Ban on Physician-Owned Hospital Creation Could Be Lifted by Congress
By Phil West

Medicine is welcoming proposed federal legislation, introduced by two Texas members of Congress, that would allow new physician-owned hospitals (POHs) to open and existing POHs to grow.  

H.R. 4002, known as the “Patient Access to Higher Quality Health Care Act of 2025,” was introduced by Reps. Beth Van Duyne (R-Texas) and Henry Cuellar (D-Texas) this summer. It aims to repeal the Affordable Care Act’s (ACA’s) effective ban on new physician-owned hospitals after Dec. 31, 2010, and its curtailment on existing physician-owned hospitals from expanding their capacity. 

Texas Medical Association policy similarly “supports the development of physician owned and directed health care delivery systems.” 

The ACA restriction on POHs was implemented by modifying the whole-hospital exception to the Stark Law, which prohibits physician self-referral in Medicare and Medicaid programs.  

An American Medical Association letter supporting the lawmakers’ reform efforts touts POHs for providing quality care to patients and infusing competition into a health care industry experiencing increased market consolidation by corporate entities.  

“Allowing patients more choices for health care services spurs innovation, improves care quality, lowers costs, and expands access to care, particularly in underserved communities,” per the AMA letter. “Unfortunately, current law imposes severe restrictions on POHs, banning new physician-led hospitals and sharply limiting the ability of existing POHs to grow.” 

TMA signed on to the letter. Staff notes the proposed resolution offers a no-cost, bipartisan reform boosting access to care, empowering physicians and encouraging value-based innovations as physicians assume accountability for outcomes and costs.   

Rick Snyder, MD, a Dallas cardiologist and president of HeartPlace, has ownership in a heart hospital in Arlington and operates three physician-owned ambulatory surgical centers and 24 clinics in the Dallas-Fort Worth Metroplex. HeartPlace, formed in 1996, established its hospital ownership position prior to the current restrictions. 

Dr. Snyder said physicians, through ownership of hospitals, can “empower the patient-physician relationship” and provide better, more cost-effective care.  

“If we are owners, if we have that transparency, that seat at the table, whereby we have meaningful authority and can enact meaningful change, not just window dressing, we can serve as much more powerful advocates for our patients for their whole hospital experience,” the former TMA president added.  

Dr. Snyder explained physicians wanting to open hospitals or add more beds to physician-owned hospitals today don’t have the option to do so. 

A Physicians Advocacy Institute study released in 2023 showed POHs generated about $1.1 billion in savings in 2019 compared to traditional hospitals, looking at total cost of care for 20 of the most expensive conditions for Medicare patients.  

The study also found:  

• For each of the 20 highest-cost conditions treated by POHs, total spending was 8% to 15% lower than in traditional hospitals within the same market for relatively the same Medicare patient population; and 

• POHs offer an opportunity to achieve considerable system-wide savings across a range of health conditions and patient populations. 

The research found no evidence of so-called “cherry-picking” of patients, as researchers found the patient age, race and ethnicity and comorbid medical conditions were very similar between POHs and traditional hospitals. 

In its letter, AMA asserted POHs “frequently outperform general hospitals in clinical quality, cost efficiency, and patient satisfaction.”  

“This is a logical step toward a more dynamic and patient-focused health system,” AMA added.  

Visit TMA’s physician ownership resource page and learn more about its practice management services.