[00:00] Bryan Hyde: Welcome to the Health Policy Podcast. I'm Brian Hyde. Today I'm joined by Rainier Schorr. He is a policy analyst at the Center for Modern Health. Rainier, welcome to the program. Take a moment here to tell us a little bit about who you are and what you do. [00:13] Reinier Schuur: Thanks for having me, Brian. So I'm a policy analyst at the Center for Modern Health. I have a background in philosophy, but I've always been interested in medicine. In fact, my PhD in philosophy was in the philosophy of medicine. And while I initially wanted to go into academic philosophy, I figured that there's a lot of work to be done in health policy. So that's why I dove into that area. [00:37] Bryan Hyde: Well, when it comes to health policy, it seems like the one area that I hear of more than anything is the Affordable Care Act. And considering how long ago that was enacted, that's, that's saying something. Apparently, it's still very much, you know, making headlines. And, you know, specifically today, you and I are going to be talking about calls for repealing Section 6001 of the American— or the Affordable Care Act, but we'll also be talking about physician-owned hospitals. Let's set the stage, if you will. I'd like you to first of all tell us, um, I don't know which one you'd like to start with, physician-owned hospitals or Section 6001, but what's the best way to understand the context behind these issues? [01:19] Reinier Schuur: Right, I mean, those 2 things are related, so When the ACA was passed in 2008 and implemented in 2010, the American Hospital Association managed to lobby the government to insert into the ACA Section 6001, which is not actually a ban on physician-owned hospitals outright. That's something that should be clarified from the very start. It's actually a prohibition on new physician-owned hospitals from receiving Medicare dollars for seeing Medicare patients. And so while it's not an actual ban, it is very prohibitive because Medicare shapes so much of the healthcare market. And so if you're a big hospital, not having access to that market is pretty close to a ban. And in fact, no physician-owned hospitals have opened up since this was enacted, and some have even closed down. [02:20] Bryan Hyde: So was this more of a barrier for entry into the marketplace for new physician-owned hospitals than correcting some kind of a wrong? [02:31] Reinier Schuur: Well, so the reason why this was implemented in the first place was that the American Hospital Association was arguing that, well, if you let physicians own hospitals, there's going to be all sorts of conflicts of interest because Physicians have the power to prescribe. So if they have a financial interest in a hospital, such as when they own it, they can do something called self-referring. And there's also other concerns that physicians, especially if they specialize in particular areas, can create boutique hospitals and focus on the high-reimbursing care or just focus on care that's more profitable overall and leaving the unprofitable services to other people. And then just a more general concern that if we're going to let physicians own hospitals, it's going to form this distinct lobbying group that's going to further distort the system. Those are all the arguments for the ban. And in fact, it could even sound plausible from a somewhat free market perspective. In fact, that's the case that Michael Cannon made from the Cato Institute, that we should keep this ban in place until other reforms are being implemented to protect the American taxpayer. But then on the other side of that argument, you have people saying like, well, whoa, wait a minute, let's slow down. Let's actually look at what happened to American healthcare since the passing of the Affordable Care Act. There's been massive consolidation of corporate-led healthcare. Independent practices have been bought up by them. And this argument that, well, physicians are going to cream skim and lobby and do all this self-referral stuff, a lot of those things are things that corporate-led healthcare can also do. And so that does pose somewhat of a dilemma from someone who thinks of themselves as being for free markets in healthcare, is that, well, you could see the argument going both ways. But for me, especially with my background as a philosopher, I just knew that there had to be a better answer to that. And so that's what my colleagues and I did at the Center for Modern Health. We looked into it and we think we have a more principled approach to Section 6001. [04:47] Bryan Hyde: I had to chuckle when you mentioned, well, there was concern that they might become a big lobbying force. And I went, wow, good thing that didn't happen. But as you mentioned, with corporate healthcare, they're one of the biggest lobbyists of lawmakers in the whole country. So let's— Rainier, let's talk about the moral case for repealing this section of the Affordable Care Act. Let's draw upon your philosophical training. And what is the moral case for making that change? [05:17] Reinier Schuur: Right. So I think what's important to do here first is to kind of like take a step back and think about the kind of terms of the debate. And I don't think we should take those kinds of distinctions for granted. And in fact, I think that very separation in itself is a consequence of regulations and an unfree market. It's not what you would see in an actual free market where you would have businessmen and physicians each contributing their own expertise, capital to hospitals and healthcare in general. And so this very separation between physician-owned hospitals and corporate-owned hospitals is a consequence of regulations. [05:59] Bryan Hyde: Okay. [06:00] Reinier Schuur: and corporate hospitals, I, I think should, uh, appear suspect, especially if you're a free marketeer as I am. And then really ask, like, well, is the solution really just to, uh, repeal Section 6001, or just to also look at the general way that the whole system has split up these 2 