By Mariah Taylor

Lawmakers are considering removing a provision of the Affordable Care Act that limits expansion and opening of physician-owned hospitals, reported May 13.

About 4% of hospitals are owned by physicians, or 250 to 265 nationally. If the current restrictions are lifted, that number could expand dramatically.

Debate between industry groups continues around the healthcare quality, cost and patient access to care. Some physician groups argue that ending the restriction would introduce more competition amid rising hospital mergers and prices, and could give more access to rural communities. However, hospital industry groups say physician-owned hospitals "cherry pick" healthier, better insured patients and don't compete fairly with acute-care hospitals.

"They're not providing full service," said Chip Kahn, president and CEO of the Federation of American Hospitals, which represents about 1,000 for-profit hospitals. "They're not providing emergency rooms. They're not taking care of uninsured patients."

Both sides cite reports and analysis that cannot agree on how many physician-owned hospitals provide general services vs. specialty care. These surveys tend to be funded by the association that commissions them.

One 2023 analysis of 2019 Medicare data, commissioned by physician groups, found the cost of care for the 20 most expensive diagnostic-related groups was 8%-15% lower for physician-owned hospitals than traditional hospitals. The price difference could translate to roughly $1.1 billion in Medicare savings in that year.

However, another 2023 analysis, compared patient acuity, insurance coverage and more at 163 physician-owned hospitals and 3,020 traditional hospitals. It found physician-owned hospitals were more likely to have maximum hospital readmission penalties and treat nearly 5% fewer Medicaid patients (3.5% vs 8.4%).

The proposed legislation, which is in committee for now, is called the Patient Access to Higher Quality Health Care Act of 2023 (H.R. 977/S. 470).