Joshua Perry, an assistant professor at the Kelley school of business at the University of Indiana recently wrote that “short of banning physician-owned hospitals, there is sufficient justification for aggressive regulation of such hospitals in the (Un)Affordable Care Act.”  His findings were published in the American Business Law Journal.  You can read a summary of his findings here.  

The Unaffordable Care Act (UCA) prohibits new or expanded physician-owned hospitals from receiving reimbursement from Medicare.  Hmmm.  Let me see.  Cui bono?  Who benefits from this little jewel in the UCA?  Could beneficiaries include Mr. Perry’s employer,  the Univ. of Indiana, which has to compete with physician-owned hospitals in their state?  Actually, as an “expert” on “moral decision making” and ethics in professional life, he should know that any one in his position should provide a disclaimer of their own conflicts as most researchers are required to do.  Mr. Perry may be a “useful idiot,” as Lenin liked to refer to his type, but he is not a complete idiot.  He has a law degree from Vanderbilt.  While he’s an “assistant” professor, his bio proclaims him to be “Professor Perry.”  Maybe he thinks spewing this bile for the benefit of his employer will get him his next academic merit badge.  

Why is it unethical for a physician to own a hospital and not for a hospital to own a physician?  If he believes that doctor owners are more inclined to put profits ahead of patients, how can he not also see that a physician employed by a hospital, will order unnecessary test after test on patients when their job “productivity targets” depend on it?

Is he aware of the CMS (Medicare) study which showed that the “community benefit” of tax paying physician-owned hospitals exceeded that of the local (non tax paying) “not for profit” facilities?  In other words, these physician-owned hospitals paid more in taxes than the so called “charitable hospitals” gave out in free health care.  

Contrary to his claims, the same study (again by CMS) showed no significant difference between levels of illness between the specialty, physician-owned hospitals and the big box hospitals.  You can read the study here.  This study also showed that physician owners referred as many patients to their competitor hospitals as they did to their own.

His comment about the physician-owned hospitals receiving larger reimbursements from Medicare is false.  The big hospitals have successfully lobbied long and hard for higher reimbursement from Medicare for the same diagnosis and procedure codes as those provided in the physician-owned hospitals.  Many of these “not for profit” hospitals will start some rudimentary resident-training program in order to fleece the taxpayers even more, as “teaching hospitals” receive a greater fee for the same service.  One surgeon told me that a Medicare pays his hospital one half for a total knee replacement what is paid to the local teaching hospital.

Where do the vast majority of Canadians go to get their care?  Physician-owned facilities, that’s where.  Why?  Because the prices are reasonable and the quality is as good or better.  These same prices are made available to the uninsured and the under-insured.  These big “not for profit” hospitals like Mr. Perry’s employer’s hospital would bankrupt these folks with their pricing.  Who’s greedy and unethical?

Our “expert,” more like a hired gun, says that “ethics should drive health reform.”  I don’t think he really means that.  What he really means is that the market has created these physician-owned facilities that deliver extremely high quality (the Indiana specialty hospitals are some of the best) at reasonable prices, a combination with which Indiana’s University Hospital system can’t very well compete.  His “call for ethics” is really his “cry of fear” of the free market, a concept hopefully taught in someone else’s classroom at his school.

G. Keith Smith, M.D.