Bill Could Kill Doc-Owned Hospitals

Feds may see $1.2B in savings if for-profit facilities come under new regulation

By Ambreen Ali, Newser User

Posted Jan 22, 2009 12:36 PM CST

(Newser) – A clause in a child-health bill just passed by the House would restrict Medicare payouts for, and the expansion of, doctor-owned hospitals, the specialized-care units blamed for hurting income at nonprofit facilities, the Wall Street Journal reports. There are 200 such facilities nationwide, touted for their efficiency but criticized for giving physicians a financial incentive to recommend unnecessary tests and surgeries.

If the bill’s Senate counterpart—which has no such restrictions—passes next week, the two will be combined and presented to President Obama. The final version may contain the limits, held up for years by Republican opposition and presidential vetoes. Congress expects to save $1.2 billion if the hospitals are contained, but the industry trade group calls that figure “completely outrageous and false.”

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Doctor-owned hospitals don't always have money-losing social necessities like emergency rooms, labor units, or mental health facilities. (AP Photo)

Most hospitals are nonprofits, and they have seen their profits fall as doctors funnel lucrative patients to hospitals where they have financial stakes. (Houston Chronicle)

Proponents of physician-owned hospitals say they are more efficient than others and thus reduce the overall cost of health care, including Medicare. (AP Photo)

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It's a conflict of interest between the needs of the patient and the physician's self-interest. They refer the well-reimbursed and less difficult cases to places they have a financial interest in. - Rick Pollack, executive vice president of the American Hospital Association

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Bill Could Kill Doc-Owned Hospitals