groups, right? Because there's also other laws that split up these 2 groups, such as the corporate practice of medicine laws, which are state-based laws which prohibit corporations for being involved in healthcare and having an ownership stake in medical practices, not hospitals. And so from our perspective is that we should get rid of Section 6001, not because physicians are somehow better than corporations— some of them might be— but because it just doesn't make sense to discriminate between an entire class of owners because of the actions of a small number of them, right? Like, that's the other argument that we make at the Center for Modern Health is that these bans don't really make sense because they don't actually go after the behavior that people complain about. And if that's what you want to go after, you should think about how to do that rather than like just banning an entire class of owners. And then the other perspective that we took on this is This whole framing of the debate on repealing 6001 and for and against is often being put in terms of, oh, we need to protect the American taxpayer, which we should. But we should also ask, why is there this conflict between people wanting to pursue their own health with whatever hospital they want and the taxpayer, which they themselves very often are? So it's like you're often in conflict with yourself. And there our approach was, well, again, we shouldn't take these categories for granted. We should recognize that in a system where, uh, you have taxes paying for healthcare, you necessarily separate the person who's paying for healthcare from those who are pursuing it. And that necessarily creates a conflict because then it raises questions of, well, what care is worth paying for? Well, worth it for whom? Uh, the taxpayer or the patient? And which taxpayer and which patient, right? Like, taxpayers may disagree, patients may disagree. And so the solution to that is not to, um, limit any future, uh, increases in, uh, spending on healthcare, uh, with taxpayer dollars, like, blankly, uh, but it's also just recognizing that, well, There are legitimate taxpayer concerns, but we want to separate them from people's private pursuit of health. And that's precisely what's not being done in American healthcare. There's all sorts of ways that taxpayer funding of healthcare limits the private pursuit of healthcare. And you don't fix that by either blindly limiting people's pursuit of health or just like protecting taxpayer money at all costs. Long term, you do need to do that. You do need to like slowly make sure that the public spending on healthcare goes down, but that's like a decades-long project. But in the meantime, I think it's not a good measure for reform to ask, oh, does repealing 6001 protect the American taxpayer, or do corporations hurt the American taxpayer more? At the end of the day, we need to— on the one hand, when it comes to corporations and physicians, help them team up together to reform the system together. But when it comes to the American taxpayer and the American patient, we need to allow them to go their own ways. [09:45] Bryan Hyde: And I've got to circle back for a moment just because I think you mentioned early on the physician-owned hospitals that existed before Section 6001, they still can receive Medicare dollars. Are they— they're grandfathered in under the ACA? Is that correct? [10:03] Reinier Schuur: They are grandfathered in, but they are also severely restricted from expanding their capacity, like wards and beds. And because of that, because they're severely restricted, some of them have had to close down and have to be bought up by corporate-led healthcare. [10:19] Bryan Hyde: I was just curious if the concerns, the reasons for that particular section of the ACA, if you were still— if that was coming to light, if they were actually doing those sort of things, or if it was just a preemptive, we just want to make sure that this does never happen? [10:35] Reinier Schuur: I mean, that is important to point out, is that the data doesn't bear out the concerns that motivated Section 6001 to begin with. There isn't a massive discrepancy between physician-owned hospitals and corporate-owned hospitals when it comes to things like cream skimming and self-referrals, which I think is important to point out. Like, that's the data. But the point that we make in our paper is that even if it turns out to be the case that some doctors engaged in that more than some corporate-owned hospitals, that's not a reason to ban an entire class of owners because those same things corporate-owned hospitals might still do. And so it's just not a principled approach. Now, I would say that the only reason really for keeping Section 6001 in place is if it actually were true that allowing physician-owned hospitals would massively overwhelm the federal budget. And then you have to actually take a more technical, slow approach. Like, okay, well, there's really big issues here that we have to resolve first. But that's just not the case. [11:45] Bryan Hyde: It's so interesting. And I appreciate your explanation here because it really shows that really we've got this pitting of, you know, competition. Should it be throttled, you know, for the sake of the corporate hospital owners? Or, you know, should the physicians who want to own hospitals be prevented lest they become greedy? With all of the taxpayer money that's being poured into paying for healthcare costs, is there ever a possibility that one day that responsibility will return to private hands rather to the taxpayers or to private health care providers rather than the government? Because it— I know it's a ton of money, but it wasn't always that way. Is there a possibility it would ever go back to not being primarily a taxpayer-borne expense? [12:37] Reinier Schuur: Well, that is certainly my hope. And if I didn't think that was possible, I would go into another area of work. But it's certainly the case that your ability to control your own money when