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Physician-owned hospitals provide health care at lower cost than non-physician-owned hospitals

Article

Study examines prices of 8 procedures and finds other characteristics when doctors are owners.

hospital hallway: © Monkey Business - stock.adobe.com

© Monkey Business - stock.adobe.com

Health care procedure prices are about 33% cheaper at physician-owned hospitals (POHs) than nonprofit or for-profit hospitals with different forms of ownership.

The findings were in a new study that price-shopped eight procedures at 156 POHs and 1,116 non-POHs in 78 hospital referral regions around the country. The authors hypothesized the POHs would have greater procedure costs than competitors, but found commercial negotiated prices and cash prices at POHs were 33.7% and 32.7% lower, respectively, than those of non-POHs.

The procedures were: spinal injection; physical therapy-therapeutic exercise; magnetic resonance imaging scan of lower spinal canal; computed tomography (CT) scan of the abdomen and pelvis; comprehensive metabolic panel; blood test-clotting time; and emergency department (ED) visit levels 3 and 4.

Based on median commercial negotiated prices or cash prices, POHs were cheaper for every procedure except two.

POHs charged 11% more for a comprehensive metabolic panel, or $80 vs. $72 at a non-POH.

The ED visit level 4 was 1% greater in cost, $764 vs. $756. That also was the smallest price difference in the study, while largest difference was 36%, or $1,628 for a CT scan of the abdomen and pelvis.

The researchers reported other characteristics of POHs compared with non-POHs:

  • Smaller in size, with a mean number of beds at 55, vs. 162
  • Larger profit margin, 15.2% vs. 7.1%
  • More likely to be for-profit, 99% vs. 24%
  • Nonteaching, 88% vs. 72%
  • Noncritical access, 99% vs. 76%
  • Located in metropolitan areas, 94% vs. 63%

“POHs served fewer Medicaid patients and provided less charity care, which might enable them to accept lower commercial prices,” the study said.

The research letter, “Comparison of Commercial Negotiated Price and Cash Price Between Physician-Owned Hospitals and Other Hospitals in the Same Hospital Referral Region,” was published in JAMA Network Open.

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