Healthcare Reforms Decimate Doctor-Owned Hospitals

The new healthcare reform laws is having a devastating effect on the nation’s physician-owned hospitals, according to officials for the Physician Hospitals of America. The new law bans the construction any new doctor-owned hospitals and places stiff restrictions on the expansion of existing facilities.

When the Patient Protection and Affordable Care Act was signed on March 23, there were about 70 new or expanded physician-owned facilities under construction. Since then, work has been halted on 27 of the facilities. Existing hospitals need to be in operation by that date and must obtain Medicare certification to be grandfathered in under a Dec. 31 deadline.

The law also effectively prohibits any expansion plans for the nation’s 260 doctor-owned hospitals. Although some expansion plans may be approved, the hospitals will have to jump through several complex bureaucratic hoops before they are allowed to go through with those plans. The ban also extends to new investments in whose facilities.

According to PHA officials, the law also jeopardizes more than 25,000 jobs and puts the billions of dollars already invested in hospital construction projects in limbo. Much of that money will be lost, says the PHA.

The provisions in the new law that hamstrung the doctor-owned hospitals had the support of some big-time lobbyists, according to an editorial in the Washington Examiner, including the American Hospital Association, which represents more than 5,000 community hospitals. The AHA spent more than $18 million on lobbying efforts last year, according to the editorial; in contrast, the PHA spent just $300,000.

The reason for the heavy lobbying push is clear: Doctors bring in big money for hospitals. Physicians generate an average of about 1.5 million in revenue for affiliated hospitals, according to a recent survey by Merritt, Hawkins & Associates. One full-time cardiologist alone brought in an average of $2.2 million a year, the survey showed.