Physician-Owned Hospitals Face Restrictions Under Healthcare Reform

Healthcare & Life Sciences Partner Michael Manthei and Associate Liliana Vidal authored the article "Physician-Owned Hospitals Face Restrictions Under Healthcare Reform", published in the January 15 issue of Health Lawyers Weekly.

The article discusses the impact two pieces of legislation currently in Congress will have on physician-owned hospitals. Mr. Manthei and Ms. Vidal write that sections of the Affordable Health Care for America Act and the Patient Protection and Affordable Care Act could prevent the formation of new physician-owned hospitals and place significant restrictions on existing physician-owned hospitals.

Under the proposed legislation, a physician-owned hospital would have to adhere to several requirements. Mr. Manthei and Ms. Vidal state that under these guidelines, physician-owned hospitals must have a Medicare provider agreement in operation; it may not add operating rooms, procedure rooms or beds unless it successfully applies for an exception; the hospital must provide initial assessment and treatment to patients and refer and transfer them to a hospital with the required capability; the hospital may not be converted from an ambulatory surgical center after the legislation is passed.

These bills also require ownership and investment disclosure of physician-owned hospitals to potential patients. Mr. Manthei and Ms. Vidal write that language within these pieces of legislation restrict physicians from increasing their percentage of ownership or investment in the hospital above what they held on January 1, 2009; it requires these hospitals to submit an annual report identifying each owner or investor to the Secretary of Health and Human Services; hospitals must disclose the ownership or investment interest of referring physicians or any physician involved in treatment and the hospital must disclose any physician ownership or investment interest on its website or in any public advertisement.

Mr. Manthei and Ms. Vidal conclude that despite objections from the American Medical Association, physician-owned hospitals are likely to face continued scrutiny from the federal government and suggest that these institutions stay abreast of legislative developments as healthcare reform continues to unfold.

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