HealthLeaders-InterStudy, a leading provider of managed care market intelligence, reports that while Texas laws favoring physicians have traditionally enabled doctors practicing in the state to compete directly with health systems, these regulations may actually yield increasing challenges for this sector. According to the recent Houston Market Overview and San Antonio Market Overview, positives for the physician sector are tempered by economic conditions and a challenging contracting environment.
Texas has no certificate-of-need requirements for healthcare facilities and state law bars hospitals from employing physicians in most cases--two factors that have allowed doctors to build their own hospitals and facilities. There are more physician-owned hospitals in Texas than in any other state.
Meanwhile, the current economic environment finds many patients delaying care, a situation that will intensify as more consumers adopt health plans with higher copays and deductibles.
In the Houston market, home to more than a dozen acute-care facilities with physician investors, the area's physician-owned hospitals have an additional challenge: difficulty securing managed care contracts. Physician-owned University General Hospital and Foundation Surgical Hospital have contracts with one major insurer each--Aetna and UnitedHealth, respectively. Each hospital has seen lower-than-expected patient volumes.
"The Houston market has seen many hospitals open in recent years. For physician-owned facilities, today's environment, with reduced patient volumes and limited managed care contracts, makes it difficult for them to become profitable," said Mark Cherry, market analyst with HealthLeaders-InterStudy. "In areas like Houston and San Antonio we'll likely see physicians begin to work more closely with health systems, and consolidation among the overall health system segment as these players look to become more efficient."
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