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Expansion of Physician-Led Hospitals Gains Steam on Capitol Hill

February 13, 2024

Congress’ push to eliminate the ban on physician-led hospital growth continued at the U.S. House Energy and Commerce Health Subcommittee’s January 31 hearing on “Health Care Spending in the United States: Unsustainable for Patients, Employers, and Taxpayers.”

The hearing featured two new twists:

  • Congressman Tony Cardenas of Los Angeles – a Democrat – joined Republicans on the Committee calling out the absurdity of this ban.
  • Congressman Larry Bucshon, MD (R-Indiana) asked a Congressional Budget Office (CBO) representative if he was aware of the latest study finding that physician-led hospitals treat the same mix of patient as hospitals without physician ownership at a lower cost. Congressman Bucshon directed CBO to take the new studies into account.

Click here to view the hearing’s video.

Congressman Henry Cuellar (D-Texas) serves as the original sponsor of H.R. 977 with Congressman Burgess. Democrats’ public support for repealing the ban, however, has been largely missing over the last decade.

Increasing concerns over consolidation and high costs have led lawmakers from both sides of the aisle to begin calling for an end to the ban on physician-led hospitals. Last year, federal officials appointed by the Biden administration from the U.S. Department of Justice’s Antitrust Division and the Federal Trade Commission’s Bureau of Competition acted in their personal capacities to call for an end to the ban on physician-led hospitals.

Activity from the Democrat side of Congress is also bubbling up. At the hearing,

Congressman Cardenas pointed out the ridiculous ban on physician-led hospitals:

And I also want to say that I agree with Congressman Burgess about physician-owned hospitals. We need to revisit that. We shouldn’t be assuming that physician-owned hospitals cannot follow the rules. In this country, lawyers…we allow lawyers to own their own law firms. It’s unbelievable to me that we trust lawyers more than doctors to do the right thing.

Congress requires offsets to pay for new spending in legislation. Economics is said to be a “soft science,” and the CBO’s dubious assumption that eliminating physician ownership would lead to lower costs to the federal government has served as one of the primary obstacles to eliminating the ban.

For example, CBO stated in then-President Obama’s first budget that addressing “financial conflicts of interest in physician-owned specialty hospitals” would lead to $900 million in savings for the federal government.

The CBO cited various reasons for its argument: more referrals to ASCs and fewer cases performed, among other fallacies.

Of course, numerous studies have found the opposite to be true.

A representative from CBO was part of the January 31 hearing, and Congressman Bucshon directed CBO to look at last fall’s study that found that physician-led hospitals treat similar patients at a lower cost, when compared to hospitals without physician ownership:

Are you aware of a recent study from University of Connecticut last fall? It’s called “A Study of the Cost of Care Provided in Physician Owned Hospitals Compared to Traditional Hospitals,” and it’s an analysis of 20 high-cost DRGs using 2019 Medicare claims data. And what it showed ultimately is that in physician-owned hospitals payments were 8 to 15 percent lower than traditional hospitals within the same market.

Congressman Bucshon went on to state:

I’m asking you to commit to CBO consider this and other new research about physician-owned hospitals.

The CBO representative responded:

We have been tracking this physician-owned hospital for some time and we would be happy to take on new information.

Congressman Michael Burgess, MD (R-Texas), the sponsor of HR 977 and pictured at the hearing above, continued to express his support for ending the ban:

A bill is ready to be marked up. That involves physician-owned hospitals, particularly rural and underserved areas. There is an answer to consolidation, it is competition, and physician-owned hospitals would provide that.

Congressman Morgan Griffith (R-Virginia) added additional support and cited a formerly physician-led hospital in his community:

Let me join Rep. Cardenas and Dr. Burgess as a lawyer who believes that physician-owned hospitals are probably not a bad idea and probably a good idea, particularly in my hometown since we have the Lewis Gale hospital, now owned by a larger corporation that started out many years ago by Drs. Lewis and Gale and then revived in my childhood by doctors that I knew. They were physician-owned hospitals, and there are a lot of communities in my area that would not have a hospital today if it were not for physicians a long time ago. And for many years, I owned my own law practice, and I drove down the costs of various items, particularly wills and representation in small traffic cases because I liked helping people, and I think doctors can do the same kind of stuff.