NCPA - National Center for Policy Analysis

Physician-Owned Hospitals

August 26, 2011

A competitive health care market is vital to ensure high quality, cost effective health care for patients.  Some of the most competitive participants in the health market in recent years have been physician-owned hospitals (POHs), says Spencer Harris, a health care policy analyst, and Brad Zarin, a research associate, with the Texas Public Policy Foundation.

  • These facilities provide broad consumer choice, cutting-edge innovation and equipment, high quality of care and high patient satisfaction.
  • This added competition from POHs has been a wakeup call for some general hospitals, forcing them to innovate to stay competitive.
  • However, provisions in the Patient Protection and Affordable Care Act (PPACA) have essentially eliminated future expansion of POHs.
  • By effectively removing this competition from the marketplace, access to high quality health care for patients will be diminished.

The prohibition in the PPACA against physician-ownership of hospitals removes a clear source of competition to non-physician owned hospitals.  As a result, the law constricts the economic effectiveness of the physician-owned facilities.  Just as the free market has served us well in so many other sectors of the American economy, so free market solutions should remain a major force for more effective delivery of health care services as well, say Harris and Zarin.

Source: Spencer Harris and Brad Zarin, "Physician-Owned Hospitals," Texas Public Policy Foundation, August 2011.

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