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In 2008, The Washington Post reported on a devastating tragedy. A 44-year-old went into respiratory arrest following elective surgery at a physician-owned hospital in Abilene, Texas. The facility, which only provided limited healthcare services and was not a full-service hospital, did not have the capabilities to handle his medical emergency, and the staff called 911 for help. The man was taken by ambulance to a full-service hospital, but the delay may have cost him his life.
This was not an isolated incident. A subsequent federal Office of Inspector General report found that many physician-owned hospitals were ill-equipped to handle medical emergencies, putting patients at risk. In response, then-Senate Finance Committee Chairman Max Baucus (D-Mont.) and Sen. Chuck Grassley (R-Iowa) wrote, “It’s unbelievable that a facility that calls itself a hospital would, at times, not even have a doctor on call or a nurse on duty.”
Today, there is a well-orchestrated attempt by special interests to rewrite this history and mislead American policymakers and patients about what physician-owned hospitals are and what they offer.
Some physician-owned hospitals do not meet requirements to maintain a nurse on staff 24/7. They do not always have a physician on call. They do not need to operate an emergency department or be equipped to handle all levels of medical emergencies. And they cannot treat every patient who walks through the door. They call themselves hospitals, but they fail to take on the level of care patients expect out of actual hospitals.
Further, patients and their families don’t make these distinctions in moments of need. In an emergency — a heart attack, a natural disaster, a mass casualty event — patients expect hospitals (all of them) to be open, equipped, and ready to provide lifesaving care. When facilities cannot meet that standard, lives are put at risk.
That’s why when Congress wrote the Affordable Care Act (ACA), lawmakers included commonsense accountability measures on physician-owned hospitals (POHs). The “POH-ban” — as many refer to it — doesn’t stop physicians from running or operating hospitals. Rather, it stops them from cherry picking patients, from threatening the viability of full-service hospitals with emergency care, and from putting patients’ safety at risk.
With legislation introduced in Congress to try and reverse these measures, and an aggressive media campaign behind it, it is important to set the record straight.
Many physician-owned hospitals focus on highly specialized services such as cardiac care or orthopedic surgery. But this model isn’t simply about offering focused expertise — it creates a financial incentive to steer certain procedures and commercially insured patients away from full-service hospitals.
Instead of creating a competitive environment, the unlevel playing field fundamental to these limited facilities does the opposite. The lack of services offered, the specific patients seen, the small scale of staff and resources needed to run these facilities is not balanced with that of full-service hospitals, and it breeds an anti-competitive landscape.
That’s where the concern lies. This issue is not about ownership — it is the inherent conflict of interest created by self-referral and the impact those referrals have on a community’s access to care. A physician who practices at a hospital can refer select patients to a facility in which they have a financial stake, often for higher-margin procedures, and the patients may not know the limited-service facility lacks emergency capabilities.
Over time, that dynamic shifts resources away from hospitals that are responsible for treating all patients, regardless of complexity or ability to pay, and that are there to pick up the pieces for a limited physician-owned hospital when a case turns dire.
The data bear this out. A 2023 report from Dobson|DaVanzo found that physician-owned hospitals treat fewer Medicaid and dual-eligible patients, and provide less uncompensated care than full-service hospitals. In practice, they disproportionately serve commercially insured patients while leaving more complex and less profitable care to community hospitals.
This imbalance doesn’t just affect individual hospitals — it reshapes entire markets. A 2025 study found that this diversion of care could undermine full-service hospitals’ financial stability in rural areas and, ultimately, threatens access to care across communities. At a time when rural hospitals are already under threat, and hospital integration is allowing hospital doors to stay open in communities where access to care is at risk, an increase in physician-owned hospitals would tear away that foundation for entire communities.
When Congress passed restrictions on physician-owned hospitals under the ACA, it was motivated by the clear risk to patient safety and the referral implications without any added benefits to the communities they operated in; it was not the lobbying of the full-service hospitals and health systems that provided the political impetus for the restrictions. Put simply, the inclusion of this policy was not about securing pivotal votes for the ACA.
When Congress acted, it struck a careful balance. The law preserves existing arrangements, and allows for certain expansion of physician-owned hospitals based on community need. Importantly, the law protects patients, banning physicians self-referring patients to the hospitals they own — a clear conflict of interest that doesn’t put patients first — and it introduces important safeguards to promote safety. And perhaps most notably, at a time when lawmakers are taking a serious look at how to reduce waste and abuse in healthcare, the Congressional Budget Office estimated that the law reduced the deficit by $500 million over 10 years.
These safeguards help ensure that hospitals remain equipped to serve all patients, and today, patients and communities are safer because of them. These safeguards should not be eliminated as recent legislation and misleading lobbying campaigns suggest.
