Sunday, September 18, 2011

National Ban on Physician Ownership of Hospitals

One of my goals in life was to own a hospital.  Thanks to a recent law passed by Congress, it doesn’t look like that is going to happen.  A part of the Patient Protection and Affordable Care Act prohibits physician-owned hospitals from obtaining a Medicare provider number (meaning they cannot bill and receive payment from Medicare or Medicaid, which is a large proportion of hospital income).  All existing physician-owned hospitals that were operating as of March 23, 2010 were grandfathered in (meaning the law won’t apply to them).  Physician-owned hospitals that were under development at the time of the law passing were allowed to proceed with development as long as they obtained their Medicare provider numbers before the end of the year.  After December 31, 2010, physician ownership and investment in hospitals was completely banned.  The grandfathered hospitals will also be banned from increasing bed numbers, operating rooms or increasing the percentage of physician ownership.
According to a recent Texas Medical Association article, physician-owned hospitals are safer and have higher patient satisfaction ratings; “a 2005 Department of Health and Human Services study…found physician-owned hospitals have lower complication and mortality rates, as well as higher nurse-to-patient rations, than do general hospitals….CMS patient satisfaction ratings…show 85.1 percent of patients gave physician-owned hospitals a rating of nine or ten on a scale of ten, compared with a national hospital mean of only 64 percent.”
I believe physician are the right fit for owning and running a hospital, especially those with business and/or legal training and experience on top of their medical experience

More information on this issue can be found in the August 2010 edition of Texas Medicine.  Ortolon, K., Quashing Ownership.  Texas Medicine, 106:8; 29 (August 2010).


  1. Did the government provide any rationale behind this decision?

    Excellent reason to vote a different way next year.


  2. Hi Bart

    Thank you for your insightful comments! The rationale is their belief that Medicare spending rises when doctors refer patients to hospitals that they own (they feel that self referrals to their hospitals increased utilization, thereby increasing health care costs).