Hospital Competition and Restrictions on Physician-Owned Hospitals

 

Matthew Mandelberg

U.S. Department of Justice - Antitrust Division

Michael Smith

Georgetown University Law Center; Government of the United States of America - Federal Trade Commission

Jesse Ehrenfeld

Medical College of Wisconsin; American Medical Association; Vanderbilt University; Uniformed Services University of the Health Sciences

Brian Miller

Johns Hopkins University School of Medicine; Johns Hopkins Carey Business School; American Enterprise Institute

Date Written: February 5, 2023

Abstract

This paper examines hospital competition and restrictions on physician-owned hospital; it proceeds as follows. Part I provides an overview of the seemingly inexorable trends towards further consolidation among healthcare providers and the related competition concerns this consolidation raises. Part II discusses the factors which position POHs well as potential market entrants. Part III describes how the accrual of market power by incumbent hospitals and health systems accentuates the incentives and importance of physicians to identify opportunities for market entry and innovation. Part IV describes the growth of POHs and the subsequent ban on further growth and expansion. Part V then discusses the effects of the POH ban on competition in healthcare markets, potential benefits of relaxing the ban, and more narrowly tailored policy options for addressing concerns associated with physician ownership short of an outright ban. Lastly, Part VI concludes the paper with our recommendation that Congress consider removing the ban on POHs or at least relaxing it.

Note:
Funding declaration: The authors received no funding for this work.

Conflict of Interests: There is no competing interest.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4350105