There is a little-known – but critical – law that helps ensure hospitals are able to care for their communities.  It is a ban on physician self-referral to hospitals in which they have an ownership interest. A permanent ban was put into effect in 2010 and eliminating it would raise the federal deficit by $500 million. The ban has long had bipartisan Congressional support and the initial moratorium on the practice of self-referral passed in 2003 under a Republican Congress and was signed into law by a Republican president. 

A recent column touting the benefits of physician owned hospitals failed to say that eliminating the ban would result in gaming of the Medicare program. In addition, it could jeopardize patient access to emergency care, potentially harm sicker and lower-income patients, and damage the safety-net provided by full-service hospitals.

These arrangements have been studied for more than 15 years by Congress, several administrations and independent organizations such as The Medicare Payment Advisory Commission. The data is clear.  Several studies show that physician self-referral leads to higher per capita utilization of health care services, which can be costly to patients. This is the epitome of health care inefficiency and rising costs.


The reality is physician-owned hospitals typically provide only the most profitable services, such as cardiac, orthopedic or general surgery.  By steering their most profitable cases to facilities they own, physician-owners drain essential resources from full-service community hospitals, which depend on a balance of services and patients to provide expensive, life-saving services such as trauma centers, burn units and mental health services – vital services generally not provided by physician-owned hospitals. 

In fact, almost half of physician-owned hospitals not only lack emergency rooms, but those that claim to often limit the scope of their treatment to minor ailments, and those that do not  are often ill-equipped to respond to medical emergencies that happen in their own hospitals. 

Community hospitals strive to improve what they do every day as technology and medical techniques advance – all with the goal of providing a healing environment for all those in need.  Full-service hospitals take their mission of caring for communities very seriously and will continue to provide the best care possible to their entire community. This proposal would do harm to that mission, and is ill advised.

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