Promoting Access, Competition and Equity Act of 2015 (H.R. 2513), the PACE Act of 2015.
Some are For and some Against.
In 2010, the Patient Protection and Affordable Care Act, (ACA) banned building new or expanding existing physician-owned hospitals. Large General Hospitals and Medical Centers cited that private hospitals were “cherry picking” the healthiest and wealthiest patients, excessive utilization of care and patient safety concerns.
The law when enacted recognized that more than 200 physician owned hospitals were already operating and rather than force them to close, these hospitals were grandfathered in. The law did recognize that these hospitals were operating counter to the spirit of the new law and it thus prevented the opening of any new or expansion of any existing physician owned hospital unless the facility could show need in the community for greater access to care.
Forty plus major building and expansion projects underway at Physician Owned Hospitals, at the time, were immediately stopped and any physician owned hospital that violated the ban was prohibited from participating in Medicare or Medicaid.
The current law, it is said, is to prevent harm to community hospitals, patients, taxpayers and employers that may be possible when physicians self-refer to hospitals in which they have an ownership interest. Changing the law now would allow broad repercussions for patients, taxpayers and the sustainability of full service community hospitals that provide services 24/7, including trauma care and other high-cost services that are critical to all communities and patients. They say changing the law will weaken full service community hospitals, increase patient safety concerns and increase the excess growth in health care costs that self-referral manifests. *
On the other hand, private physician-owned hospitals say they do not “cherry-pick” the most profitable patients. A recent study found that patients at physician-owned hospitals and non-physician owned hospitals were equally likely to have Medicaid insurance and to be from racial or ethnic minority groups. Other studies have found that seven of the top 10 hospitals receiving quality bonuses in the new Hospital Value-based Purchasing Program in 2015 were physician-owned hospitals. This despite the fact that physician owned hospitals represent only 5% of the 5,700 hospitals nationwide. Also the Centers for Medicare and Medicaid Services released Star Ratings in 2015 based on consumer assessment surveys and it was found that 40% of physician-owned hospitals received the top 5-star rating compared to only 5% of general hospitals. In addition the Department of Health and Human Services found that patients are three to five times more likely to experience complications at general hospitals than at physician-owned specialty hospitals. Further the study showed that physician-owned hospitals performed equally to non-physician-owned hospitals on many measures of quality of care, costs and payments for care. Often these hospitals charge less for the same procedures as the non-physician hospitals. One example said that physician-owned hospitals are saving Medicare $3.2 billion dollars over 10 years.
Physician-owned hospitals also provide more charity care than their counterparts which receive subsidies and tax exemptions. One report states that physician-owned hospitals spend nearly 6% of their total revenue on community benefits compared to less than 1% for other hospitals. Physician-owned hospitals are in both rural and urban areas including full-service hospitals and specialty hospitals focusing on orthopedic surgery, cardiac care, rehabilitation, psychiatry, etc. They explain that these are not hospitals where the physician owners expect to get rich. A majority of the physician owners have less than a 2% interest in the hospital. These physicians, they explain, just want to practice in an environment where their medical expertise counts for something and they can put patient care first.
Physician-owned hospitals want Congress to allow their hospitals to be able to expand and grow in programs and services to the community. Since growth is currently prohibited, they say this poses a serious risk to their patients who look to them for high quality health care in a safe and personalized setting.
Physician-owned hospitals say that the big community hospitals see them as competition. The big hospitals often are a major employer and thus they have more clout with local, state and federal politicians . **
Currently there are approximately 250 hospitals operating in 34 states, where physicians have an ownership stake.
The new legislation (H.R. 2513) –Promoting Access, Competition, and Equity Act of 2015, will suspend the moratorium on physician –owned hospital expansion for three years so that current physician-owned hospitals can expand their facilities and allow those facilities that were under development at the time the law was passed to be grandfathered in.
It may be of interest to read more about the bill and to contact your Congress person for more insight.
- “Oppose Legislation (H.R. 2513) that would Allow for the Proliferation of Self-referral to Physician Owned Hospitals”, Federation of American Hospitals.
** Turner, Grace-Marie, “Lift the Ban on Physician-Owned Hospitals”, www.Forbes.com, Nov 6, 2015.