An ACA Repeal With (Some) Appeal

The hours are finally getting to R. Blake Curd, M.D.

As a doctor, he’s grown accustomed to working odd hours to care for patients. But over the last seven years, his schedule—and those of his colleagues—has increasingly become more erratic as the vacancy rate at Sioux Falls Specialty Hospital dropped to zero.

The 32-year-old South Dakota institution routinely operates at full capacity, extending the workday for most of the staff and pushing elective surgeries like knee and hip replacements to the weekend. The hospital fielded more than 3,600 potential candidates for its 35 available beds in the most recent year for which data is available, admitting 1,627 subjects, and performing 1,042 outpatient and 306 inpatient procedures, according to U.S. News & World Report.

“In many cases, patients have to wait forever,” Curd, an orthopedic surgeon and the hospital’s CEO, told the Washington Examiner in July. “We don’t have the physical capacity to take care of them.”

Curd’s problem is easily resolvable, but the most obvious solution—expansion—is illegal under the Affordable Care Act (ACA, a.k.a., Obamacare). An obscure ACA provision (Sec. 6001) bans the expansion of hospitals that are partly or wholly owned by doctors, and it forbids the creation of such facilities unless they forgo Medicare and Medicaid reimbursement. Lawmakers created the ban to appease longstanding concerns by non-profit community and for-profit hospitals over improper patient referrals by doctors at physician-owned facilities. These doctors, opponents have historically claimed, cherry-pick healthier patients as well as those needing specialized, profitable medical treatment, driving up overall healthcare costs.

Physician-owned hospital (POH) proponents, however, deny the accusations, citing several studies that disprove the charges. Analyses by both BMJ and Health Affairs found no evidence of preferential treatment or financial conflicts of interest among POHs, but rather noted similar referral patterns to non-profit/for-profit facilities. “The propaganda put out against physician-owned hospitals…is false and must be rejected outright,” stated a March 1 letter to Congress from the Physician Hospitals of America (PHA), a Washington, D.C.-based support and advocacy group. “The first and most prominent false claim is that physician-owned hospitals ‘cherry pick’ healthier and more profitable patients due to financial conflicts of interest. This is breathtaking as AHA and FAH member hospitals have the same perceived conflicts, with well over 50 percent of physician practices now owned by large hospital systems, which require their physicians to refer to their own hospitals and ancillary facilities. Talk about a conflict of interest.”

The PHA contends that physician-owned hospitals improve care quality, create jobs, and advance state economies. Moreover, an Avalon Health Economics report concluded that POHs saved Medicare $3.2 billion over 10 years.

The American Hospital Association (AHA), naturally, refutes the latter claim, insisting the POH ban reduced the federal deficit by $500 million during the same time period. The group also alleges that POHs are penalized for unnecessary readmissions at 10 times the rate of non-physician-owned facilities. “The 2010 law is working exactly as planned to protect taxpayers and ensure a more level playing field,” declared a June 1 letter to U.S. senators from the AHA and Federation of American Hospitals. “The law as it stands protects patients, businesses, and taxpayers. It also helps ensure that full-service hospitals can continue to meet their mission to provide quality care to all patients…”

Not exactly all, PHA asserts: The group estimates that 37 new hospitals, 40 nearly completed construction projects, and 20 major expansions have been sacrificed under the law, costing the American economy $200 million in tax revenue and 30,000 jobs.

With an ACA repeal all but dead, the PHA and physician-owned hospital proponents are pressuring Congress to act upon legislation introduced earlier this year in both the House and Senate that would overturn the POH ban. The House version, introduced by U.S. Rep. Sam Johnson (R-Texas), has garnered support from more than 55 national and state organizations, many of which are orthopedic-related.

“The orthopaedic profession exists for the primary purpose of caring for patients, and indeed, orthopaedic surgeons play a vital role in keeping our nation in motion through the prevention and treatment of musculoskeletal care,” the American Academy of Orthopaedic Surgeons maintained in a July 5 formal statement. “Physician-owned hospitals allow orthopaedic surgeons—and other physicians—who know patient care best, to be more involved in some of the day-to-day decision making of the hospitals. Limiting the ability of dedicated physicians to open or expand facilities to treat their patients penalizes those patients who would otherwise benefit from this valuable care.”

There seems to be little momentum to change the ban, though the Centers for Medicare and Medicaid Services (CMS) requested feedback in April about possibly rescinding the measure.

The U.S. Chamber of Commerce supports the ban, claiming it prevents costs from increasing. But CMS gives high-quality ratings and top awards to POHs for helping deliver value to Medicare.

“It’s hard for me to understand, based on the evidence we have, what justifies banning this entire group of hospitals,” said Dr. Ashish Jha, director of Harvard University’s Global Health Institute and co-author of the BMJ study. “I just think Congress got this one wrong.”

It wouldn’t be the first time.