Are physician-owned medical groups a silver bullet for health care reform, a bad idea from yet another special interest group, or just one component of a larger reform package?

It depends who you talk to.

Amidst the cries for a public plan, no public plan, co-ops, community hospitals, physician-owned hospitals and medical groups have been warming the bench. Major industry groups haven’t been in favor of physician-owned medicine, but their attacks have been mostly unsuccessful.

A compromise earlier this year with the White House and Senate Finance Committee to reduce hospital reimbursement by $155 billion over 10 years was backed by the American Hospital Association, the Catholic Health Association and the Federation of American Hospitals. The agreement places restrictions on a physician’s ability to refer patients to clinics in which they have a vested financial interest, and would have restricted the future growth of existing physician-owned hospitals.

Those provisions are still in the current iteration of the bill, but pressure from physician-owned groups and constituents has forced House Ways and Means Committee Chairman Charlie Rangel (D-N.Y.) to say that he will hold a separate meeting addressing the issue. He has yet to hold that meeting.

Michael Cannon, the Cato Institute’s director of health policy studies, thinks the jury is still out over whether or not the model has a net benefit to the American consumer, but that there shouldn’t be restrictions placed on them.

“I am agnostic about whether physician owned hospitals play any role in health care or not, because it could certainly be the case that different governance structures would perform better,” said Cannon. “A publicly traded hospital, a not-for-profit hospital, a hospital that is set up by a cooperative – I’m not more for any one of these things; I’m just for a level playing field.” Continued...