Emphasizing the Most Important Relationship in Healthcare: the Patient-Physician Relationship
Physicians have driven innovation in healthcare throughout history.
Physician ownership and management of hospitals has a long and distinguished record in the United States, beginning with some of the earliest hospitals, which were built and managed by physicians such as the Mayo Brothers.
Over time, new entities were formed to operate hospitals, and they often removed physicians from leadership positions.
Beginning in the early 2000s, a number of physicians across the nation witnessed a void in physician leadership within hospital management and began creating physician-led hospitals. Today, over 250 hospitals across the nation are owned and operated by physicians.
Over 250 physician-led hospitals across the nation
Physician-led hospital savings for the Medicare program.
Approximately 75 Facilities Were Under Development
Physician-Led Hospitals: The Different Models
Some physician-led hospitals, such as Doctors Hospital Renaissance (DHR) in McAllen, Texas, serve as community (general) hospitals that provide every service of a large hospital, such as labor and delivery, ICU care and surgery.
DHR played a vital role in treating the community’s Covid-19 patients during the pandemic.
Click here to learn more about how one physician-led hospital has delivered over 110,000 babies and led its region’s Covid-19 response.
Recognizing that specialization in certain types of care can lead to greater outcomes for patients, specialty hospitals focus on and excel in certain specialties. In Texas, physician-led specialty hospitals include cardiac, orthopedic, and children’s hospitals.
Specialization has played a critical role throughout our nation’s health care history. Over time, cancer centers and children’s hospitals evolved into specialized facilities in order to offer the most efficient and highest quality care possible.
Physician-led hospitals specializing in cardiovascular and orthopedic care, among several specialties, represent the latest example of our nation’s healthcare system evolving to meet patient needs through specialization.
Rather than spend valuable resources to defeat physician-led hospitals, a large number of non-profit community hospital systems across the country chose to embrace the safety, quality and innovation that physician-led hospitals create and partnered with them in joint venture models.
Today, dozens of non-profit community hospital systems across the nation are partners with physician owners in joint venture models.
Various Levels of Ownership
The nation’s 250-plus physician-led hospitals feature a variety of physician ownership levels.
In some cases, the physicians own 100 percent of the hospitals. In a number of other physician-led hospitals, a non-profit community hospital system owns a majority of the ownership, with physicians holding some ownership.
The Benefits of Physician-Led Hospitals
High Quality & Patient Satisfaction
In FY 2017, seven of the top 10 hospital in Medicare’s value-based purchasing (VPB) program were physician-led hospitals. In addition, 40 of the top 100 hospitals in the nation were led by physicians.
Physician-led hospitals comprised approximately 5 percent of the hospitals nationwide in 2017.
Physician-led hospitals add much-needed competition into hospital markets around the nation. Hospital consolidation has accelerated across the nation, and physician-ledhospitals serve as a tool to create competition.
Click here to learn more about how physician-led hospitals can address consolidation.
“With a pandemic underscoring the need for flexible, dynamic hospital capacity, now is the time for congressional correction of Section 6001, a provision contrary to the ACA’s goals of expanding access to care, improving quality, and promoting innovation.”
MedPAC’s Comments on Competition
The Medicare Payment Advisory Commission (MedPAC) made the following comments about competition to Congress in its 2005 report:
“Some proponents of specialty hospitals argue that competition with specialty hospitals improves community hospital operations. Some community hospital administrators admit that competition with specialty hospitals has had some positive effects on community hospitals’ operations. One community hospital administrator told us that the specialty hospitals were akin to a wake-up call – getting them to pay more attention to hospital operations and physician relations. We heard several examples of constructive improvements sparked by the entrance of a specialty hospital into a market, including extending service hours, improving operating room scheduling, standardizing the supplies in the operating room, and upgrading equipment.”
Physician-led hospitals support local, state and federal services through tax contributions.
A September 2022 study found that physician-led hospitals contributed $564.4 million in payroll taxes, including $396.1 in federal and $168.3 in state payroll taxes in 2021.
Overall, physician-led hospitals contributed over $1.2 billion in federal and state income and payroll taxes in 2021, including $567.6 million in the South, $391.4 million in the Midwest, $239.9 in the West, and $50.5 million in the Northeast.
The same study found that physician-led hospitals provide considerable charity care to their communities. In 2018, physician-led hospitals reported to the Centers for Medicare and Medicaid Services (CMS) a total of $240.1 million in charity care.
Charity care reported to CMS only counts for a portion of the total uncompensated care reported by physician-led hospitals, which reported $546.2 million of uncompensated care in 2018.