Houston physicians engage in general acute-care hospital ownership

HealthLeaders-InterStudy, a provider of managed care industry intelligence, reports hordes of area physicians are venturing enthusiastically into ownership of general acute-care hospitals with the vow to treat a full range of patients.

According to the latest Houston Market Overview, local physicians' desire to operate full-scale general hospitals is likely related to the scrutiny that limited-service hospitals have received statewide and nationally in the past several years.

"Houston far outpaces other cities in the boldness of its physicians, both in the sheer number of facilities owned and their willingness to branch out from operating small, niche facilities into operating larger general, acute- care hospitals," states Renee Burnham, HealthLeaders-InterStudy market analyst and author of the report.

In addition to the acquisition by Houston physicians of the Twelve Oaks and St. Joseph medical centers, a new Houston-based company, University General Hospital Systems (UGHS), signed a record $1 billion deal for the physician-owned hospital model with Charlotte, N.C.-based Alliance Development Group in November 2006. Under the agreement, UGHS will build 10 physician- owned, general acute-care hospitals in metropolitan areas nationwide. With the look and feel of an upscale hotel, the first facility -- University General Hospital -- opened in September 2006 at a cost of $50 million. Plans are to follow up with a nine-story, $40 million hospital with 80 beds in the Chinatown area of Houston in 2008.

Advocates of physician-owned facilities claim that they increase competition and quality, as the physicians are able to make decisions concerning the facilities. Critics, however, warn that specialty hospitals treat less-severely ill and better-insured patients, leaving traditional hospitals to shoulder the burden of caring for the uninsured.