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Obamacare hospitals killed: 60, with 200 on life support Reform law 'thins the herd' to line big health-care companies' pockets

By Drew Zahn

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Section 6001 of The Patient Protection and Affordable Care Act is responsible for Obamacare's first casualties: a reported 60 physician-owned hospitals, which had promised to offer an innovative alternative to big, corporate and non-profit facilities, but under the new law are now "virtually destroyed," according to advocates. Another 200-plus doctor-owned hospitals already in existence may soon be put out of business by the health-care reform law.

To Molly Sandvig, executive director of Physician Hospitals of America, the move to cut doctor-owned hospitals out of the national health-care system is a foolish blow to both the industry and the patients it serves.

"The American people need more access, not less," she said in a statement. "We need high quality, efficient, patient-centered care, not more of the same high-cost, inefficient, bureaucratic-minded care. The impact of the health-care reform bill on physician-owned hospitals is truly illogical and unfortunate."

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The new law is a victory, however, for the American Hospital Association, ranked by The Center for Responsive Politics as the sixth-biggest lobbyist presence in Washington, which has been trying for years to get government to squash the physician-owned hospital movement.

Ellen Pryga, director of policy at the AHA, told Investor's Business Daily, "The provision is a good one that will stem the tide of an entrepreneurial approach to medicine that is potentially fatal."

On the flip side, CEO Don Burman of the physician-owned Heartland Spine & Specialty Hospital in Overland Park, Kan., told the Kansas City Business Journal, "Because we have built a better mousetrap and because we have challenged the conventional wisdom, we are being punished."

Under Obamacare and in the name of "transparency," after Dec. 31 doctors will no longer be able to refer patients to hospitals in which they have a financial interest, or face being ruled ineligible to receive payments for Medicare and Medicaid patients. Only physician-owned hospitals already operating before the deadline will be allowed to continue.

Furthermore, even the existing hospitals will not be allowed to expand or add facilities except under extreme demographic circumstances that are nearly impossible to meet.

This means dozens of doctor-owned hospitals currently under construction across the country have completely wasted their efforts.

Dr. John Dietz, owner of the Indiana Orthopedic Hospital, for example, tells Investor's Business Daily that because of the new law, he now has a useless, empty building.

"It is an expansion of our hospital that is three-quarters finished; it had three operating rooms for outpatient surgery," he said. "Now it can't be used for that purpose. We'll have to figure out an alternative for it."

The battle over who owns hospitals – corporate investors or the doctors themselves – is one that flips typical political stereotypes on their heads.

The AHA represents approximately 5,000 of the nation's largest hospitals and medical companies. The group has spent nearly $180 million over the last 12 years on lobbying Washington.

But rather than being the stereotypically big-business, Republican capitalists, the AHA – whose political action committee has given 73 percent of its 2010 contributions to Democrats – has been lobbying through several bills in recent years to get government to kill free-market competition in health care. After failing with the 2007 farm bill, the AHA achieved its goal in Obamacare.

Standing against the AHA, with a much smaller budget to persuade lawmakers, are the doctors who believe their model of health care represents healthy competition in the health marketplace.

"It's anti-competitive. I think it's pretty clear," Sandvig said of the push to eliminate doctor-owned hospitals. "We're a model that makes sense that's affecting innovation. We're trying to do something better than it has been done. Anytime you do that, there's going to be a clash between the existing and the new. Unfortunately, it's a real David and Goliath battle."

Dr. Jane Orient, executive director of the Association of American Physicians and Surgeons told CNSNews, ""There are vested interests in getting rid of physician-owned hospitals because they do a better job and are more affordable."

The AHA, however, disagrees, arguing that physician-owned hospitals are guilty of inflating their performance numbers by providing limited emergency services and using doctors' influence to pluck only the healthiest patients and those with the best ability to pay, while dumping the sick and needy back on public hospitals.

Furthermore, the AHA contends, physician-owned orthopedic and surgical hospitals' costs are 20-30 percent higher than average hospitals, boosting profits for doctors.

"We don't cherry pick patients, period, end of story. We take patients based on their need for care, not on their ability to pay," protests Sandvig. "[The health-care reform law] puts control outside the hand of physicians and patients and into bureaucrats' hands."

Regardless of who provides the better service, it's clear the stakes are high.

"In total, over 25,000 jobs are at risk in 38 states. Billions of dollars already invested in hospitals stand to be lost," Sandvig said in a statement. "And rural and inner city hospitals being rescued and kept open by physician investment will now close."

The PHA is pushing House and Senate members to take a second look at the first casualties of Obamacare – the physician-owned hospitals.

"When the members of Congress understand the chaos these provisions will cause in many communities," Sandvig says, "we are confident they will be changed."

A group of Republican senators have already gathered in the office of Minority Leader Mitch McConnell, R-Ky., to discuss what they're calling a "second opinion" on Obamacare.

A Republican Senate aide told Roll Call the effort is intended "to draw attention to the consequences of the health care-law that the White House hopes people miss."

Sen. John Barrasso, R-Wyo., an orthopedic surgeon, told Roll Call, "I've gone to the floor every week for the last four weeks and given a doctor's second opinion of this health-care law, because at least every week something that I predicted would happen has actually happened."