What is the implication of the Affordable Care Act’s Section 6001?

Section 6001 of 2010’s Affordable Care Act (ACA) grandfathered in all physician-led hospitals that are in place as of the date that the ACA was signed into law: March 23, 2010. Hospitals that were under development had until the end of 2021 to become operational and to have their grandfather status.

Meanwhile, the Medicare program does not place expansion handcuffs on hospitals without physician ownership.

Does Medicare allow for the physician ownership of ambulatory surgery centers and ancillary services?

Yes, Medicare allows physicians to own other facilities, such as ambulatory surgery centers, and ancillary services, such as imaging and physical therapy. Click here to learn more about the physician ownership exceptions.

Opponents of physician-led hospitals have not campaigned against the physician ownership of other entities; they have only focused their efforts on hospitals.

How can Congress use physician-led hospitals to reverse consolidation?

Acting in their personal capacity, attorneys from the U.S. Department of Justice’s Antitrust Division and the Federal Trade Commission’s Bureau of Competition and physicians from the Johns Hopkins University School of Medicine and the American Medical Association (AMA) assert in a new competition policy paper:

For those in the U.S. health policy community concerned about consumer harms resulting from the growth of health system market power and the shrinking role of physicians in leading and designing patient care, our paper urges a reevaluation of the prohibition on new or expanded POHs. POHs present an opportunity to inject more competition into patient/consumer markets, U.S. payor markets, and markets for physician services. Competition in these markets is vital for reducing costs and improving quality. This not only benefits healthcare consumers—which eventually includes all of us, but also taxpayers providing publicly-financed health benefits that cover nearly one in two Americans. It also benefits physicians through increased competition for their services and greater opportunities for entrepreneurship and innovation in patient care.

The paper, “Hospital Competition and Restrictions on Physician-Owned Hospitals,” references the explosive growth in hospital and physician practice mergers over the past few years:

There were 1,412 hospital mergers from 1998 to 2015, with 561 occurring from 2010 to 2015. In 2010, 28 percent of primary physicians were employed by hospitals. By 2016, that number had risen to 44 percent. Large physician practices have been growing larger while smaller practices have been growing smaller. According to recent data, over 90% of metropolitan statistical areas have been estimated as consolidated for hospitals, 65% for specialist physicians, and 39% for primary care physicians.

The authors – Matthew C. Mandelberg, JD, MPA; Michael H. Smith, JD; Brian J. Miller, MD, MPA, MPH; and Jesse M. Ehrenfeld, MD, MPH – cite a dearth of tools that policymakers have turned to for addressing the troubling consolidation trends, stating, “Few effective policy tools have been identified that might stall or reverse these trends.” The authors point to a reversal of the ban on physician-led hospitals as one solution to inject immediate competition.

In terms of quality and cost, what do the studies show about physician-led hospitals?

A mounting level of evidence concludes that physician-led hospitals deliver higher quality, lower costs and an increased access of care to patients. Click here to review the studies.

An October 2023 study by researchers from UConn Health and Loyola University Chicago found that physician-led hospitals could have saved the Medicare program $1.1 billion in 2019. In addition, the study found that the “patient populations of POHs and traditional hospitals were very similar, with few
substantively meaningful differences by race and ethnicity, sex, age and patient sickness.”

Click here to read a 2021 systematic review of 21 studies related to the quality and cost of care delivery by physician-led hospitals to determine whether the opponents of physician-led hospitals were justified in their 2010 criticism. The authors concluded: “In the absence of evidence that POHs provide services of lower quality or higher cost, Medicare’s ban on new POH participation and expansion of preexisting POHs lacks justification.”

A September 2022 study by ndp | Analytics found that physician-led hospitals found that physician-led hospitals featured an average rating of 3.9 out of 5 (compared to 3.2 for all hospitals) in a Centers for Medicare and Medicaid Services survey on patient experience.

The same study found that 59 percent of physician-led hospitals were below the median costs per Medicare beneficiary, which was compared to 51 percent of all hospitals.

How can I ensure that my community has access to physician-led hospitals?

Click here to learn more about how to contact Congress.