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New Study: Physician-Led Hospitals Could Have Saved Medicare $1.1 Billion in 2019

October 23, 2023

The Latest in a Series of Studies Demonstrating Physician-Led Hospital Quality and Value for Patients

Last week’s study finding that physician-led hospitals could have saved Medicare $1.1 billion for the 20 most expensive diagnostic related groups (DRGs) in 2019 is the latest in a continuous flow of studies emphasizing the low costs, high quality and outstanding patient satisfaction that physician-led hospitals are delivering to Americans.

The October 19, 2023, technical report conducted by researchers from UConn Health and Loyola University Chicago studied the 20 highest cost DRGs treated by physician-led hospitals. According to 2019 Medicare claims, the researchers found “that total payments were between 8 to 15 percent lower than in traditional hospitals within the same market.” This would have resulted in $1.1 billion (or 12.2 percent) in savings for the Medicare program in 2019.

Just as significant, the study found that the patient populations of physician-led hospitals and hospitals without physician ownership featured minimal differences: “In general, the patient populations of [physician-led hospitals] and traditional hospitals were very similar, with few substantively meaningful differences by race and ethnicity, sex, age and patient sickness.”

“At this point, the only opponents of physician-led hospitals are special interest lobbyists in Washington who are trying to use legislation to stop competition and protect their monopoly,” Joseph Alhadeff, MD, PHA’s president, said. “The facts don’t lie: physician-led hospitals create lower costs, higher quality and outstanding patient satisfaction for patients.”

Alhadeff added: “The year has been marked by significant support for physician-led hospitals from dozens of medical societies and policy experts from both sides of the political aisle. This latest study comes at a time when Congress has demonstrated a renewed vigor for tackling rapidly increasing costs and the lack of access for many patients.

Earlier this year, H.R.977,the Patient Access to Higher Quality Health Care Act of 2023, was introduced with bipartisan support, to repeal the anti- competitive Affordable Care Act (ACA) ban on creation of new physician-led hospitals. The Senate companion, S. 470, featured 13 original co-sponsors.

Last week, the Energy & Commerce Committee considered HR. __ (To amend title XVIII of the Social Security Act to revise certain physician self-referral exemptions relating to physician-owned hospitals), which is a narrower bill that would address immediate patient access needs. The bill would allow grandfathered hospitals, many of which are at capacity, to expand and allow physicians to open hospitals in rural areas that lack hospitals.

“We can no longer ignore the facts; the time is up to end the ban so that we can increase patient access to physician-led hospitals,” Alhadeff said.