ACA pro­vi­sion against doc own­er­ship needs to be re­con­sid­ered

ACA pro­vi­sion could lead to higher ser­vice costs, hin­der re­form’s goals

Modern Healthcare - - NEWS - DAVID BURDA Ed­i­tor

Hav­ing spent a few days in Austin, Texas, last week at the Physi­cian Hos­pi­tals of Amer­ica an­nual meet­ing, I’m re­minded again of the Pa­tient Pro­tec­tion and Af­ford­able Care Act pro­vi­sion that re­stricts physi­cian own­er­ship of hos­pi­tals. At a time when cost-con­trol­ling and job-pro­duc­ing com­pe­ti­tion is needed most in health­care and the over­all econ­omy, this pro­vi­sion stands out as spe­cial-in­ter­est leg­is­la­tion that needs to be re­con­sid­ered.

The pro­vi­sion lim­its the abil­ity of ex­ist­ing physi­cian-owned hos­pi­tals to ex­pand and bars new ones from open­ing if they want to be el­i­gi­ble for the Medi­care and Med­i­caid pro­grams. With Medi­care and Med­i­caid com­bin­ing to rep­re­sent more than 50% of a typ­i­cal hospi­tal’s an­nual pa­tient rev­enue, the pro­vi­sion is a lethal fi­nan­cial blow to physi­cian own­er­ship.

The PHA es­ti­mates that the num­ber of physi­cian-owned hos­pi­tals has de­clined from a high-wa­ter mark of about 275 be­fore the ACA was passed to about 230 now.

Law­mak­ers need to re­think the pro­vi­sion given the grow­ing con­cern over the vi­ral con­sol­i­da­tion in the in­dus­try and how that con­sol­i­da­tion and loss of com­pe­ti­tion may ul­ti­mately lead to higher prices for health­care ser­vices. As we’ve re­ported, a num­ber of hospi­tal-physi­cian deals are un­der in­ves­ti­ga­tion by state and fed­eral an­titrust of­fi­cials.

Hos­pi­tals ar­gue that physi­cians who own their own hos­pi­tals will of­fer only ser­vices with high rev­enue po­ten­tial like car­diac and or­tho­pe­dic care at their fa­cil­i­ties, leav­ing gen­eral acute-care ser­vices to carry the un­fair fi­nan­cial burden of pro­vid­ing needed but low-mar­gin ser­vices. Hos­pi­tals also ar­gue that physi­cians who own their hos­pi­tals will ad­mit only pa­tients with pri­vate in­sur­ance and shunt their Medi­care, Med­i­caid and self-pay pa­tients to their lo­cal community hos­pi­tals, again giv­ing them an un­fair fi­nan­cial burden.

Seem­ingly dis­in­ter­ested law­mak­ers bought the ar­gu­ments and added the pro­vi­sion to the ACA, pre­fer­ring to con­cen­trate on big­ger and more po­lit­i­cally charged is­sues like the in­di­vid­ual in­sur­ance man­date and the pub­lic in­sur­ance op­tion.

The hospi­tal lobby’s in­tent ap­pears to have been to re­duce com­pe­ti­tion from doc­tors by turn­ing them into em­ploy­ees of their ser­vice net­works rather than fa­cil­ity own­ers to be feared. The irony, of course, is no one, most no­tably or­ga­nized medicine, stepped up to ad­dress the is­sue with hos­pi­tals and in­sur­ance com­pa­nies.

We re­port on a near-daily ba­sis of an­other med­i­cal prac­tice be­ing ac­quired by a hospi­tal or hospi­tal sys­tem. And grow­ing more fre­quent is news of health in­sur­ers snap­ping up doc­tors and mak­ing them em­ploy­ees. If that’s fair game in the mar­ket­place, doc­tors should be al­lowed to com­pete on the same level.

The other irony is the ACA’s physi­cian own­er­ship pro­vi­sion chok­ing off a de­liv­ery model that’s per­fectly suited to fol­low the in­cen­tives and carry out the goals of health­care re­form. Un­der bun­dled pay­ment re­im­burse­ment schemes, for ex­am­ple, pay­ers want to con­tract with providers that of­fer spe­cific types of treat­ment to pa­tients with spe­cific med­i­cal con­di­tions. Physi­cian-owned hos­pi­tals that of­fer spe­cial­ized in­pa­tient care are ideal provider part­ners in those ar­range­ments.

They also would be an as­set to any ac­count­able care or­ga­ni­za­tion that needs cost-ef­fi­cient high qual­ity care in its net­work to gen­er­ate sav­ings un­der a pri­vate-sec­tor, Medi­care or Med­i­caid ACO con­tract. It’s also quite pos­si­ble that gen­eral acute-care hos­pi­tals could learn a thing or two from physi­cian-owned hos­pi­tals about elim­i­nat­ing health­care ac­quired in­fec­tions, re­duc­ing 30-day read­mis­sion rates and im­prov­ing pa­tient sat­is­fac­tion—all of which will soon carry fi­nan­cial penal­ties from Medi­care for sub par re­sults.

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