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Physician-Owned Specialty Hospitals Survive Congressional Attack

April 20, 2009

The latest Congressional effort to restrict physician ownership in specialty hospitals was defeated in February. Currently, the "Stark Law" permits physicians to make referrals to a hospital in which they have an ownership interest, as long as the ownership is in the entire hospital and not just a department or other limited part of the hospital.

Opponents of physician ownership succeeded in adding restrictive language to the version of the State Children's Health Insurance Program legislation initially approved by the House of Representatives in January. The restrictions would have prohibited a physician's referral to any hospital in which she or he had an ownership interest if, as of the effective date of the legislation, the physician did not already have an ownership interest in the hospital and the hospital was not already Medicare certified.

The Senate's version of the legislation did not include the restrictive requirements, and the House of Representatives eventually accepted and adopted the Senate version, which President Obama then signed on February 4.

Both proponents and opponents of physician ownership in hospitals have stated that, in effect, the unsuccessful effort to use the State Children's Health Insurance Program bill as a vehicle for addressing the issue amounted to a battle in what they predict will be a continuing war.

If you have any questions regarding physician-owned specialty hospitals or the regulations that apply to them, please contact Charles G. Vogel ( or 414-287-9502) or another member of the Godfrey & Kahn Healthcare Team.

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