Many physician executives have successfully led healthcare institutions, so it makes sense to allow them to own and operate them. However, for more than fifteen years, federal law has effectively prohibited the development of most new physician-owned hospitals while severely restricting the growth of existing ones. These restrictions were based largely on concerns that physician ownership could create financial conflicts of interest or encourage physicians to select healthier, more profitable patients. Those concerns were worthy of discussion. But good public policy should be guided by evidence rather than assumptions.
Since those restrictions were enacted, numerous studies have demonstrated that physician-owned hospitals provide outstanding care. They have consistently achieved high patient satisfaction scores, excellent quality metrics, low complication rates, and efficient use of healthcare resources. Studies also show little evidence that physician-owned hospitals systematically avoid Medicaid patients or underserved populations.
As a result of the enactment of the Affordable Care Act, healthcare has become increasingly consolidated. Large health systems have acquired physician practices at an unprecedented pace. Independent physicians have become employees. Hospitals have merged into regional networks. Insurance companies have consolidated into increasingly dominant market positions. The result has been an increase in the costs of care delivery, fewer choices for patients, and fewer opportunities for physicians to shape the systems in which they practice. The bottom line, competition has diminished.
History has repeatedly demonstrated that competition, when accompanied by appropriate oversight, improves quality, encourages innovation, and controls costs. Healthcare should be no exception. We know where healthcare works well because we live it every day. We are bound by professional ethics, licensure, peer review, board certification, and a lifelong commitment to place patients first. Giving we as physicians a meaningful role in hospital ownership allows those with firsthand clinical experience to redesign systems around patients, within the bureaucracy.
Critics often argue that physician ownership creates financial incentives that could influence medical decision-making. Yet our current healthcare system is hardly free of financial incentives. Hospitals employ physicians. Insurance companies increasingly own physician practices and outpatient facilities. Private equity firms invest heavily in physician groups and healthcare delivery. Large health systems make strategic business decisions that influence where patients receive care and what services remain available in their communities. Every ownership model carries incentives.
New York should embrace policies that encourage physician leadership. Our state faces a growing physician shortage at the very moment our population is aging and medical needs are increasing. Burnout continues to drive experienced physicians into early retirement while discouraging medical students from entering private practice. Administrative burdens consume hours that should be spent caring for patients. Physicians increasingly feel responsible for outcomes without having meaningful authority over the systems that determine those outcomes. Physician-owned hospitals represent an opportunity to restore professional engagement.
When physicians participate in leadership, hospitals and patients benefit from the insight of individuals who understand patient care from the bedside as well as the boardroom. Decisions regarding staffing, technology, quality improvement, patient safety, and clinical operations become grounded in real-world experience rather than solely financial considerations.
For too long, policy has treated physicians as employees within healthcare rather than leaders of healthcare. That approach has contributed to many of the challenges we face today. As the Medical Society of the State of New York continues to advocate for reducing administrative burdens, preserving physician-led care, expanding access to care, and improving the practice environment for physicians, we should also advocate for removing unnecessary barriers to physician-owned hospitals.
If physician-owned hospitals can improve quality, foster innovation, increase competition, and strengthen patient care, as the evidence increasingly suggests, we deserve the opportunity to once again become an important part of New York’s healthcare landscape. Our physicians and patients deserve nothing less.
All the best,
Mark J. Adams, MD, MBA, FACR
MSSNY President
