons and those remain valid today as this analysis shows,” said Rick Pollack, President and CEO of the AHA. “Physician-owned hospitals undermine our nation’s health care safety-net and jeopardize access to care by cherry-picking the most profitable cases and avoiding patients with complex conditions and lower-reimbursing coverage.”  

View the full report at https://www.aha.org/fact-sheets/2023-03-28-select-financial-operating-and-patient-characteristics-pohs-compared-non-pohs-fact-sheet.