Hospital Ownership: Exploring Varied Control And Management

Hospitals vary in ownership in several ways. They can be classified as private non-profit, proprietary, district, or county. They can also be government-owned, or nonfederal, and can include long-term care hospitals, prison hospitals, or school infirmaries. For-profit hospitals are often accused of cream skimming by selectively admitting patients who can pay high prices. They also tend to have higher gross profits than non-profit hospitals. In terms of physician practice, doctors in independent nonfederal government hospitals work more hours, see more patients, and discharge more patients than doctors in other types of hospitals.

Physician practice patterns

The ownership of hospitals varies, and this can influence physician practice patterns. Hospitals can be owned by non-profit organisations, for-profit corporations, or government entities. Each type of ownership can impact the way physicians work and the number of patients they see.

The type of hospital ownership can also impact the specialisation of physicians. Private non-profit hospitals tend to have more specialised physicians on staff compared to other types of hospitals. Additionally, the ownership structure can influence the frequency of inpatient visits and hospital discharges, particularly for Medicare patients. While there is no significant variation in the weekly number of inpatient visits, physicians in for-profit and non-profit hospitals may see their Medicare inpatients more frequently than those in government hospitals.

In recent years, there has been a shift in physician practices, with more doctors moving away from independent practices and towards employment in hospitals or corporations. This trend has accelerated, with corporate entities, including health insurers, private equity firms, and large pharmacy chains, now owning more physician practices than hospitals. This shift has been influenced by factors such as burnout and heavy workloads, especially during the COVID-19 pandemic. As a result, the number of physicians employed by hospitals and corporate entities has increased sharply, with more than 503,000 doctors employed as of January 2024.

While the impact of hospital ownership on the quality of patient care is not yet fully understood, there are potential benefits and drawbacks. Hospital-owned practices may have access to greater resources, leading to improved care coordination and the utilisation of recommended care management processes. However, there may also be negative consequences, such as reduced autonomy for physicians and less personalised care.

Physician compensation

Compensation packages should consider regional and local adjustments, payment methodologies, productivity, value, benefits, and other factors like quality and financial efficiency. Before implementing a compensation policy, hospitals should conduct interviews with a diverse group of physicians to understand their perspectives and assure them that the process is not solely a cost-cutting measure.

Federal physicians, including those in the military or employed by the Veterans Administration, Public Health Service, or other federal agencies, typically receive a basic salary with variations depending on their specific employer. Academic physicians, whose primary activities are teaching, research, and administration, may receive a fixed salary or a base salary with supplemental earnings from medical practice.

Overall, physician compensation is a complex topic influenced by numerous factors, and hospitals must carefully design compensation packages that balance financial sustainability with fair and reasonable remuneration for physicians.

Patient admissions

Hospitals can vary in ownership, with categories including proprietary, private non-profit, and government. Proprietary hospitals tend to have higher gross profits than non-profit hospitals, indicating lower costs and/or higher charges. For-profit hospitals have been accused of selectively admitting patients with favourable price-cost ratios, contributing to higher profits.

Now, when it comes to patient admissions, there are several types, including elective, holding or observation, and emergency admissions. Elective admissions make up a significant portion of hospital admissions. These occur when a patient has a known medical condition or complaint that requires further treatment, surgery, or hospital care. Patients can work with their doctors to schedule their admission and may undergo prescreening tests beforehand. Direct admissions fall under this category, where a doctor deems immediate hospital admission necessary. Holding or observation admissions often take place through the emergency department for diagnostic purposes, with patients typically discharged within 24 to 48 hours unless further treatment is required.

Emergency admissions, as the name suggests, involve sudden health issues that require urgent care. Patients are admitted to a floor, specialised unit, or observation unit based on their condition. Seniors and their loved ones are encouraged to be prepared for potential hospital visits by having essential information readily available, such as identification, medical cards, emergency contacts, and medication lists.

Upon arrival at the hospital, patients may be asked if they prefer to be treated as public or private patients, which can impact their hospital experience and associated costs. In public hospitals, patients typically cannot choose their treating specialist, and waiting times for elective surgery depend on the urgency of their condition. Private hospitals generally offer shorter waiting times and the ability to choose one's doctor, but these services come at a cost.

Physician ownership interest

Physician-owned hospitals (POHs) are a topic of interest in the healthcare industry due to the potential conflict of interest they create. While fair competition is a driving principle of the US economy, including in healthcare, the Ethics in Patient Referrals Act, or "Stark Law," aims to protect Medicare from this conflict of interest when physicians self-refer patients to facilities in which they have a financial stake.

In the past, the "whole hospital" exception within the Stark Law permitted physicians to refer patients to hospitals where they owned the entire facility rather than just a subdivision. However, in 2010, Congress closed this loophole, except for grandfathered hospitals. This closure was supported by research showing that POHs treat younger, less medically complex patients and have adverse effects on patient selection, access, and cost.

Despite the closure of the "whole hospital" exception, physician ownership in hospitals still exists. Data shows that hospital ownership is more prevalent among physicians with privileges at independent for-profit hospitals, with 22% of these physicians being owners compared to 6% at chain hospitals. To address concerns, regulations have been put in place regarding physician ownership and investment in hospitals, including disclosure requirements and restrictions on loan guarantees and business interests.

The impact of hospital ownership on physician practice patterns is also evident. Physicians at independent nonfederal government hospitals work longer hours, have more patient visits, and discharge more patients weekly than those at other hospital types. At the same time, physicians in multifacility for-profit hospitals see the fewest patients on rounds, although they offset this with more office visits. These differences highlight the complex dynamics influenced by hospital ownership structures.

Hospital charges

Hospitals can vary in terms of ownership, with the main categories being proprietary, private nonprofit, and government. In the US, there are 6,093 hospitals, with nearly half of Medicare-enrolled hospitals being non-profit (49.2 percent), 36.1 percent being for-profit, and 14.7 percent being government-owned.

Hospitals can also be part of a multihospital system (MHS), which is when two or more hospitals are owned, leased, sponsored, or contract-managed by a central organisation. In addition, individuals disproportionately own more specialty hospitals (e.g. psychiatric) and fewer short-term acute care hospitals.

Hospital ownership has been found to influence physician practice patterns, with physicians at independent nonfederal government hospitals working more total hours, having more patient visits, and discharging more patients each week than physicians at other types of hospitals. For-profit hospitals have been accused of "cream skimming" by selectively admitting only those patients who can be treated at high price-cost ratios, which allows them to offer more competitive prices.

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