FAH Hospital Policy Blog

Perspectives on health policy affecting America's hospitals and the patients we serve.

FAH Policy Blog Team

FAH, AHA Oppose Physician-Owned Hospital Expansion Request 

In a joint comment letter submitted to CMS on March 11, 2022, the FAH and AHA urged CMS to reject a request from Doctors Hospital at Renaissance (DHR) for an exception to the prohibition on expansion of the facility capacity of a physician-owned hospital, and to reverse the 2020 amendments to the “high Medicaid facility” exception, which removed the “on campus” expansion requirement.  
DHR proposes to create a new hospital campus in Brownsville, Texas (Cameron County) 55 miles from the parent hospital in Edinburg, Texas (Hildago County), yet the statutory criteria for a high Medicaid facility focus on the percent of Medicaid admissions “in the county in which the hospital is located.” However, the two existing general acute care hospitals in Cameron County (Valley Baptist Medical Center and Valley Regional Medical Center) already exceed DHR’s percent of Medicaid admissions. Therefore, “it appears unlikely that DHR would operate a high Medicaid facility in Cameron County if it expanded there.” Nor is there unmet need or Medicaid patient access issues in Cameron County as the percentage occupancy at the two facilities has ranged between 46 percent in 2019 and 66 percent in 2021. “The creation of a distant second campus of DHR in Cameron County is not warranted by beneficiary needs and clearly violates the spirit and intent of the statutory prohibition on physician-owned hospitals under the Stark law,” the letter notes.  
Along similar lines, DHR’s uncompensated care cost as a percentage of operating expenses has been consistently less than half of the uncompensated care percentages for the two existing Brownsville hospitals and significantly less than the other large hospital based in Edinburg (South Texas Health System).  
The letter also notes that in its request for a waiver of the 30-mile limitation on new hospital locations under Texas Law, DHR indicated that if a patient requires a transfer, that patient would be transferred to the DHR parent hospital in Edinburg more than 50 miles away, creating wholly unnecessary patient safety concerns.   
Click here to read the full letter.