it comes to healthcare is Really tied into your own right to pursue healthcare, because if someone else is paying for it, you're not entirely free to pursue your health because someone else is deciding how it's paid for and how resources are allocated. But I, I do think that simply going out and saying that, oh, like, well, we just need to cut spending, even though that's true, only saying that, what you're really communicating to someone else is that, well, we just want to limit your access to healthcare. [13:17] Bryan Hyde: Yeah. [13:18] Reinier Schuur: Right? Which is not the case. So you really have to make clear to people that, look, your very pursuit of healthcare is empowered by your ability to pay for it, and that decreasing spending in healthcare is really a long-term project. But I think what should come first is the deregulation part of it. We have to recognize that we are in a system that is heavily funded by taxpayer dollars. And it's done in your name, right? And so, like, to some extent, you've paid a bit into it as well. So you do have some say in how that's being used. And so what I think is a much more sensible approach, rather than just cutting spending and just deregulating, is trying to separate the public system from the private system. And in many ways, again, we don't really have a private system. Precisely because it's so tied into and warped by the public system, especially the Centers for Medicare and Medicaid Services. If you in any way accept taxpayer dollars, you have to comply to all of the government's rules and regulations on healthcare. And really slowly, I think what we should be doing is separating those things out and making the private pursuit of healthcare much more possible because then you can actually start to build a parallel free market healthcare market next to the public system. And once that gets going and gets much better, my hope is that you'll have people like you do with public education where they think, hey, I want my kid to go into the charter school, which is more free, rather than people just seeing the cutting of funding for healthcare and deregulations as a threat. They'll see it as an opportunity. [15:06] Bryan Hyde: I really love how you're explaining this, and it makes a lot of sense too. People who complain about the high cost of healthcare, which is pretty much all of us, you know, if you have to go and get healthcare, I think we all experience sticker shock at the moment the bill arrives. But you're making a very strong case that, you know, those pricing schedules, including the ones that are followed, you know, under the Medicare system and that are you know, paid for with taxpayer dollars. Those high costs are because of bureaucracy, not because that's what the market supports. [15:39] Reinier Schuur: That's right, absolutely. And I think on the one hand, there's just massive ignorance about that, but I think part of that ignorance is also born of a certain kind of bias, right? Like, people think that, well, government should be involved in doing these things, is we don't want a completely free market. But then I would say that pretty much most of the problems with the American healthcare system is precisely because of that. And I think that's an opportunity to confront people about that and basically ask like, well, do you want us to keep doing what we're doing? Or are you actually open to considering a different approach? And I think that opening is becoming wider and wider by the day. [16:21] Bryan Hyde: So I'm looking at a paper that was released by Center for Modern Health. And I love how this is framing it. You know, are these physician-owned hospitals, would they be subsidy seekers or would they be market disruptors? Take a moment to talk about what market disruptors, what function do they serve? [16:38] Reinier Schuur: Yeah, so this is an interesting question because what exactly does it mean to disrupt a market in a market that's not completely free, right? And you have different ways that, that could be done. Part of the angle that we take in the article is to point out that, well, some physician-owned hospitals might be using the language of free markets and being disruptors, but really they just want a piece of the pie without any of the other reforms. And one of the lines that I have in the article is that simply replacing corporate-led healthcare with physician-led healthcare is not pro-free market. It's just replacing one beneficiary of a government-distorted market with another, right? And, and so what it would look like to disrupt things is, of course, coming up with new business models, being innovative within the system that we have. But I think true disruption isn't just about a different business model. It's also about challenging people's expectations. I mean, like, if you look at truly disruptive businesses, It is not simply a new product or a business model that they introduce. Very often those products and business models challenge our basic assumptions of what we want and what the world can be. And that's what I would really like to see from not just physician-owned hospitals, but corporations or physicians that partner with corporations challenge our expectations of what is actually worth having rather than offering us Anything within the basic parameters of what we already have. [18:17] Bryan Hyde: Again, I'm going to recommend that anybody who wants to sink their teeth into this issue should really take a look at this, this article on your, your website. Where can people find it? [18:28] Reinier Schuur: So we are at www.centerformodernhealth.org. We're also on Substack and we're on Twitter. So, and, and the article can be found on our Substack and regular website. And please sign up for the newsletter. [18:43] Bryan Hyde: Again, we're talking with Rainier Schorr. He is a policy analyst at the Center for Modern Health. And Rainier, thank you so much for joining us today on the Health Policy Podcast. [18:52] Reinier Schuur: Thank you for having me, Brian.