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Sally Pipes: Shouldn't doctors be allowed to own hospitals?

Experts from the Department of Justice, the Federal Trade Commission, and the American Medical Association just released a paper urging Congress to peel back the Affordable Care Act's restrictions on creating and expanding physician-owned hospitals.

Their analysis is correct. Such hospitals inject much-needed competition into the healthcare market. Consequently, repealing restrictions on them could help lower healthcare costs and expand access to healthcare.

The 2010 Affordable Care Act bans physician-owned hospitals from expanding and prevents new ones from participating in Medicare or Medicaid. Proponents of this ban argue that these hospitals are a net negative because they "cherry-pick" healthier patients and prescribe unnecessary treatments to increase their bottom lines.

But physician-owned hospitals aren't uniquely profit-centered. For-profit hospitals have to deliver returns to their investors. So they're arguably more profit-motivated. Nonprofit hospitals have to at least cover their costs. And a quick look at many of their investment portfolios and pay schedules indicates that it's a stretch to call them "nonprofit." Restricting physician-owned hospitals just protects incumbents from competition that could yield lower costs and better quality care for patients.

Physician-owned hospitals specializing in orthopedics and cardiology delivered better results than other hospitals — including shorter stays and lower mortality rates, according to a recent Mercatus study . An NDP Analytics study found that 41% achieved the top patient experience rating, compared with just 6% of other hospitals. Overall, physician-led facilities scored nearly seven times higher with patients. Physician-led hospitals can also drive down costs. They saved Medicare $217 million in 2021 and reported $240 million in charity care.

More than two-thirds of metropolitan areas have highly consolidated hospital markets, according to a recent study . Relaxing restrictions on physician-owned hospitals could undo that anti-competitive trend.

Senate Republicans just introduced a bill that would remove the Affordable Care Act's restrictions on creating and expanding physician-owned hospitals.
The Biden administration has previously endorsed efforts to enhance competition in the economy. Endorsing that bill could let them match their words with actions.

is president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020). Follow her on Twitter @sallypipes.

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Posted: March 6, 2023 Monday 06:00 AM