Physician-owned hospitals have worse readmission metrics: AHA

Physician-owned hospitals have worse readmission and Medicare quality measures than full-service community hospitals, a new analysis from the American Hospital Association found.

The analysis used data from the January 2023 Hospital General Information file and Fiscal Year 2023 Hospital Readmission Reduction Program Supplemental file created by CMS. Healthcare consulting firm Dobson | DaVanzo, on behalf of the AHA, compared 158 physician-owned hospitals and 1,184 non-physician-owned hospitals, defined as remaining acute care hospitals that were paid under the inpatient hospital prospective payment system, in the same market areas. 

Here are seven key findings:

  • In the lowest dual-eligible proportion peer group there were 119 physician-owned hospitals, or 78 percent of all POHs; and 216 non-POHs, or 19 percent of all non-POHs. This finding suggests POHs treat smaller proportions of dual-eligible patients, which in the data is a stand-in for the prevalence of health-related social needs.

  • Of hospitals in the lowest dual-eligibility proportion peer group, 6.7 percent of POHs received the maximum Hospital Readmissions Reduction Program penalty of 3 percent in FY2023, compared to only 0.5 percent of non-POHs in the same market.

  • For average count of facility mortality measures used in the Medicare star ratings program, POHs scored 1.3 compared to 4.6 for non-POHs.

  • For average count of facility safety measures, POHs scored 2.8 compared with 5 for non-POHs.

  • For average count of facility readmission measures, POHs scored 4.3 compared with 7.7 for non-POHs.

  • For average count of facility patient experience measures, POHs scored 7.1 compared with 7 for non-POHs.

  • For average count of facility timely and effective care measures, POHs scored 2.9 compared with 6.4 for non-POHs.

"This new analysis adds to more than 15 years of research suggesting that POHs select their patients by avoiding less profitable Medicaid and uninsured patients, treat fewer medically complex patients, and provide fewer emergency services," the AHA and the Federation of American Hospitals said in a one-pager on the report. "Beyond validating findings by the Government Accountability Office, Health and Human Services Office of Inspector General, and the Medicare Payment Advisory Commission that POHs do not treat the same scope, complexity, or acuity of patients as non-POHs within the same market, this analysis also shows that POHs have higher average penalties for readmissions compared to full-service community hospitals. In short, by choosing the healthiest and wealthiest patients, POHs pose program integrity, access and health equity risks for the Medicare program." 

Recently, major groups have ramped up resistance to physician-owned hospitals, which have been largely quiet in conversations over the past decade-plus due to the Affordable Care Act. Enacted in 2010, the law placed a number of restrictions on POHs, including a prohibition on expanding the capacity of existing Medicare-certified POHs unless they meet certain exceptions and a moratorium on the establishment of new Medicare-certified POHs.

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