SCHIP bill includes tough restrictions on doctor-owned hospitals

The State Child Health Insurance Program expansion bill that was passed by the House of Representatives last week includes restrictions on physician-owned hospitals that may put many out of business (Source: “Doctor-Owned Hospitals Fare Poorly in Child Health Bill,” Wall Street Journal, Jan. 22, 2009).

Rep. Pete Stark, (D-Calif.), who chairs the House Ways and Means Committee and is a long-time critic of physician-owned hospitals, added language to the SCHIP bill that would likely halt new construction of doctor-owned facilities by making them unable to receive Medicare reimbursements and seriously restrict operations at existing ones.

Critics including Stark and officials at the American Hospital Association say physician-owned hospitals drive up health costs because doctors with an ownership stake in a hospital will order more costly tests and procedures. According to Congressional Budget Office estimates, the doctor-owned-hospital prohibitions included in the House version of the child-health bill would save the government $1.2 billion over 10 years in lower Medicare costs, a savings some in Congress are counting on to pay for the expansion of child coverage. The restrictions are not included in a Senate version of the SCHIP bill that is slated for a final vote in the coming days, although it could be inserted in final version that would be sent to President Barack Obama.

Brett Gosney, president of industry trade group Physician Hospitals of American says claims that doctor-owned facilities increase health costs are  "completely outrageous and false," adding that physician-owned hospital actually save the government money because they have lower complication rates, lower infection rates and lower return-to-surgery rates than other hospitals.

According to the PHA, there are currently eight physician-owned hospitals in Ohio (two in Dayton and one each in Cincinnati, Lima, Proctorville, Hamilton, Fairfield and Newark).