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Draft Bill Threatens Existence of Physician-Owned Hospitals

John Commins, for HealthLeaders Media, July 9, 2009

The American Hospital Association and other large hospital groups have made a "quid pro quo" deal with the Obama administration and Democrats in Congress to support healthcare reform in exchange for legislation that would prove "devastating" for physician-owned hospitals, the industry trade group Physician Hospitals of America claims.

"To put this anti-competitive issue into the deal between the Administration, Congress, and the hospital associations makes no sense and demonstrates the desperation of many hospitals to remove healthcare decisions from the hands of those who should have the biggest say, the physicians and patients," says Molly Sandvig, executive director of the Sioux Falls, SD-based PHA, which represents about 220 physician-owned hospitals in 32 states.

Sandvig says draft language in the 852-page House healthcare reform legislation is nearly identical to "anti-physician hospital language" placed in the SCHIP bill in January, and the language is expected to be included in the Senate Finance Committee bill too.

"The language included in the draft House healthcare reform proposal, if passed as is, would have a devastating effect on physician hospitals. Existing physician hospitals would 'whither on the vine' since they would not be able to grow to meet the needs of the healthcare marketplace," Sandvig says. "From Jan. 1, 2009 on, hospitals owned by physicians that do not yet have Medicare Provider Numbers, would not receive their certification if the physician-owners refer patients to their hospitals. Obviously, many hospitals currently under development would be unable to open and hundreds of millions of dollars could be lost."

On Wednesday, AHA President/CEO Rich Umbdenstock, Catholic Health Association of the United States President/CEO Sister Carol Keehan, and Federation of American Hospitals President Chip Kahn, issued a joint statement of support for healthcare reform.

They also specifically said they were "pleased to see restrictions on physician self-referral to hospitals in which they have an ownership interest" in draft legislation.

Rick Wade, a spokesman for the American Hospital Association, says AHA has been consistently opposed to physician-owned hospitals. "Our members have an enormous problem with physician self-referral, and we've been consistent in trying to rein that in in the legislative process," Wade says. "We think there is an enormous conflict-of-interest problem here, and we are not doing anything differently in the health reform debate that we haven't done all along on this issue."

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