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Physician-Owned Hospitals Face New Regulations, Limits on Growth

Written by Kathryn Nix

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Obamacare was going to expand access to higher-quality health care for all Americans, right? Well, though the legislation can purport to extend health insurance for millions of currently uninsured Americans, when it comes to access to high-quality care, Obamacare is more likely to have the opposite effect.

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One way the President's health plan will kill quality care is by putting a chokehold on physician-owned hospitals. Tight regulations include a ban on expansion, restrictions on new investments, requirements to submit annual reports to the feds, and fines for failure to comply with new transparency rules.

As Heritage's Rob Bluey highlights in the Washington Examiner, Obamacare will cause development of 24 new physician-owned hospitals to cease. An additional 47 will struggle to meet the deadline to complete construction and receive their Medicare certification.

Physician-owned hospitals provide competition, which forces physician-owned and community hospitals alike to perform better. Opponents of physician-owned hospitals claim that they cherry-pick their patients, but according to Bluey, "More than 90 percent of the patients at [physician-owned] Westfield Hospital aren't affiliated with the hospital's partners. [The] hospital takes pride in a lower nurse-to-patient ratio than the community hospital and an efficient emergency room with a 15-minute wait."

At a time when access to care will be in growing demand due to a greater number of insured Americans, Congress and the President should have been doing everything in their power to expand access, especially to higher-quality care. So why put the kibosh on physician-owned hospitals? Bluey points to the combined $22 million the American Hospital Association and the Federation of American Hospitals spent on lobbying in 2009, effectively buying their way out of competition.

So instead, Congress effectively lowered the bar for hospital performance. Writes Bluey, "Ellen Pryga, director of policy [for the American Hospital Association], defended the new regulations on physician-owned hospitals as necessary to streamline patient care and avoid conflicts of interest on patient referrals."

Obamacare is already certain to cause a major shortage of doctors. The provisions affecting physician-owned hospitals will similarly affect access to hospital care. Says Molly Sandvig, the executive director of Physician Hospitals of America, "At a time when we should be looking for additional ways to provide more access, this is going to have the opposite effect."

See The Heritage Foundation's Health Side Effects resource section for more on this issue.

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