New Study Warns That Physician-Owned Hospitals Could Undermine Rural Patient Access and Full-Service Hospital Stability

A comprehensive study released by the American Hospital Association (AHA) is sparking fresh debate across the United States about the impact of physician-owned hospitals on the country’s healthcare ecosystem. The analysis argues that these facilities, which are partly or fully owned by medical practitioners, could weaken the operational structure of full-service hospitals and jeopardize patient access, especially in rural regions where healthcare options are already limited.

The report, based on new data and an in-depth review of hospital performance across different states, underscores a widening gap between physician-owned institutions and the full-service hospitals that carry the responsibility of providing emergency care, high-complexity treatments and round-the-clock medical coverage. According to the AHA, this divide is more than financial; it directly influences the quality and continuity of patient care in local communities.

One of the central findings relates to patient selection practices. The study highlights that physician-owned hospitals tend to admit lower-risk and higher-margin cases, leaving full-service hospitals with the burden of treating complex patients who generate higher operational costs. This dynamic, the AHA argues, creates an uneven distribution of care that strains the financial stability of hospitals that serve as community anchors.

Rural areas face particular vulnerability under this model. Many small towns across the country rely on a single full-service hospital for emergency services, maternity care, trauma support and chronic disease management. The AHA warns that when physician-owned hospitals divert profitable services away from these institutions, the revenue needed to sustain essential departments declines. For communities that are already experiencing shortages of specialists, nurses and critical care units, this financial pressure could lead to reductions in services or, in severe cases, hospital closures.

The report also examines the broader implications for workforce distribution. Full-service hospitals typically employ a wide range of healthcare professionals, including emergency physicians, intensivists and specialized nurses. If revenue declines because lower-risk procedures are increasingly concentrated in physician-owned centers, workforce retention becomes more challenging. This can trigger staffing shortages that directly affect patient waiting times, care coordination and long-term service availability.

Beyond financial and staffing concerns, the AHA study raises questions about the regulatory framework governing physician-owned hospitals. While these institutions are subject to federal and state oversight, the report suggests that current policies do not sufficiently address the disparities in service responsibilities between facility types. Full-service hospitals, for example, must maintain emergency departments and provide care regardless of a patient's ability to pay. Physician-owned hospitals, however, are not always required to meet the same obligations.

Healthcare policy experts argue that this discrepancy can influence patient outcomes. When emergency services are limited to fewer hospitals, patients may need to travel longer distances to receive urgent care, particularly in rural communities. Delays in treatment can increase the risk of complications during cardiac events, strokes or severe injuries. The AHA’s findings reinforce concerns that changes in hospital distribution could result in measurable differences in survival rates for time-sensitive conditions.

The study also evaluates the long-term sustainability of the current healthcare landscape. If physician-owned facilities continue to expand without policy adjustments, the report warns that the financial imbalance could reach a point where full-service hospitals struggle to maintain comprehensive care units. These include neonatal intensive care, surgical trauma centers and advanced diagnostic services, all of which require substantial investment and cannot rely solely on elective procedure revenue.

The hospital sector’s response to the report has been divided. Advocates for physician-owned hospitals argue that these institutions can contribute to competition, encourage efficiency and expand patient choice. They highlight examples where physician-owned centers report high patient satisfaction and operational efficiency. However, the AHA counters that competition must not compromise the healthcare system’s ability to support essential services that physician-owned hospitals do not provide.

For policymakers, the study arrives at a critical moment. Discussions in Congress and state legislatures regarding hospital funding, Medicare incentives and rural health protection measures are ongoing. The AHA hopes that the new data will inform decisions about strengthening regulations that ensure full-service hospitals can remain financially stable while maintaining their community role.

As healthcare challenges continue to evolve across the United States, the study emphasizes the need for a balanced system where innovation and efficiency coexist with equitable access and comprehensive services. The AHA concludes that protecting the stability of full-service hospitals, particularly in rural regions, is essential to safeguarding the nation’s healthcare infrastructure.

Source: American Hospital Association