More Bureaucracy Who Would've Thought

[eunhye]

http://www.investors.com/NewsAndAnal...aspx?id=528337

ObamaCare Will Effectively Bar New Physician-Owned Hospitals
By DAVID HOGBERG, INVESTOR'S BUSINESS DAILY
Posted 03/24/2010 07:25 PM ET

Patients receive care in the emergency room at Jamaica Hospital in New York. Traditional hospitals hailed a provision in the new health care law that... View Enlarged Image

Because of the new health care law, Dr. John Dietz has an empty building that he's not sure what he's going to do with.

Dietz is part owner of the Indiana Orthopedic Hospital.

"It is an expansion of our hospital that is three-quarters finished; it had three operating rooms for outpatient surgery," he said. "Now it can't be used for that purpose. We'll have to figure out an alternative for it."

Dietz and his fellow investors put $27 million into that new building.

Under the new law there are a host of bureaucratic hoops that physician-owned hospitals must go through to expand.

• The hospital must apply to the Department of Health and Human Services and can do so only once every two years.

• It must then wait for a period for members of the community to provide input.

• It must be in a county where population growth is 150% of the population growth of the state in the last five years.

• Inpatient admissions must be equal to or greater than the average of such admissions in all hospitals located in the county.

• Its bed occupancy rate must be greater than the state average.

• It must be located in a state where hospital bed capacity is less than the national average.

• Once a hospital meets all of those conditions, it is prohibited from expanding more than 200%.

And they are the lucky ones. There are currently 60 to 65 physician-owned hospitals under construction. Those that aren't finished and don't have a Medicare provider number by Aug. 1 (Dec. 31 if the reconciliation bill passes) will probably never open their doors. Without a provider number, such hospitals can't treat Medicare patients, which are usually essential to financial survival.

The feud over physician-owned hospitals has been boiling for many years. The American Hospital Association, along with key lawmakers such as Rep. Pete Stark, D-Calif., Sen. Chuck Grassley, R-Iowa and Sen. Max Baucus, D-Mont., have made numerous efforts to curtail physician-owned hospitals. In 2003, Grassley won a temporary ban on new construction of these hospitals in the Medicare prescription drug bill.

License To Ill

Ellen Pryga, director of policy at the AHA, said, "The provision is a good one that will stem the tide of an entrepreneurial approach to medicine that is potentially fatal."

But Molly Sandvig, executive director of Physician Hospitals of America, argues that the new restrictions undercut the broader health care overhaul.

[Acturus]

Speaking completely out of my ass, but basing it on a couple of failed joint ventures that I've contracted for, Doctors usually don't know shit about running a business. They just want to put money into and get "easy" money out through self-referrals.

I have no problem with this provision in the law. It sucks for the 60-odd physician-owned hospitals that are now stuck in limbo, but in my experience, I've developed very little patience for doctors who pretend to be businessmen.

[Gregorio]

You don't need a business degree to be a businessman.

[Correction]

Without a provider number, such hospitals can't treat Medicare patients, which are usually essential to financial survival.

So if the hospital was being constructed with the idea that the government would subsidize its survival, why is the new law making it harder to do so bad?

[Olo401]

Coulda just posted this in the 30-page health care reform thread..

[Xno Kappa]

But then you wouldn't get teh attention!

[Acturus]

You don't need a business degree to be a businessman.

While that is a fair statement, again, from my limited interaction with this sort of thing, some physicians seem to believe that because they went to med school, they have an innate knack for running a business.

My hospital system has purchased 4 different failing joint ventures or physician-owned ancillaries in the past two years because of this misplaced confidence.

It's no different than the great chefs who think they can own a restaurant. Being good at the front line is no guarantee of being good behind the scenes, and unfortunately, doctors tend to have a lot more discretionary funds to throw around at projects like this sort of thing.

Now, nothing is -stopping- doctors from continuing to strike up these ventures, but the fact that they have more stringent regulations in doing so is a measure of protection for the patients and the community where these hospitals would be located.