S-1390-119
Read twice and referred to the Committee on Finance.
Sponsored by James Lankford (R-OK)
What it does
This bill would create an exception to the federal physician self-referral law's restrictions on physician-owned hospitals for hospitals located in rural areas that meet certain rural provider criteria at the time they enroll in Medicare. It would also remove the current nationwide prohibition on existing physician-owned hospitals expanding their facility capacity, allowing all such hospitals (not just rural ones) to add beds or operating rooms.
Who benefits
Physicians who own or co-own hospitals, particularly in rural areas, who could open new physician-owned facilities or expand existing ones. Rural patients who may gain access to additional specialty care closer to home. Rural communities seeking to attract or retain physician investment in local healthcare infrastructure.
Who is hurt
Nonprofit and community hospitals, especially in rural markets, that could face increased competition for profitable services and patients with better insurance coverage. Medicare and Medicaid programs, which studies suggest may see increased utilization and costs when physicians can refer patients to facilities they own. Rural hospitals not owned by physicians that could lose market share for lucrative procedures while retaining less profitable, higher-cost patients.
Supporters argue
Supporters argue that physician-owned hospitals often provide higher patient satisfaction and quality outcomes, and that the current near-total ban on their growth, enacted under the Affordable Care Act, has worsened access to specialty care in rural areas already facing hospital closures. They contend that letting physicians build and expand these facilities in underserved rural communities would bring more medical capacity and choice to patients who currently must travel long distances for care.
Opponents argue
Opponents argue that physician self-referral creates financial incentives for overutilization of services, which is precisely why Congress restricted physician-owned hospitals in the first place, citing research showing these facilities tend to treat healthier, better-insured patients while leaving complex cases to community hospitals. They contend that lifting the expansion ban and creating rural exceptions could drain resources and patients from existing nonprofit rural hospitals, worsening their financial instability and potentially accelerating closures.