- The Affordable Care Act's restrictions on the formation and expansion of physician-owned hospitals (POHs) effectively stopped new ones from being created, concluded a new report published in Health Affairs.
- The researchers looked at 106 POHs in Texas to answer two questions: Whether the owners took preemptive action before the March 23 and December 31, 2010 dates that triggered new restrictions, and whether they later modified their practices to maximize their profitability under the new restrictions.
- The ACA's impacts were more effective at reigning in POHs than other legislative actions over the previous 20 years, the authors said.
Physician-owned hospitals have long sparked controversy due to concerns around the potential for profit motives in medical decisions and their tendencies to cater to only the most profitable patients, the authors noted, adding that supporters, meanwhile, have argued they are the perfect setting under the ACA for pursuing the Triple Aim of improving care and population health, and reducing costs.
In either case, the ACA has had a strong impact on the model through its restrictions on Medicare or Medicaid patient referrals by owner-physicians, on increasing aggregate percentage of physician-ownership, and on increasing operating and procedure rooms and beds.
Before the restrictions took effect, the study found, there was a flurry of activity as hospital formation accelerated to beat the deadlines. Evidence indicated that physicians remained "bullish" on those physician-owned hospitals that continued to accept Medicare and that were formed prior to the ACA’s restrictions, the study found.
However, "[i]n contrast, evidence suggests that physician-owned hospitals formed after the effective date are not viable enterprises," the researchers said, noting that all those that were created afterward did not accept Medicare or Medicaid as a strategy to allow for their physician-ownership, and that as of June 2016, all of them had either been sold or are part of bankruptcy filings.
"Given the crucial role of Medicare in hospitals’ survival, the ACA has effectively eliminated the formation of new physician-owned hospitals," the report found, adding, "Moreover, the ACA has rendered remote the likelihood of significant future expansion of existing physician-owned hospitals that accept Medicare."
While it's unclear whether the impact is good or bad for healthcare quality, it is "unambiguous" that the restrictions on POHs have decreased competition. Going forward, the researchers suggested, policymakers should consider how other hospitals are affected by POHs and how POHs affect costs and quality across the industry, noting that in Texas about 20% of all hospitals are physician-owned.