Physician-owned hospitals: Competition that drives quality

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The Affordable Care Act (ACA) has created an anticompetitive environment in hospital markets around the country. The rapid acceleration of consolidation has, in some cases, resulted in the monopolization of health care in communities even when lower quality, higher cost facilities are involved. This is a problem which Congress must address in any efforts to repeal, repair or replace former President Obama’s signature piece of healthcare legislation. Specifically, Congress must lift the ban placed on the growth and expansion of hospitals with physician ownership to allow for more competition that drives high quality care and reduced costs.

This week, Rep. Sam Johnson (R-Texas) – a longtime advocate for physician ownership and free market competition in healthcare – is introducing legislation which would repeal this unjustified ban and put patients first by allowing them access to better care alternatives. One would hope that the rest of Congress will join Mr. Johnson in pushing for common sense provisions such as this legislation, the “Patient Access to Higher Quality Health Care Act of 2017.”

{mosads}Physician-owned hospitals are widely recognized as among the top performing and most affordable hospitals nationwide and should not be targeted for extinction. For example, Sioux Falls Specialty Hospital – where I practice as an orthopaedic surgeon and serve as CEO – is physician-owned and is consistently rated as one of the highest quality hospitals in the state of South Dakota.

In over two decades of practicing medicine, I have watched as physicians became more and more alienated from decision-making for patients by hospital and health system administrators. Like many other physicians frustrated by this, I started my own hospital with like-minded colleagues to prioritize patient care and satisfaction over bottom-line thinking.  The results in quality and affordability of care at physician-owned hospitals across the country have been remarkable.

Let’s look at the facts. The Centers for Medicare and Medicaid Services (CMS) instituted the Hospital Value-Based Purchasing (VBP) Program to reward hospitals for delivering high quality of care, adhering to clinical best practices, and improving the patient experience. In FY 2017 of the VBP Program, seven of the top 10 and 40 of the top 100 performing hospitals are physician-owned. For the fifth year in a row, a physician-owned hospital was ranked first in the nation.

CMS has also begun publicly disclosing the average Medicare payments to hospitals across the country for the most common medical procedures. An analysis of this data by Avalon Health Economics has shown that physician-owned hospitals save Medicare $3.2 billion over 10 years.

So why, then, are Sioux Falls Specialty and other hospitals like it – proven to be higher quality and lower cost – prohibited from adding new beds, operating rooms, or procedure rooms? Section 6001, a little-known portion of the ACA, targets physician ownership of hospitals based on debunked myths spread by the associations representing the large tax-exempt and investor-owned hospitals. It is yet another retelling of the classic Washington adage, “If you can’t beat ‘em, lobby Congress to eliminate your competition.”

Congress must take action to ensure that high-quality, low-cost competition is allowed to flourish in hospital markets by enacting the “Patient Access to Higher Quality Health Care Act of 2017.” They must dismiss the false accusations made against the physician-owned hospital industry and lift the ban on physician ownership. If physician-owned hospitals continue to be suppressed, soon patients may not be able to find a higher quality, more affordable alternative to their local big box hospital.

Dr. Curd currently serves as President of Physician Hospitals of America and CEO of Sioux Falls Specialty Hospital in Sioux Falls, S.D., where he also practices as an orthopaedic surgeon.


The views expressed by this author are their own and are not the views of The Hill.

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