Data from Dobson | DaVanzo reveals that physician-owned hospitals (POHs) perform poorly on readmissions and report fewer Medicare quality measures compared to full-service community hospitals. POHs tend to treat a younger, less complex patient population with lower Medicare or Medicaid enrollment. Concerns arise as this analysis validates previous studies indicating that POHs avoid less profitable patients, raising program integrity and health equity risks for Medicare. Policymakers should carefully consider the impact of relaxing Medicare’s prohibition on physician self-referral to new POHs.
Recent data from Dobson | DaVanzo sheds light on the performance of physician-owned hospitals (POHs) compared to full-service community hospitals. The study becomes particularly relevant as some members of Congress contemplate relaxing Medicare’s prohibition on physician self-referral to new physician-owned hospitals and easing restrictions on their expansion.
According to the study findings, POHs publicly report on fewer Medicare quality measures and fare worse when it comes to readmission penalties compared to their full-service community hospital counterparts. Additionally, the research reinforces previous conclusions that POHs tend to serve a patient population that is generally younger, less medically complex, and has a lower likelihood of being enrolled in Medicare or Medicaid.
The report raises concerns as it suggests that POHs might strategically select their patients by avoiding those who are less profitable, such as Medicaid and uninsured patients. Consequently, they end up treating fewer medically complex cases and providing fewer emergency services. This trend has been consistent for over 15 years, as numerous studies, including those by the Government Accountability Office, Health and Human Services Office of Inspector General, and the Medicare Payment Advisory Commission, have also found that POHs do not handle the same scope, complexity, or acuity of patients as non-POHs within the same market.
The American Hospital Association (AHA) and the Federation of American Hospitals emphasize that this analysis underscores the potential program integrity, access, and health equity risks posed by POHs for the Medicare program. By catering to the healthiest and wealthiest patients, POHs might inadvertently exacerbate disparities and inequalities within the healthcare system.
Overall, the study calls for careful consideration before weakening Medicare’s prohibition on physician self-referral to new physician-owned hospitals and urges a comprehensive assessment of the impact such policy changes may have on patient care, healthcare equity, and program integrity.
