Since 2010, the Affordable Care Act (ACA) has expanded health insurance to millions, protecting people with pre-existing conditions and strengthening America's healthcare safety net. But one of its lesser-known provisions has yielded unintended consequences. The ACA restricts the creation and expansion of physician-owned hospitals, a policy that stifles innovation, limits patient access to specialty care, and has coincided with growing market power among large hospital systems.
The bipartisan "Patient Access to Higher Quality Health Care Act of 2025" (H.R. 4002) would repeal these statutory and regulatory barriers that restrict the formation or expansion of physician-owned hospitals. More than 90 national medical specialty societies and state medical associations have joined with the American Medical Association (AMA) to strongly support this measure, and for good reason: removing the ACA's restrictions on physician-owned hospitals will unlock benefits for patients, physicians, and communities, without increasing federal spending or administrative burdens.
Advancing Patient Outcomes and Access
Empirical studies and government analyses suggest that physician-owned hospitals can increase competition and patient choice while delivering high-quality specialty care. A 2005 study conducted for CMS found that physician-owned cardiac hospitals delivered patient outcomes comparable to, and on several measures better than, competitor hospitals, with high rates of patient satisfaction. These findings challenge the assumption that federal restrictions are needed to protect patients from lower-quality care, especially when patients require specialty care.
Beyond delivering strong outcomes, physician-owned hospitals also bring a nimble approach to care delivery, quickly adapting to meet patient needs. Consolidation among hospitals and insurers is reducing competition and driving up costs, leaving fewer options, especially in vulnerable communities. Leading health economists have shown how this consolidation undermines quality and restricts patient access. Physician-owned hospitals have the potential to act as a competitive counterweight in markets where consolidation has taken hold.
Most physician-owned hospitals today are in urban and suburban markets. Restoring physicians' ability to build and expand these hospitals could allow the model to reach more rural and underserved communities that have been hit hardest by hospital closures and consolidation -- creating new options where patients currently have few and helping preserve the physician-patient relationship.
Accountability and Coordinated Care
Expanding physician leadership in hospitals supports higher levels of coordinated and integrated care, a goal at the heart of respected models like Kaiser Permanente and Mayo Clinic. Physician engagement supports the adoption of team-based care, alternative payment arrangements, and a more streamlined patient experience through "one-stop shopping." This kind of physician-led collaboration is designed to reduce waste and duplication and facilitate smarter, more coordinated care.
When physicians lead and own hospitals, they have a direct stake in patient outcomes and total cost. This accountability can translate into responsive, higher-quality care that centers on patients' needs.
Setting the Record Straight
Critics have long argued that physician-owned hospitals "cherry pick" healthier, more profitable patients. The evidence tells a more precise story. The 2005 CMS study of referral patterns at cardiac, surgery, and orthopedic specialty hospitals concluded, "we are unable to conclude that referrals were driven primarily based on incentives for financial gain." A 2021 study in the Journal of Health Economics reached a similar conclusion: individual physician-owners do not selectively refer their healthier or more profitable patients to the hospitals they own.
The same study found physician-owned hospitals tend to draw a somewhat healthier patient mix overall, tied to where these hospitals are built and to the patient populations physician-owners already treat, not to doctors steering sicker patients elsewhere.
A separate line of criticism focuses on emergency and safety-net services, suggesting that physician-owned hospitals are ill-equipped to manage emergencies. Because grandfathered physician-owned hospitals are a small, capped share of the hospital market, and because any future growth would occur under the same emergency care and Medicaid nondiscrimination requirements that already apply to them, these concerns are best addressed through those existing safeguards rather than an outright ban on growth.
Statutory and Regulatory Issues
Physician-owned hospitals have always been held to the same rigorous standards as all other hospitals. Since 2010, when the ACA restrictions took effect, they have also been subject to additional ownership disclosure and growth-restriction requirements that no other hospital type faces. Those restrictions were eased in 2020, but a 2023 rule reinstated and further tightened them beyond even what the ACA itself required. These expanded rules make it harder for hospitals to grow or serve vulnerable communities, placing additional burdens on facilities that could otherwise help address local care gaps. As a result, patients now face fewer choices, higher costs, and less innovation in their local healthcare systems.
Healthcare policies have real-world consequences, in this case fewer hospital options and a healthcare system that stifles physician initiative and entrepreneurship. The AMA urges Congress to rescind these rules, restore needed flexibility, and encourage innovation.
A Logical Step Forward
Removing ACA restrictions on physician-owned hospitals is a logical, evidence-based step toward a more dynamic, patient-focused health system. This reform would increase innovation, competition, and access to care without raising federal spending.
Especially in areas with hospital consolidation or closures, physician-owned hospitals represent a promising avenue for new options for patients and communities. Congress should pass H.R. 4002, eliminate unnecessary regulatory barriers, and let America's physicians deliver the specialty care and innovation that patients deserve.
Willie Underwood III, MD, MSc, MPH, is president of the American Medical Association (AMA).
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