ObamaCare and the War on Hospitals

Regardless of what happens in the November election, the CEO of the American Hospital Association (AHA), Richard Umbdenstock, said, Sept. 16, “Many aspects of health care will remain[.]”

But many hospitals won’t.

What he didn’t mention was the burning dispute in the hospital community that could wipe out 100,000 jobs and see the U.S. Department of Health and Human Services in court for “retroactive regulation and restrictions for arbitrary and irrational reasons,” as charged in a lawsuit by the Physician Hospitals of America (PHA). That’s the association of doctor-owned hospitals, not the AHA hospitals, which Umbdenstock represents.

The fuse to the fight was ignited when the Democrats this spring were trying desperately to hold down the cost of the pending health-care legislation. “ObamaCare architect Sen. Max Baucus (D-Mont.) proposed to help pay for ObamaCare’s massive expansion of entitlements,” the Washington Times reported Aug. 27, “by imposing a 20 percent cut in Medicare fees for hospital services[.]”

The American Hospital Association and Federation of American Hospitals balked at such an arbitrary cost cut. So, the Senate Democrats threw a bone to the big hospital groups to hush their opposition. The “bone” was an onerous restriction on the 265 physician-owned hospitals. The Democrats slipped in a provision that blocks doctors from building or expanding their hospitals. The provision (Section 6001) prevents a new physician-owned hospital from receiving Medicare certification after the end of this year if its doctors refer patients to that hospital.

The lawsuit states that the federal law has “singled out hospitals owned by physicians…for retroactive regulations and restrictions for arbitrary and irrational reasons.” It prevents a new physician-owned hospital facility from receiving Medicare certification after the end of 2010 if its physicians refer Medicare patients to that hospital. Moreover the law “endeavors to prevent any existing Medicare-certified physician-owned hospital from expanding unless it meets vague and contradictory qualifications” despite the quality of the hospital and its performance.

The provision is particularly arbitrary in view of the economic efficiency and superior medical outcomes of the physician-owned hospitals. The AHA has contended that the physician-owned hospitals have a conflict of interest in referring patients to their hospitals. But, typically, physicians have only a small portion of the investment needed to build these hospitals.

The American Medical Association has said tht physician ownership has created superior care alternatives for patients. AMA President J. James Roback, M.D., has said “Restricting physician-owned hospitals is counter to what we are working to achieve: a better health care system for patients and physicians,” according to a June 28 Amednews.com story.

A study commissioned by the PHA and released last December found that the cost to Medicare of a patient receiving treatment at a physician-owned and operated hospital was 4.6 to 6.0 percent lower than in hospitals not run by physicians. Moreover, the provision in the ObamaCare law that dissed the physician-run hospitals could have an economic “loss of well over $5 billion and could eventually cost up to 100,000 jobs,” the study concluded. The analysis was done by Oxford Outcomes, an international research outfit specializing in health economics.

Altogether, there are 6,010 community hospitals, 213 federal government hospitals, 447 non-federal psychiatric hospitals, 1229 long-term care hospitals, and 16 prison hospitals, while physician- owned hospitals total 265.

The national seniors organization, RetireSafe, filed an Amicus Curiae brief Sept. 10 in the U.S. District Court for Eastern Texas in support of efforts to stop “the severe new restrictions on the expansion of physician-owned hospitals. The 400,000-strong group’s president, Thair Phillips, said the law that is the subject of the suit “is of serious concern to RetireSafe and the thousands of seniors it represents.”

PHA identified 39 hospital projects that were under development, but whose owners had cancelled, aware that they could not possibly win Medicare certification by the year-end deadline. For another 45 projects, it’s touch-and-go whether they can meet the Medicare criteria in time.

In Loma Linda, CA, for example, a team of physician investors was collaborating with the local university’s medical center to build a new 110-bed medical building as part of a $250 million project. It was intended to meet the needs of underserved areas of care in the community. Because it will not have Medicare certification by the deadline in the ObamaCare law, it has been shelved, amednews.com reported June 28. PHA said the law will “virtually destroy” more than 60 hospitals that were under development and leaves few prospects for the future.

“Patients across the country should be outraged that, at a time when the government is supposedly attempting to increase access to care, it has chosen to stop the growth of many of the best hospitals in the country,” complained Molly Sandvig, PHA’s executive director.

So, top-notch hospitals are being lost at a time when financial troubles face many independent community hospitals nationwide that aren’t part of any health system. Tight lending policies of banks make it hard for hospitals to pay for capital improvements.. Hospital administrators complain that Medicare and Medicaid reimbursements haven’t kept up. ObamaCare could double their troubles with requirements that hospitals adopt electronic health records and report all patient outcomes.

The AHA spent $18 million and the Federation of American Hospitals spent $4 million on lobbying in 2009, compared with $300,000 spent by the Physicians Hospitals of America, revealed a May 4 story in the Washington Examiner. Could this have had anything to do with the Baucus caucus Democrats’ sly move behind closed doors to stiff the physician-owned and operated hospitals throughout America? And the jobs being lost needlessly could keep the Obama unemployment record at the disaster level.