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Physician-Owned Hospitals

By September 10, 2015Commentary

Concerns of excessive utilization and patient cherry-picking have led to restrictions on physician-owned hospitals.  At the federal level these restrictions apply when there is any level of doctor participation, however small.  Are these restrictions justified by the data?  New research in the British Medical Journal suggests not.   (PHO Study)   The authors attempted to compile an exhaustive list of such hospitals and to compare their characteristics, patient populations and outcomes versus non-physician owned facilities.  Since the regulatory basis for many of the limits is through the Medicare program, data on Medicare patients was the basis for quality and cost comparisons.

In terms of overall characteristics, the doctor-owned facilities were more likely to be small, located in urban areas and specialized.  They were all for-profit.  This group also treated patients about a year younger on average and there were slightly fewer admissions through an ER (fewer admits from the ER normally is considered a good thing) and slightly fewer discharges to hospice and more to home care (also usually considered good).  They admitted basically identical proportions of Medicare, Medicaid, African-American and Hispanic patients, and their patients had comparable numbers of comorbidities, so no evidence of cherrypicking there.  Mean length of stay was about a half day shorter at the physician-owned hospitals.

Quality of care was also almost identical, with patient experience scores being within a half percent.  30-day mortality was identical, and there was no significant difference in 30-day readmissions or ratings on the usual variety of quality process measures.  And there were very small, non-significant differences in overall measures of cost of care and in episode-based costs for common diagnoses.  Within the physician-owned group, there were some differences between specialty hospitals and general hospitals, but they were mixed–in some cases general hospitals had better quality scores and in others the specialty hospitals did.

This research is just another example of why it is so important to attempt to be fact-based in setting policy.  I will admit to great skepticism about physician ownership of any kind of facility or provider to which they may admit or refer patients.  It intuitively seems that this has the potential for the doctor to act in his or her economic self-interest, driving up costs.  But physicians may also have a better understanding about what creates quality outcomes, and their influence as owners may ensure that a facility or provider operates in a manner that leads to those better outcomes.  Certainly this well-done piece of research does not support the rationales currently used in the US to limit physician ownership.

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