One of the less publicized aspects of recent Congressional healthcare reform efforts is the continued efforts of some legislators to severely limit physician ownership in specialty hospitals, this time through the current U.S. House of Representatives and Senate bills.
There are nearly 200 specialty hospitals in the United States, as well as many in various stages of development. These specialty hospitals most commonly concentrate on surgical procedures, although there is a subset of the specialty hospital market that focuses on cardiovascular services, and there is a growing trend toward specialization in other nonsurgical areas such as special cancer treatment hospitals, children’s specialty hospitals and renal hospitals.
These hospitals are often physician-owned and operate pursuant to a specific exception to the federal Stark Law known as the “whole hospital exception” which permits physician to refer to the hospitals in which they own equity. The U.S. House of Representatives and Senate have both passed bills containing language that seriously alter the so-called “whole hospital exception” to the Stark Law on which these specialty hospitals rely, including by limiting the ability of existing hospitals to expand, limiting the level of physician ownership in such hospitals and prohibiting the development of new physician-owned hospitals which have not yet achieved certain developmental milestones (such as Medicare certification) by a set date.
The House and Senate are working to consolidate their reform bills but it is yet unknown whether Congress will be able to pass any health care reform bill, particularly given the recent shifts in the power with the election of new Massachusetts Senator-elect Brown. Even if a consolidated bill is adopted, the details of such limitations on physician-owned hospitals are unclear; however, most industry leaders believe any consolidated bill would include some additional restrictions on physician-owned hospitals.
One thing is certain. The political future of physician-owned specialty hospitals is hazy, and if the current healthcare reform efforts do not produce a bill with restrictions on physician-owned hospitals, industry opponents are unlikely to lay down their swords.
Physician Hospitals of America (PHA) is the industry trade association for physician owned hospitals.