NCPA - National Center for Policy Analysis


January 28, 2009

North Texas physicians are bracing for the possibility that an early victory for the Obama administration to reauthorize funding for the State Children's Health Insurance Program (SCHIP) - which is designed to expand health care coverage to 4 million children from low-income families -- will pose a threat to the viability of doctor-owned hospitals, says the Dallas Business Journal.

Certain provisions of the legislation would not allow doctor-owned hospitals to add beds or physician investors.  And hospitals under development would not be able to get all-important Medicare certification, greatly limiting their ability to get government reimbursement.

While the proposed legislation would affect physician-owned hospitals from coast to coast, Texas has the majority of the hospitals owned under this kind of arrangement:

  • Nationwide, there are 199 such hospitals and more than a quarter of that total -- about 60 -- are in Texas.
  • Another 50 of the 85 physician-owned hospitals under development nationwide are also located in the Lone Star State.
  • The Dallas-Fort Worth area is a hotbed for physician-owned growth, with 21 existing facilities and more than 20 in development, according to the Physician Hospitals of America, a trade group.

If the SCHIP legislation is passed in current form, physician-owned hospitals would start to wither on the vine.  It's a real problem because they can't adjust to market flux.  Their evaluations will go down, says the Journal.

Source: Joyce Tsai, "Doctor-owned hospitals at risk," Dallas Business Journal, January 23, 2009.

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