Getting physician-owned hospitals involved with Medicare policy: ‘This is a big step’

Any health care system has clinical and financial risks, but doctors are the best ones to control those and lead organizations that produce healthy patients and healthy bottom lines, advocates say.

This spring, health care is paying new attention to physician-owned hospitals because the U.S. Centers for Medicare & Medicaid Services (CMS) has hinted at willingness to offer a second opinion on the Affordable Care Act rules over them. CMS is asking for information about physician-owned hospitals in its published rules for the Transforming Episode Accountability Model (TEAM) payment model.

Carlos Cardenas, M.D., a Texas gastroenterologist, is president of Physician-Led Healthcare for America (PHA). It is an advocacy group with the mission to promote, educate and advocate exceptional patient-centered care through physician leadership.

This article continues his conversation with Medical Economics about the prospects of new freedoms for physician-owned hospitals. This transcript has been edited for length and clarity.

As for the TEAM model and physician-owned hospitals, a public comment period runs through June 9. More details are here. The request for information reasoning can be found under heading “E. Hospital with Physician Ownership Request for Information.”

Medical Economics: A 2023 study cited by PHA found that Medicare could have saved more than $1 billion on the 20 most expensive conditions if care had been delivered at physician owned hospitals. How credible is that finding and what really drives those cost differences?

Carlos Cardenas, M.D.: The study was very credible. It, and what is being looked at now in the larger sense in the TEAM approach to this is, we're looking at procedures that we can look and measure to see how you might scale something that would help us to increase the better use of resources. And do we maintain outcomes? Can we improve outcomes? And in that, patients are receiving high quality care? And we're preventing readmissions and the other things that add to cost by including the decision-makers, rather, the physicians who are actually delivering care in the process of creating the model to deliver the care and then measuring it. I think that's where we find the economies, and we find the savings, and we find that we can enhance quality. To a certain extent, the request for information and for “how can we do this?” is a nod to some of that. Participating in the TEAM concept lets us focus on high resource use and/or frequent diagnoses. And it's a start, but we've got to start if we're going to finish and that's where we can find what things work and what things don't. There's that opportunity, and for the first time, we're actually being asked to participate and be at the table to talk about it.

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Medical Economics: One of the criticisms that has been leveled at physician ownership of hospitals is that overutilization could drive costs up. How do you address that concern?

Carlos Cardenas, M.D.: That that was looked in a large study where they found no evidence of, basically no difference between physician-led/physician-owned hospitals and traditional hospital care models, that the populations that were being served were basically the same. And given all of that, physician-led hospitals, physician-owned hospitals were saving money, at the same time delivering high quality care with better resource management. And at the end of the day, I think that the data itself has spoken, and that's part of why I think we got the ask.

Medical Economics: Not to belabor the point about potential criticisms, but I did want to ask you to what I like to call the fruit question about cherry-picking patients.

Carlos Cardenas, M.D.: The answer is real simple: no. I think the studies have shown that there is no cherry-picking. I can tell you, from looking at our vantage point in south Texas, we have never denied a single patient who's come to our door regardless of their ability to pay. Period.

Medical Economics: Is that a risk?

Carlos Cardenas, M.D.: There can be a risk for overutilization in any model, and so I think that that's why, in the last couple of years, couple of decades, we have come under increasing scrutiny, and a variety of regulations have been put in place that I think, have helped to move us to better utilization, than we probably had when I started my career. But by the same token, we draw a line when it comes to what is the right thing to do for the patient, and that's where we can go too far on the other side of that equation. But we need to find the balance and that's why it's so important to have physicians at the table to help us to make those policy decisions and create the models of the future that, again, focus on what we do at the bedside. What are the outcomes? What does it cost to do what we need to do? And what can we do to try to improve on all aspects of the equation?

Medical Economics: When the Medicare inpatient rule comes out later this year, if the request for information results in no change, what happens next?

Carlos Cardenas, M.D.: First of all, I would say thank you for including us in the discussion and looking to us for possible innovations. Then I think we continue to do what we're talking about, and that is to continue to educate, continue to inform, continue to advocate for a model that includes physician-led care. We're seeing a move to that because the data is definitely pointing in that direction and we have an opportunity to maybe try some things under the veil of CMMI (the Center for Medicare and Medicaid Innovation) and the TEAM experiment. I would be more concerned about what happens after TEAM. Can we continue? Are we going to be allowed to expand? Are we going to be allowed to do these other things? Those are questions that we need to get think about answers for. But conceptually this is a big step because it's about having all the players in in in the marketplace together figure out how to make health care better, how to do things that impact, again, the patient, and what we can do together to try to do the best we can with the resources we have.

Medical Economics: We serve an audience of primary care physicians. What would you like to say to them? Or what would you like them to know?

Carlos Cardenas, M.D.: What I'd like to say to our primary care physicians is that they are the base of the pyramid. As a community of physicians, they are our base. They deal with the issues, with our patients, every single day, on both the community level and on the personal level. They are, I think, the backbone of what is health care in America is, our primary care physicians, and we need to have them available to be able to participate in the models that we create.