The time is now for physician-owned hospitals, with Carlos Cardenas, M.D., president of Physician-Led Healthcare for America

For the first time, CMS isn't asking whether physician-owned hospitals should be part of Medicare's care delivery models — it's asking how.

Carlos Cardenas, M.D., a practicing gastroenterologist, founder and chairman of DHR Health in Texas' Rio Grande Valley, and president of Physician-Led Healthcare for America, joins Medical Economics Senior Editor Richard Payerchin to explain why that distinction matters. They cover how Section 6001 of the ACA froze competition in hospital markets, what the data actually shows about cost and quality at physician-led facilities, how to address the over-utilization criticism, the patchwork of state and federal rules governing physician ownership, and what it will take to move the needle in Congress.

CMS has published its proposed 2027 Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals (IPPS), including a request for information about participation of physician-owned hospitals in Medicare’s new Transforming Episode Accountability Model (TEAM). Public comments on the CMS request for information are due June 9. The IPPS is a 576-page document, but the relevant section can be found by searching for: “Hospital with Physician Ownership Request for Information”.

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Music Credits:
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Editor's note: Episode timestamps and transcript produced using AI tools.

0:00 – 0:27 | Sponsor message Copic Medical Liability Insurance.

0:27 – 0:52 | Dr. Cardenas previews the episode's core argument: for the first time, CMS is asking not whether physician-owned hospitals should be included in care delivery, but how.

0:52 – 1:55 | Austin Littrell introduces the episode, the guest and a reminder that CMS is accepting public comments on physician-owned hospital participation through June 9.

1:55 – 3:11 | Dr. Cardenas introduces himself as a practicing gastroenterologist in Deep South Texas and president of Physician-Led Healthcare for America, the national advocacy organization for physician-led hospitals.

3:11 – 3:49 | Dr. Cardenas explains the significance of CMS's recent request for information: it's the first time the federal government has shifted from questioning physician-owned hospitals' legitimacy to asking how to incorporate them into care delivery.

3:49 – 6:02 | Section 6001 of the Affordable Care Act prohibited new physician-owned hospitals and significantly restricted expansion, effectively halting free-market competition in hospital markets for 15 years and accelerating consolidation.

6:02 – 7:26 | Dr. Cardenas argues that physician-led health care facilities are integral to healthy communities beyond just treating illness — a strong health care system and a healthy population produce a better, more economically viable community.

7:26 – 9:49 | Being included in the policy conversation means physicians can bring the same patient-centered principles from the bedside into the design of care delivery models. Dr. Cardenas sees the request as an affirmation that physician-led care is on the right track.

9:49 – 10:37 | P2 Management Minute: Keith Reynolds shares practice management tips and invites listeners to submit their own workflow ideas.

10:37 – 12:34 | A 2023 study cited by PHA found Medicare could have saved more than $1 billion on the 20 most expensive conditions if care had been delivered at physician-owned hospitals. Dr. Cardenas argues the savings come from putting the physicians who actually deliver care in the room where decisions are made.

12:34 – 13:34 | A large study found no meaningful difference in the patient populations served by physician-owned versus traditional hospitals, while physician-owned facilities still came out ahead on cost and resource management.

13:34 – 15:15 | Dr. Cardenas is direct: no. Studies show no evidence of cherry-picking, and at DHR Health, no patient has ever been turned away regardless of ability to pay. He acknowledges over-utilization has been a real concern historically but says increasing regulation has improved it.

15:15 – 18:07 | State laws vs. federal rules: some states require physician ownership of medical practices under corporate practice of medicine laws, while federal rules restrict physician ownership of hospitals. Dr. Cardenas traces physician-owned facilities back to the very first hospitals in American history and argues the concept is about getting back to basics.

18:07 – 20:02 | Dr. Cardenas says the most effective advocacy is getting legislators to visit physician-owned facilities in their districts — or help them imagine one — because physician ownership is not easily pigeonholed and the concept speaks for itself when people see it firsthand.

20:02 – 21:28 | Dr. Cardenas says the conversation itself is progress. The priority is continuing to educate and advocate, and to use the CMMI and TEAM model framework to demonstrate what physician-led care can do before asking for broader expansion.

21:28 – 22:22 | Primary care physicians are the backbone of American health care — the base of the pyramid who deal with patients' problems every single day. Dr. Cardenas calls on them to be active participants in building the care models of the future.

22:22 – 23:23 | Littrell thanks Dr. Cardenas, reminds listeners of the June 9 CMS public comment deadline and wraps the episode.