Bill Eases Rules for Physician-Owned Hospitals: Exempts Rural Facilities Over 35 Miles Apart, Lifts Expansion Caps

This bill, the 'Physician Led and Rural Access to Quality Care Act,' tweaks the rules around hospitals owned by the doctors who work in them. Specifically, it modifies the Social Security Act to change how physician self-referral laws apply, aiming to affect both rural healthcare access and the growth potential of existing physician-owned hospitals (POHs).

New Rules for the Back Roads

The first major change carves out an exemption from certain self-referral restrictions for what the bill calls 'covered rural hospitals.' What qualifies? According to Section 2, it's a hospital in a designated rural area that was located more than 35 miles from the nearest hospital or critical access hospital when it first enrolled in Medicare. In plain English, if a doctor has an ownership stake in one of these qualifying rural hospitals, it becomes easier for them to refer their Medicare or Medicaid patients there for services without running afoul of specific regulations. The idea seems to be boosting healthcare options in underserved areas. For instance, someone living in a small town 40 miles from the next medical center might find their local, physician-owned clinic can now offer more services referred by its own doctors. However, the strict 35-mile definition might leave out facilities in areas that feel remote but are technically closer, potentially creating uneven access.

Taking the Brakes Off Growth

The second key piece of this legislation directly addresses existing physician-owned hospitals, regardless of their location. Section 2 removes a current prohibition that limits these hospitals from expanding their facilities. Effective immediately upon enactment, POHs would be allowed to increase their number of operating rooms, procedure rooms, and beds. Imagine an established POH in a growing suburb – this bill could allow it to build a new wing or add specialized surgical suites where it previously couldn't. While this could mean more capacity and potentially newer facilities, it also leans into the ongoing debate about POHs. Allowing expansion could intensify concerns about conflicts of interest, where physician-owners might have a financial incentive to refer patients for more services, potentially driving up healthcare usage and costs for everyone. This growth could also put pressure on nearby community hospitals that don't have the same ownership structure.