May 16, 2017
3 min read

Physician-owned hospitals have positive impact on communities

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Anthony A. Romeo, MD
Anthony A. Romeo

Issues related to the delivery of health care in the United States are front-page news almost every day. Concerns about the possible repeal of the Affordable Care Act, pre-existing conditions, value-based care and funding for the uninsured remain key issues. As Congress grapples with the issues of the most expensive health care system in the world, we work to find solutions to reduce health care costs while improving value.

One area that has not received attention but should is the variance in cost and quality for similar conditions based on the site of health care delivery, particularly conditions orthopedic surgeons treat on a regular basis. A significant portion of musculoskeletal care is still provided in the most expensive location — a hospital or hospital OR. Many procedures and care management plans that can be successfully and safely executed in outpatient settings are captured by hospital systems. Some procedures that have scientific support for outpatient care, such as joint replacement, remain designated by CMS as “inpatient only,” costing 30% to 40% more per procedure than if the procedure was performed in an ambulatory surgery setting.

Positive impact

Hospital-based care will always be a necessary component of health care, so improving value with better outcomes and higher patient satisfaction while lowering costs should be a priority. It remains curious that Section 6001 of the Affordable Care Act (ACA) prohibited the formation of new physician-owned hospitals (POHs) and the expansion of existing POHs, while no restrictions were placed on the growth of hospitals without physician ownership (non-POHs). According to the Hospital Value-Based Purchasing Program established by the ACA, seven of the top 10 and 40 of the top 100 hospitals were POH-based in 2017.

In February, Congress introduced H.R. 1156, “Patient Access to Higher Quality Health Care Act of 2017,” to repeal the restrictions established by Section 6001 of the ACA. The bill allows the expansion of POHs.

Physician-owned hospitals have significant positive impacts in their communities. The patient-recognized quality of care creates competition in the hospital market, forcing traditional non-POHs to improve, innovate and raise the level of care and patient satisfaction. Furthermore, POHs provide care to an appropriate payer mix between Medicare, Medicaid and private insurance, and treat a diverse population without discrimination, just like non-POHs. Overall, 25% of POHs are in medically underserved areas where non-POHs have sold the hospital or left due to insufficient profits.


Motivation for improvement

For hospital-employed orthopedic surgeons, the bill may seem irrelevant. However, this could not be further from the truth. If the non-POH system employs a surgeon and there is no competition from POHs, then there is little motivation for improvement. When POHs provide physician-centric and professionally satisfying environments and salary and benefit packages consistent with national non-academic benchmarks, the non-POH system must improve or it will quickly lose surgeons.

We have an opportunity to support H.R. 1156 and repeal Section 6001 of the ACA. Physician-owned hospitals lead the nation in quality of care, cost efficiency, patient satisfaction and professional satisfaction. Congress needs to put patients first and provide the opportunity for the expansion and development of POHs. Let your congressman know you support H.R. 1156 and ask him or her to repeal the moratorium on the formation and expansion of POHs. More patients will have the opportunity to experience the highest quality and value of hospital-based care.

Disclosure: Romeo reports he receives royalties, is on the speakers bureau and a consultant for Arthrex; does contracted research for Arthrex and DJO Surgical; receives institutional grants from AANA and MLB; and receives institutional research support from Arthrex, Ossur, Smith & Nephew, ConMed Linvatec, Athletico and Miomed.