Physician-owned hospitals could save Medicare $1.1 billion annually for some conditions

Physician-owned hospitals (POH) have emerged as potential sources of significant cost savings for Medicare, promising more than $1.1 billion in annual savings when evaluating the total cost of care for 20 of the most expensive conditions faced by Medicare patients, according to a study from UConn Health and Loyola University Chicago.

The research, commissioned by the Physicians Advocacy Institute and The Physicians Foundation, presents evidence of the financial advantages offered by physician-owned hospitals in the health care landscape.

The study found that across all hospital referral regions served by POHs, the Medicare program and its beneficiaries saved between 8.6% and 15.2% compared to traditional hospitals for the 20 most expensive conditions. Researchers also highlighted the similarity in patient demographic characteristics and comorbidity levels between POHs and traditional hospitals operating within the same hospital referral regions.

The study underscores the potential for physician-owned hospitals to drive substantial cost reductions in patient care across various expensive health conditions. If traditional hospitals were to match the cost-efficiency of POHs within their respective regions, Medicare could realize substantial savings across these medical services and potentially extend those benefits to other areas of health care, according to the study.

Michael J. Darrouzet, Physician Advocacy Institute’s vice president, and the executive vice president and CEO of the Texas Medical Association, underscored the role of physician-owned hospitals in improving patient care. "Physicians are in the best position to make decisions with and for their patients, so it’s not surprising that congress is considering allowing new physician-owned hospitals that align the interests of ownership and practicing physicians to improve patients’ care," he said in a statement. "Now, congress has another reason to act. Hospitals owned by physicians promise significant cost savings when it comes to Medicare patients’ most expensive medical conditions. Better quality and notable cost savings to patients and taxpayers is a clear signal that physician-owned hospitals are a policy worthy of adoption."