Physician-owned hospitals charge less for imaging than their counterparts

Physician-owned hospitals actually charge less for imaging services than their counterparts, according to a new analysis published Friday in JAMA Network Open [1].

The median commercial-negotiated price for a CT scan of the abdomen and pelvis, for instance, is about $1,265 or 20% lower than at hospitals that are not owned by physicians. An MRI of the lower spinal canal costs even less, running $989 or 33% cheaper than the charge at other institutions.

Researchers reached their findings after analyzing data from a sample of 156 physician-owned hospitals and another 1,116 other institutions, spread across 78 different hospital referral regions. The results run counter to the authors’ hypothesis—and popular belief—that doc ownership leads to more expensive healthcare.

“Understanding how physicians’ ownership of hospitals affects patients and payers is an important research area,” Ge Bai, PhD, CPA, a professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health, and co-authors wrote June 23. “This cross-sectional study found that nationwide median commercial negotiated prices and cash prices were lower for general acute-care POHs than for non-POHs in the same market for most common hospital procedures,” they added later.

Bai et al. identified doc-owned acute care hospitals using information from Physician Hospitals of America, a nonprofit that provides lobbying and other support to the industry. They limited the analysis to physician-owned hospitals located in hospital referral regions that contain at least one competitor with a different type of ownership arrangement. Prices, made available via the Hospital Price Transparency Rule, were obtained as of January 13. The team focused on eight services including two imaging exams, spinal injections, physical therapy (therapeutic exercise), a comprehensive metabolic panel, and level 3 or 4 ED visits.

On average, physician-owned hospitals were smaller (55 beds vs. 162), more lucrative (15% profit margin vs. 7%), and likelier to be run as for-profit entities (99% vs. 24%). Doc-held hospitals also were more likely to be nonacademic (88% vs. 72%), noncriticial access (99% vs. 76%) and located in a metropolitan area (99% vs. 76%) compared to other private hospitals in the same market, the analysis found.

“POHs served fewer Medicaid patients (3% vs. 7%) and provided less charity care (1% vs. 3%), which might enable them to accept lower commercial prices (these factors were controlled for in the regression models),” Bai et al. wrote.

Across the eight services studied, median commercial-negotiated price and cash price at physician-owned hospitals were 33.7% and 32.7% lower, respectively, than procedures performed at other institutions. POH status also was associated with 17.5% lower negotiated prices and 46.7% lower for the cash cost. This included a 35% lower cash price for an MRI of the lower spinal canal ($1,113 vs. $1,713) and 36% cheaper for a CT of the abdomen and pelvis ($1,628 vs. $2,531).

The analysis comes as lobbying groups such as Physician-Led Healthcare for America urge Congress to repeal an ongoing moratorium on doc hospital ownership. The U.S. House Energy & Commerce Committee recently held a hearing on healthcare transparency and competition, with PHA and some lawmakers arguing that broader physician hospital ownership could help to keep costs in check. Others such as the American Hospital Association have advocated against changes to the law, asserting that ending the moratorium would lead to price increases and weakened competition. Members of Congress earlier this year proposed legislation repealing current law limiting self-referral to physician-owned hospitals.

“Medicare allows the physician ownership of ambulatory surgery centers, imaging, physical therapy and in many other circumstances,” Frederic Liss, MD, president of Physician-Led Healthcare for America, said in April ahead of the hearing. “Physician ownership is allowed because it leads to efficiency, high quality of care for patients and much needed competition that drives down cost.”