Opinion: Senator and med-school professor say allowing physicians to own hospitals again would help rural areas

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"What if lawyers weren’t allowed to own law firms or chefs weren’t allowed to own restaurants? Sounds absurd, but it’s a reality for one profession: doctors," opine U.S. Sen. James Lankford of Oklahoma and Brian J. Miller, an assistant professor at Johns Hopkins University, for The Wall Street Journal. "A tiny paragraph in the enormous Affordable Care Act prohibits physicians from building or owning hospitals. Any existing physician-owned hospital built before 2010 is prohibited from growing beyond the size it was when the bill passed. This law limits competition, defies common sense and is likely contributing to higher prices for Medicare and reduced access to treatment for millions of Americans."

Noting projections that the trust fund for Medicare’s hospital financing will be unable to pay full benefits in six years, and arguing that costs have risen 5.9% a year despite "government price controls," they say "Political leaders overlook the most obvious way to increase health-care options: letting doctor-owned and -managed facilities grow as they did before 2010."

Physician-owned hospitals could help rural areas, they argue that the Centers for Medicare & Medicaid Services "sees the value in physician ownership, particularly in high-need areas, as shown through its recent proposed rule on Conditions of Participation for Rural Emergency Hospitals. But the clause relaxing ownership restrictions wasn’t finalized, owing to vague, unsubstantiated staff unease regarding 'program or patient concerns.' If it had been, it would have permitted physician ownership of new rural emergency hospitals, which would benefit rural America. . . .These small hospitals struggle under today’s healthcare complexity and costs. . . . Allowing doctors to own and run hospitals would give rural communities another option to maintain local high-quality care and encourage local investment in existing hospitals." 

What do hospitals have to say about it? They write, "The hospital industry has long argued that physicians cherry-picked healthy patients and preferred those with private insurance as a rationale for supporting the ban on physician-owned hospitals. . . . Specialty physician-owned hospitals focused on cardiology and cardiac surgery were found to deliver higher-quality care than nonprofit hospitals, with lower rates of hospital readmission or mortality for high-risk surgery. Physician-owned specialty hospitals for orthopedic procedures, such as hip and knee replacements, offered lower costs and higher quality than nonprofit counterparts."

They offer a possible solution: "Existing laws prohibit new physician-owned hospitals from billing Medicare. One of us (Lankford) is introducing the Patient Access to Higher Quality Health Care Act to solve this problem. . . . The federal government doesn’t prohibit plumbers from owning plumbing companies, radio hosts from owning radio stations or farmers from owning farmers markets. It’s time to reopen the free market in health care and let the power of competition do its work."