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New Impact Study Identifies Solution to Healthcare Consolidation

September 15, 2022

Economic analysis finds physician-led hospitals are a force multiplier, increasing competition with high quality and lower cost care.

WASHINGTON – A new study of the economic and social benefits of physician-led and owned hospitals has confirmed that physician-led hospitals can serve as an immediate tool to help federal policymakers address the nation’s growing healthcare consolidation.  

“Physician-led hospitals are designed to meet their community needs, and they do this by focusing on the most important relationship in healthcare, the patient-physician relationship,” Frederic Liss, MD, president of Physician-Led Healthcare for America (PHA), said. “The rapid consolidation of our healthcare markets makes it clear that patients deserve additional choices in healthcare. Physician-led hospitals represent a logical tool that is immediately available.”

The study, The Economic and Social Benefits of Physician-Led Hospitals, was conducted by ndp | analytics, a strategic economics research firm. The firm examined the Health Care Cost Institute’s Hospital Concentration Index, which measures hospital concentration in markets. Only four percent of highly concentrated metro area markets featured physician-led hospitals. Meanwhile, 13 percent of highly concentrated metro area markets did not feature physician-led hospitals.

“It’s not an accident that there’s a significant difference in hospital concentration between markets with and without those that are physician-led,” Liss said. “This study confirms that physician-led hospitals serve as a force multiplier, delivering high-quality and lower cost care while fostering competition in areas of need. The presence of physician-led hospitals serves as an anchor to ensure that healthcare markets have a healthy balance of choices for patients.”

The study evaluated data from the Centers for Medicare & Medicaid Services (CMS) and found that physician-led hospitals created $217 million in annual cost savings to the Medicare program, which resulted in a cost savings of $1,100 to $3,000 per patient.  

The contribution of physician-led hospitals to their communities goes beyond the high-quality and cost-efficient care that they provide. The study also found that the nation’s physician-led hospitals reported $240 million in charity care to CMS.

In addition, physician-led hospitals serve as important economic anchors in their communities. The study found that the nation’s physician-led hospitals create 166,000 jobs, produce $10.3 billion in wages and created $43.1 billion in economic output.

“It is clear that physician-led hospitals serve as a vital piece of many communities across the United States. It’s time for Congress to remove the arbitrary expansion restriction on physician-led hospitals so that they can evolve to adapt to the needs of their growing communities,” Liss said. “The federal government allows numerous segments of the healthcare delivery system to have physician ownership due to the quality of care and efficiency that it creates for patients. Ambulatory surgery centers, imaging, physical therapy and value-based arrangements are just a few of the segments that are allowed to have physician ownership. Eliminating this archaic provision that prevents the same for hospitals is urgently needed.” 

About PHA

Physician-Led Healthcare for America (PHA) promotes, educates, and advocates for exceptional patient centered care through physician leadership. Founded in 2001, PHA advocates for the interests of physician-owned hospitals, physician-led facilities, physician-led practices, and other physician-led initiatives at the federal, state, and local levels. The organization also supports its members in their efforts to advance the quality and availability of healthcare in their specific communities.