Background: Growth of physician owned hospitals (POH) in the United States has been restricted since the 2010 passage of the Affordable Care Act (ACA). Federal policy makers wanted to restrict POH, due to concerns that POH may cherry pick healthier patients, treat fewer Medicaid patients, and have higher service utilization. Data has shown an unclear effect on quality, utilization, and cost. More current empirical data on characteristics of POH and whether physician ownership status is associated with differences in cost and patient outcomes is needed to determine the potential effects on healthcare delivery.
Methods: Physician owned hospitals and non-physician owned hospitals (non-POH) participating in Medicare from 2009-2021 was our primary sample. Medicare inpatient claims from 2009 and 2021 were merged with the American Hospital Association Annual Survey results, which was used to identify POH. The primary treatment group were POHs that had episodes of care for ten leading procedures and medical conditions. We focused on 2009 and 2018 data to accommodate for time before the ACA’s restrictions on POH went into effect and to allow for a significant amount of time after restrictions were in place. Control data was from episodes of care at non-POH from 2009 and 2021 for the same ten leading procedures and medical conditions. Our primary outcome variables were mortality rate, readmission rate, total spending, and hospital operating margin across a 90-day episode of care following an index clinical admission. We used propensity matching and a linear regression model to assess the relationship between POH and non-POH hospital differences in mortality, readmissions, cost, and operating margin.
Results: We identified a net loss of 59 POHs from 2009 to 2021. Compared to non-POH, POH were more likely to be for-profit (86.1% vs 12.8%, p< 0.001), and located in the South (66.4% vs 33.3%, p< 0.001). Using linear regression, there were similar 90 day mortality rates (-1%, -1.6 to -0.4%, p=0.0008), readmission rates (-0.15%, -1.4 to 1.1%, p=0.81), and total costs (-$399, -$1,022 to $224, p=0.21). POH were associated with an increased hospital operation margin (0.05, 0.02 to 0.08, p< 0.002).
Conclusions: Overall, we found that physician owned hospitals were likely to be small, for-profit, non-teaching hospitals, located in the south. POH were associated with similar mortality rates, readmission rates, and total payments. POH had higher hospital operating margin than non-POH. Data on whether POH are associated with changes in cost and patient outcomes have been mixed. Our findings suggest similar differences between POH and non-POH in 90-day mortality, readmissions, and total cost. Given the lack of significant differences, POH may not warrant continued restriction on their growth.