Obamacare bans new physician-owned hospitals

In 2010, Obamacare limited the expansion of physician-owned hospitals (POHs) and banned the establishment of new ones. By the end of 2010, Obamacare forced up to 84 new POHs in various stages of development to be abandoned.^[1]  These hospitals would have provided nearly 30,000 jobs.^[2]

Prior to Obamacare, POHs had been increasing rapidly.  Just between 2002 and 2004 the number of POHs nearly doubled, going from 46 in 2002 to 89 in 2004.^[3]   Then, by the spring of 2010 the number of POHs reached 265, nearly tripling in number from 2004.^[4]

Physicians are restricted from referring Medicare patients to practices in which they have a financial interest.  But there is an exception where the doctor owns part of a whole hospital.

Section 6001 of Obamacare changes this by banning new POHs from accepting Medicare payments.  In addition, expansions of existing POHs must first seek approval from the Department of Health and Human Services (HHS) if they expect to accept Medicare.  Even then, Obamacare restricts expansion to 200% of the capacity the hospital had in 2010.

Critics of POHs, such as the American Hospital Association and the Federation of American Hospitals, see POHs as a threat.  They argue that POHs, while taking only the more profitable medical procedures, don't give as much uncompensated care as do non-profit hospitals.

It is true that POHs don't give as much uncompensated care.  But unlike non-profit hospitals, POHs pay millions in taxes every year.  Physician Hospitals of America reports that on average each POH pays $3 million per year in local, state, and federal taxes.^[5]

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