A recent study commissioned by the Physicians Advocacy Institute and The Physicians Foundation found physician-owned hospitals provide high-quality care at a lower cost to Medicare than traditional hospitals serving similar patient populations.
These findings emerge as Congress weighs Medicare physician payment policy changes – including lifting the ban on new physician-owned hospitals – that could improve patients’ access to care.
The study, published on Oct. 19, analyzed 2019 Medicare claims data for the 20 highest-cost patient categories. The research indicated Medicare payments to physician-owned hospitals were 8% to 15% lower than those to traditional hospitals within the same market.
“The total cost of care ... in traditional hospitals in these markets would have been reduced by approximately $1.1 billion in 2019, a 12.2% reduction, if reimbursed at the same rate as physician-owned hospitals,” researchers wrote. “[O]ur results suggest that [physician-owned hospitals] may offer an opportunity to achieve considerably lower costs of care across a range of health conditions and patient populations.”
On the day of its release, the study cropped up during a U.S. House Energy and Commerce Committee Health Subcommittee hearing on Medicare proposals to improve patients’ access to care and minimize physicians’ administrative burden.
U.S. Rep. Michael Burgess, MD (R-Texas), an obstetrician-gynecologist in Lewisville who serves on the subcommittee, cited the study and proposed draft legislation that would allow for physician-owned hospitals to open or expand if they are at least 35 miles from an existing hospital.
Earlier this year, Representative Burgess, along with U.S. Rep. Henry Cuellar (D-Texas), also introduced the Patient Access to Higher Quality Health Care Act (House Resolution 977), which would repeal the ban on new physician-owned hospitals.
“Who better to establish a facility in a rural area or an underserved area than someone who actually knows what a hospital is supposed to be and what a well-run hospital looks like?” Representative Burgess asked at the hearing. “This solution allows physicians to maintain activity in the business of health care while providing patients the care they need and will allow doctors to continue to afford to stay in practice when they have so many things working against them."
Michael Darrouzet, CEO of the Texas Medical Association and vice president of the Physicians Advocacy Institute Board of Directors, agrees.
“Physicians are in the best position to make decisions with and for their patients, so it’s not surprising that Congress is considering allowing new physician-owned hospitals that align the interests of ownership and practicing physicians to improve patients’ care,” he said in an Oct. 19 statement.
Debra Patt, MD, an oncologist in Austin who testified during the hearing, also lent her support to Representative Burgess’ proposal.
In addition, Dr. Patt urged committee members to support Medicare physician payment reform, which she said was necessary to ensure independent physician practice viability in the face of increasing industry consolidation.
“I want to underscore that it is critical at this time for Congress to fix the looming Medicare physician pay cut as well as [to] provide independent physicians with a much-needed medical inflation update,” she said in her written testimony.
Dr. Patt also advocated for site-neutrality – which would close the gap in Medicare payments to hospitals versus other health care facilities, such as physician offices and outpatient clinics – and for relief from excessive prior authorization requirements, which she said interfere with quality, timely care.
TMA is a staunch supporter of such policy changes. In August 2020, the Centers for Medicare & Medicaid Services proposed to remove certain restrictions on the expansion of physician-owned hospitals. Although the proposal never took effect, TMA lent its support in a September 2020 comment letter.
“TMA maintains [the ban on the creation and expansion of physician-owned hospitals] stifles competition, limits job growth, inhibits innovation, and restricts patient access to care,” then-TMA President Diana Fite, MD, wrote. “These restrictions also interfere with physician autonomy, patient choice, and the patient-physician relationship.”
More recently, TMA leadership in September met with the lead sponsors of the Strengthening Medicare for Patients and Providers Act (House Resolution 2474) to expedite its passage. The bipartisan legislation would provide annual inflationary updates to the Medicare physician fee schedule in line with the Medicare Economic Index, a measure of practice cost inflation.
TMA equips you with the information you need to help stop looming Medicare physician pay cuts. Get involved in this crucial advocacy effort with ready-made social media graphics and posts, sample letters to the editor, a sample op-ed, and an Action Alert to send directly to legislators by downloading the toolkit.