Focus on Health System Reform: Ban on Physician-Owned Hospitals

One provision of the Patient Protection and Affordable Care Act that takes effect at the end of this year is the restriction on physician ownership of hospitals in the Medicare program.  The health reform law also places major limits on the expansion of existing physician-owned hospitals.

New physician-owned facilities that are not certified as Medicare participants by December 31, 2010 will no longer be allowed into the program after that date.  Other changes to the law include capping levels of physician ownership, ending some exceptions to Stark self-referral bans and mandating more disclosure of physician owners’ potential conflicts of interest, if they send their patients to their own facilities.

Past legislative attempts to limit physician ownership of hospitals often targeted specialty hospitals such as orthopedic, cardiac and other surgical facilities.  However, limitations enacted by the PPACA will also impact acute care facilities, even some community hospitals that may have been financially supported by their physicians in the past.

Until many pending federal lawsuits are settled, existing plans for new or expanding physician-owned hospitals are in a holding pattern.  The new law caps ownership levels to where they were at the bill’s passage (March 23, 2010).  According to the Physician Hospitals of America, there are currently 265 physician-owned facilities in 34 states that employ more than 75,000 workers with an average bed size of 233 general acute care beds that will be negatively impacted by the restrictions.


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