New research compares prices for eight shoppable services between physician-owned hospitals (POHs) and their competitors.
Median commercial negotiated prices and cash prices are lower for general acute-care POHs than for non-physician-owned facilities in the same market, according to a study published in JAMA Network Open.
Researchers examined 156 POHs and 1,116 non-POHs located in 78 hospital referral regions to better understand the differences in commercial negotiated prices and cash prices between hospitals for most common procedures.
The analysis focused on eight CMS-designated shoppable services: spinal injection, physical therapy–therapeutic exercise, MRI scan of lower spinal canal, CT scan of abdomen and pelvis, comprehensive metabolic panel, blood test-clotting time, and emergency department visit levels 3 and 4.
Using pricing information (as of January 2023) available through the hospital price transparency rule, the researchers expected to find that POHs would have higher prices than their competitors.
Instead, the study uncovered that for the same procedure in the same region, median commercial negotiated prices and cash prices among POHs were 33.7% and 32.7% lower than those of non-POHs, respectively.
Additionally, POH status was associated with 17.5% and 46.7% lower negotiated prices and cash prices, respectively.
MRI and physical therapy services had the biggest differences in commercial negotiated prices between facilities, costing 33% and 30% less at POHs, while CT and MRI services had the widest gap in cash prices at 36% and 35% lower at POHs.
Researchers posited that POHs might be able to accept lower commercial prices because they serve fewer Medicaid patients and provide less charity care. In the study, POHs served fewer Medicaid patients than non-PHOs at 3% vs 7.1%, respectively, and provided less charity care at 1.3% vs 3.2%, respectively.
Under the Affordable Care Act, POHs are prohibited from expanding or establishing new facilities, but there have been efforts to reverse the ban.
The American Hospital Association (AHA) recently pushed back on those efforts by releasing a study showing POHs treat less medically complex patients and have margins over 15 times higher than other facilities.
"The growth of physician-owned hospitals was restricted by Congress for good reasons and those remain valid today as this analysis shows," AHA president and CEO Rick Pollack said in a statement. "Physician-owned hospitals undermine our nation’s health care safety-net and jeopardize access to care by cherry-picking the most profitable cases and avoiding patients with complex conditions and lower-reimbursing coverage."
Jay Asser is the contributing editor for strategy at HealthLeaders.
A study published in JAMA Network Open looked at commercial negotiated prices and cash prices between hospitals for eight CMS-designated shoppable services.
The findings showed that median commercial negotiated prices and cash prices were 33.7% and 32.7% lower at physician-owned hospitals compared to non-physician-owned hospitals.
Physician-owned hospitals serve fewer Medicaid patients and provide less charity care, which could be part of why they're able to accept lower commercial prices.