New Study Demonstrates How Physician-owned Hospitals Threaten Patient Care in Rural Communities

WASHINGTON (November 18, 2025) — Today the Federation of American Hospitals and the American Hospital Association released a new study conducted by Dobson | DaVanzo that underscores the threat to patient care of expanding physician-owned hospitals (POHs) in rural communities. The study finds that if a new POH opens in the same market as a full-service rural hospital, the full-service hospital’s margins would decrease significantly as the POH siphons off healthier and commercially insured patients, risking access to 24/7 care and community jobs.

“Full-service hospitals across the country are struggling, and rural hospitals are particularly vulnerable to headwinds . . . Removing restrictions on POHs, which are notorious for selectively picking the healthiest and wealthiest patients and allowing them to open near full-service rural hospitals, will jeopardize access to 24/7 care in rural America,” write Don May, Executive Vice President, Policy, Federation of American Hospitals, and Ashley Thompson, Senior Vice President, Public Policy Analysis and Development, American Hospital Association, in an accompanying blog.

“This new report adds to the overwhelming body of evidence that led Congress to enact a ban on new POHs 15 years ago. Congress cannot forget the dangers POHs pose to high-quality, 24/7 patient care for all,” .

Previous analysis shows that POHs treat less medically complex patients and those who are more likely to have commercial health insurance coverage, which reimburses hospitals at higher rates than public payors, such as Medicaid and Medicare, which often fail to cover the full costs of providing care. POHs also provide fewer emergency services, report on fewer quality measures, and have higher readmission measure penalties compared to other hospitals. Today’s analysis further explains the damage of expanding POHs in rural communities by finding that:

• The entry of a new orthopedic POH could reduce the margin of an average sole community hospital by more than half (from 2.5% to 1.2%).
• The introduction of a new cardiac POH could lower overall sole community hospital margins to negative 1.2% — pushing the hospital fully into the red.
• The introduction of a new “other” POH, meaning either another specialty care or general POH, could reduce overall sole community hospital margins to an unsustainably low negative 7.3%.

Read the full Dobson | DaVanzo report.