Health reformers should learn from doctor-owned hospitals

Health reformers should learn from doctor owned hospitals

As part of the health reform movement, hospitals that meet various quality measures, like reduced readmission rates or improved patient satisfaction measures, get financially rewarded.  Those that don’t will be penalized.

How’s it going so far?

Well, it appears that safety net hospitals that can least afford a financial hit are getting dinged, while doctor-owned hospitals are getting rewarded.


According to Kaiser Health News, “Of 161 physician-owned hospitals eligible to participate in the health law’s quality programs, 122 are getting extra money and 39 are losing funds, a Kaiser Health News analysis shows. That’s a stark contrast with other hospitals — 74 percent of which are being penalized … Medicare is paying the average physician-owned hospital bonuses of 0.21 percent more for each patient during the fiscal year that runs through September, the analysis found. Meanwhile, the average hospital not run by doctors is losing 0.30 percent per Medicare patient.”

Doctor-owned hospitals have drawn the ire of progressive policy experts.  In fact, the health law has banned constructing new hospitals, or expand existing ones.  One reason they say is that these hospitals cherry-pick patients, often catering to relatively healthy patients in wealthy neighborhoods.  Lower income patients, for instance, may not be able to purchase their medication, or return for follow-up care.  And leaving sicker patients to the rest of the hospitals and can bring down the scores used to calculate their Medicare bonuses.

But what if physician-owned hospitals simply practice better medicine?  Of the top 10 hospitals ranked by Hospital Value Based Purchasing Program, a measure that incorporates metrics such as hospital processes and patient satisfaction, nine were doctor-owned hospitals.  They are all protocol-driven, efficiently run, and have patient amenities like single bed rooms, high definition televisions and amenities that increase patient satisfaction scores.  In fact, it would seem that a doctor-owned hospital would be the embodiment of the very best of Cheesecake Factory medicine that health reformers endorse.

But rather than learning from what these hospitals do right, policy experts are doing their best to discount them.  If you don’t like who’s winning, change the rules.

Jean Mitchell, an economist at Georgetown University’s Public Policy Institute, calls the results a “disgrace,” while Dr. Daniel Podolsky, president of UT Southwestern Medical Center, says the success of doctor-owned hospitals was due to “demographics and the geography.”

Sure, that may play a role, but shouldn’t we look a little more deeper as to why these hospitals seem to be objectively superior?  Ignoring the quality outcomes that doctor-owned hospitals are producing smacks of arrogance.  Health reformers should hold their nose and perhaps learn a little something from those who seem to be doing it right.

Health reformers should learn from doctor owned hospitals

Kevin Pho is co-author of Establishing, Managing, and Protecting Your Online Reputation: A Social Media Guide for Physicians and Medical Practices. He is founder and editor of, also on FacebookTwitterGoogle+, and LinkedIn.

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  • Laura

    What would happen if you placed doctor-run hospitals in poor neighborhoods with all the challenges that face the uneducated, poor, non-compliant population? Are there any such doctor-run hospitals to compare apples to apples, so to speak?

    • Mike C.

      They would fail… it isn’t hard to imagine. Most physicians need to make money and deserve it. Simply put the poor cannot pay for a huge facility that requires a ton of money. Welcome to reality.

      • Guest

        People call doctors greedy for “making a profit off sickness” (this “profit” which they need to pay their bills and put food on their tables and a roof over their family’s head… not to mention pay back their school loans and pay high rates of tax), I suppose they also think the 50% of citizens who DO pay tax should be asked to pay even more, so that those who neither work nor pay taxes can have Rolls Royce healthcare.

    • Dinusha Sirisena

      The doctor would be finely tuned to deal with such a situation. He would know the demographic and the problems faced by them. He would not do algorithmic, defensive medicine, but do more of a deductive reasoning type of medicine, which is easier for the pocket of the patient. And also he is finely placed to address the above mentioned problems as he will be a community doctor, not a sky god administrator.

    • ninguem

      They would do exactly what the “traditional” hospitals would do.


      All of the “traditional” hospitals are leaving the poor areas of our community and rushing to the rich enclaves.

      Heck, they are litigating with each other, suing to be allowed into the rich enclaves and suing to keep other hospitals out.

  • Beth Brown

    My gut is that doctor run hosptials are led and managed by doctors who are inherently more willing to take risk, adopt change , utilize technology to assist clinical decison making and think long term than the main stream hosptials and that would lead to better outcomes .

  • katerinahurd

    What are the professional features of the administrator of the doctor owned hospitals. Do you think it is ethical to deny hospitalization to low income patients? Do you recognize the similarities between doctor owned hospitals and public schools that meet achievement goals and receive a monetary reward from the government?

    • boboadobo

      we are not a big happy family. low income people should get free birth control and be forced to use it if they want freebies from everyone else.

  • Nathan Johnson

    This article was sited here, along with some criticism of potential profiteering.

  • Sam Sun

    The main reason

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