PHA Calls CMS Physician-Led Hospital Inquiry a Landmark Step Toward Lower Costs, Better Outcomes and Restored Competition

WASHINGTON, D.C. — Physician-Led Healthcare for America (PHA) expressed strong support for the Centers for Medicare and Medicaid Services’ (CMS) proposal to explore the inclusion of physician-led hospitals in the Transforming Episode Accountability Model (TEAM), as outlined in the agency’s Fiscal Year 2027 Inpatient Prospective Payment System (IPPS) proposed rule released Friday.

In a significant and long-overdue recognition of the role physician-led hospitals play in the healthcare system, CMS framed physician-led hospitals as a potential tool to control costs, maintain or improve patient outcomes and address consolidation in healthcare markets. The agency is considering a voluntary opt-in pathway for physician-led hospitals located in Core-Based Statistical Areas (CBSAs) not currently selected for TEAM participation.

PHA praised the request for information as a bold and evidence-based step forward.

“CMS has taken a forward-thinking and courageous step by recognizing what the evidence has shown for decades: physician-led hospitals deliver outstanding quality, lower costs, and genuine competition that benefits patients,” Carlos Cardenas, MD, PHA’s president, said. “We are deeply grateful to CMS and CMMI for their willingness to explore what role these hospitals can play in making the TEAM model more successful. This proposal reflects exactly the kind of innovative, patient-centered thinking that American healthcare needs.”

CMS’s RFI comes amid growing momentum to lift the ban on physician-led hospitals. Eighty-eight healthcare organizations, including one of the nation’s largest health insurers, have already called for removing the restrictions, and bipartisan legislation would allow physicians to open and operate hospitals in rural healthcare deserts.

“Opponents of physician-led hospitals have had 15 years since the Affordable Care Act placed handcuffs on physician-owned hospitals to prove they could deliver more options, higher quality, and lower costs to Americans,” Cardenas added. “Instead, the opposite has happened. It’s time to give physicians, who possess the highest level of clinical training in the healthcare system, the opportunity to compete, expand access and deliver the care Americans deserve.”

More than 240 physician-owned hospitals operate across the United States, and the research supporting their performance is overwhelming. Studies have consistently shown that physician-led hospitals increase competition, lower Medicare costs, feature greater patient satisfaction and deliver higher quality service:

• A 2023 study found that physician-led hospitals could have generated up to $1.1 billion in Medicare savings in 2019 alone.
• A 2023 study published in JAMA Network Open by researchers at Johns Hopkins University found that physician-owned hospitals charge 17.5 percent lower commercial negotiated prices and 46.7 percent lower cash prices than competing hospitals in the same market for the same procedures.
• A 2023 study commissioned by the Physicians Advocacy Institute and Physicians Foundation found no evidence of cherry-picking. Researchers analyzing nearly 740,000 Medicare patients across 186 physician-owned hospitals found that patient age, race, ethnicity and comorbid medical conditions were virtually identical between physician-led and traditional hospitals in the same geographic areas.

Studies also note the critical role physician-led hospitals play in reducing market concentration. Markets with physician-led hospitals have 16.7 percent lower healthcare market concentration, with only 4 percent of those markets considered “very highly concentrated” compared to 13 percent in markets without POHs. As consolidation continues to drive up costs and limit patient choice, physician-led hospitals represent a powerful and proven market-based antidote.

The proposed IPPS rule includes a Request for Information (RFI) seeking public comment on a range of questions related to physician-led hospital participation in TEAM, including potential waivers of the ACA’s Section 6001(a)(3) restrictions, geographic eligibility, program integrity requirements, and episode category design. PHA will submit comprehensive comments in response to the RFI.

About Physician-Led Healthcare for America (PHA)

PHA is an advocacy organization dedicated to promoting policies that support physician-led hospitals and other physician-led healthcare entities. PHA believes that empowering physicians is the key to improving healthcare quality, increasing patient access and lowering costs for all Americans.

Click here to learn more about PHA.