Less than two decades ago, physician-owned hospitals (POHs) were a growing segment of the U.S. hospital landscape, accounting for a majority of newly established facilities. These hospitals, partially owned by physicians, were credited with delivering higher-quality care at lower costs compared to traditional corporate-owned hospitals. However, regulatory changes stemming from the Affordable Care Act (ACA) of 2010 largely halted this trend.

Section 6001 of the ACA imposed strict limits on POHs, effectively barring new physician-owned hospitals from participating in Medicare and restricting existing ones from expanding their beds and operating rooms without navigating a complex exceptions process. This legislative move followed intense lobbying by hospital industry groups such as the American Hospital Association and the Federation of American Hospitals.

Congress is currently considering the Patient Access to Higher Quality Health Care Act, bipartisan legislation aimed at repealing these ACA provisions. If enacted, the law would reopen Medicare participation to new POHs and allow existing facilities to grow more freely to meet community needs. Advocates argue that this reform could benefit millions of patients nationwide by promoting competition and expanding access to care.

Proponents of physician ownership contend that POHs align doctors’ financial and professional incentives with patient outcomes and operational efficiency. Many POHs operate under “focused factory” models specializing in streamlined procedures, contributing to superior quality and patient satisfaction scores. Research involving over 1,400 hospitals suggests that services at POHs cost patients up to 15 percent less than those at non-physician-owned hospitals.

Critics, including hospital lobbyists, argue that POHs tend to “cherry-pick” healthier, more profitable patients and admit fewer Medicaid beneficiaries and medically complex cases. However, a 2015 study found that POHs and traditional hospitals serve nearly identical proportions of Medicaid patients and racial minorities, challenging claims of patient selection bias.

The restrictions on POHs are seen by some observers not as patient protections but as a legislative concession to entrenched hospital monopolies intended to secure support for the ACA’s passage. The consequences have reportedly included reduced patient choice, rising healthcare costs, and diminished physician autonomy.

At the same time, hospital consolidation and vertical integration have continued to reshape the healthcare landscape, often to the detriment of rural communities. Large health systems increasingly acquire independent physician practices and shift services to hospital outpatient departments, resulting in higher facility fees for care that could otherwise be delivered more affordably in physician offices. Since 2010, more than 150 rural hospitals have closed or shifted away from inpatient care, with many others operating under financial strain, leading to the loss of critical services such as labor and delivery, behavioral health, and trauma care.

Physicians currently face restrictions on hospital ownership despite hospitals being able to refer patients within their own physician networks, creating an asymmetry critics say reinforces monopolistic structures. For example, in a common procedure like lumbar laminectomy, Medicare compensates the surgeon about $1,065, while the hospital’s facility fee exceeds $7,400, highlighting the disproportionate allocation of payments and the advantage hospitals hold in service ownership.

Supporters of the proposed legislative change argue that expanding physician ownership would foster greater competition and innovation, enabling doctors who invest personally in their facilities to prioritize efficiency and patient-centered care. They contend that lifting the current restrictions would provide a counterbalance to large health systems’ dominance and potentially improve the affordability and accessibility of healthcare.

As discussions continue in Congress, the future of physician-owned hospitals remains a focal point in the broader debate over healthcare reform and access in the United States.