Reform Law Stopped Construction on 27 Physician-Owned Hospitals

Ongoing construction on 27 new physician-owned hospitals has ended because of a provision in the health reform law banning new hospitals that open after the end of the year, according to Molly Sandvig, executive director of the Physician Hospitals of America.

Ms. Sandvig added that another 40 or so physician-owned hospitals are either pushing ahead with construction or have transferred ownership to hospitals, which removes the need to be completed by the deadline. Hospitals not only have to be in operation but also need to have earned Medicare certification by Dec. 31, 2010.

The law also bans expansions of the existing 260 physician-owned hospitals and restricts new investments in them, according to an editorial in the Washington Examiner by Rob Bluey, director of the Center for Media and Public Policy at the Heritage Foundation.

As a result, Mr. Bluey reported, McBride Orthopedic Hospital in Oklahoma City cancelled plans for two new ORs and a four-bed ICU to supplement its existing 40 acute care beds, 40 rehab beds and six ORs.

When the law was signed, "we were ready to break ground," Mark Galliart, the McBride CEO, told Mr. Bluey. "We had everything approved by the state. We had the construction agreement in place."

Yasin Kahn, MD, chief executive of Westfield Hospital in Allentown, Pa., a physician-owned facility with 26 beds and an ED that has been open for two years, also commented to Mr. Bluey on the reform law.

"This bill basically kills the entrepreneurship and competitive spirit of physician-owned hospitals," he said. "How do we serve all the people they're planning to bring in if we can't expand? Are they going to overburden the local community hospitals?"

Read the Washington Examiner's editorial on physician-owned hospitals.