Expert: Ethics should drive health reform

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BLOOMINGTON, Ind., June 22 (UPI) -- A U.S. researcher says "rising tides of commercialization have eroded longstanding, ethics-based" self-regulation of physician-owned hospitals.

Joshua Perry of the Indiana University Kelley School of Business said short of banning physician-owned hospitals, there is justification for aggressive regulation of such hospitals in the Affordable Care Act.

"Ethics are the bedrock of healthcare, the root of total trust between physician and patient and what makes healthcare unique among economic enterprises," Perry said in a statement. "But rising tides of commercialization have eroded longstanding, ethics-based self-regulation and internal constraints."

The Affordable Care Act prohibits new or expanded physician-owned specialty hospitals from filing Medicare claims if a financial relationship exists between the referring physician and the hospital receiving the government reimbursement. It also requires regulations designed to promote transparency, fair competition and patient safety.

No such restrictions were placed on existing entities, allowing for exploitation of a loophole, Perry said.

Physician-owned specialty hospitals -- approximately 265 are currently in operation -- are either partially or fully owned by physician-investors, with services limited to cardiac, orthopedic or other surgical procedures.

Perry found these hospitals treat a lower percentage of severely ill patients, suggesting physician-owned specialty centers "either intentionally skim the cream off the top of the patient population or limit treatment to the healthiest and least costly patients," but request greater amounts for Medicare reimbursement due to employee compensation and single-occupancy rooms.

The findings are published in the American Business Law Journal.