I always believed that, if we could harness the entrepreneurial spirit of the American physician, we could be capable of great things. Physician decisions drive much of what is good and bad about our health care system. Their pens are the biggest driver of cost and their vigilance is the most significant driver of quality. It is a shame that physician-owned hospitals are accelerating the creation of a two-tier system by cherry-picking healthy, well-insured patients.
There are overwhelming monetary incentives for physician-owned hospitals to market to the healthiest and wealthiest, who seek a narrow list of procedural interventions. But then those physicians are rewarded with value-based payments for high satisfaction scores and low readmission rates as mandated by the Affordable Care Act.
What happens to the rest of the patients—the ones with one if not several chronic conditions and minimal if any insurance?
They find their way to teaching hospitals, which treat a disproportionate number of “dual eligibles” (seniors so poor they need both Medicare and Medicaid support), the disabled, and nonwhite patients. Teaching hospitals can quickly become underfunded and over-stretched, offering opportunities for physician-owned hospitals in the market to deliver better quality, albeit more expensive, health care to those who have the ability to choose. In spite of that, many teaching hospitals deliver excellent service and care.
In a May 14 Wall Street Journal article, Alicia Mundy wrote, “Doctor-owned hospitals are largely privately held, so it’s difficult to know their profit margins, despite the law’s growth restrictions. According to the American Hospital Directory, a private firm that provides data about some 6,000 U.S. hospitals, many physician-owned hospitals have enjoyed 20 to 35 percent profit margins in recent years.”
