CMS Just Cracked Open the Door for Physician-Owned Hospitals. Here's Why DPC Doctors Should Care.

For 15 years, a single provision in the Affordable Care Act has blocked physicians from opening new hospitals. That provision just got its first serious challenge from inside the federal government.

On April 10, CMS released a proposed rule that asks a question nobody in Washington has been willing to ask since 2010: should physician-owned hospitals be allowed back into Medicare?

If you run a DPC practice, you might wonder why you should care about hospital ownership rules. The answer is that the same law that locked doctors out of owning hospitals helped push thousands of them toward the model you’re practicing right now.

What Section 6001 Did

In 2010, Congress passed Section 6001 of the ACA, which froze physician-owned hospitals out of Medicare participation. Existing facilities were capped at their 2010 bed and operating room counts. No new physician-owned hospitals could join the program.

The stated rationale was that physician-owners would cherry-pick profitable patients and avoid complex cases. The American Hospital Association and the Federation of American Hospitals lobbied hard for the restriction. It worked.

What happened next was predictable. With one major pathway to physician-led care closed off, doctors looked for others. As Dana Lujan wrote on KevinMD this week, “Direct primary care, concierge medicine, and direct specialty care exist in significant part because Section 6001 closed other ownership pathways.”

By 2024, nearly 80% of physicians were affiliated with corporate entities. The restriction didn’t stop consolidation. It accelerated it.

The Narrow Opening

CMS-1849-P, the FY2027 Inpatient Prospective Payment System proposed rule, includes a Request for Information about whether physician-owned hospitals should be allowed to voluntarily participate in TEAM, a five-year mandatory bundled payment model covering joint replacements, spinal fusions, heart bypass surgery, and other major procedures.

About 15 physician-owned hospitals are already in TEAM because CMS selected their geographic areas for the mandatory rollout. The RFI asks whether others should be able to opt in.

The bigger question buried in the proposal: can CMS use its Innovation Center authority under Section 1115A to waive Section 6001 restrictions? If the answer is yes, it would be the first time in 15 years that the federal government has loosened physician ownership rules without an act of Congress.

The comment period closes June 9, 2026. The final rule is expected in August.

The Cherry-Picking Myth

The strongest argument against physician-owned hospitals was always the claim that they avoid sick, complex patients. A 2023 study analyzing roughly 740,000 Medicare discharges across 186 physician-owned hospitals found the opposite. Patient demographics, including age, race, ethnicity, and comorbidities, were virtually identical between physician-owned and traditional hospitals in the same geographic areas.

The study also found potential Medicare savings of 8.6% to 15.2% on the 20 most expensive conditions at physician-owned facilities.

None of this has stopped the opposition. The Blue Cross Blue Shield Association has already submitted comments supporting narrow exceptions for community hospitals in rural areas while explicitly excluding surgical-specialty physician-owned hospitals from any loosening. The hospital industry lobby is positioning to keep the restrictions as tight as possible.

If you’ve watched how insurance companies and hospital systems respond to DPC growth, this playbook should look familiar.

The Autonomy Thread

Here’s the connection that matters for DPC physicians.

Section 6001 and the pushback against direct primary care share the same underlying tension: who gets to control how medicine is practiced and delivered? In both cases, physicians tried to build something outside the corporate hospital system. In both cases, incumbents argued it would hurt patients. In both cases, the data told a different story.

DPC grew from roughly 1,200 practices to nearly 2,800 in the past six years. Physician-owned hospitals, frozen in place since 2010, couldn’t grow at all. If CMS opens even a narrow pathway back, it signals something DPC physicians should pay attention to: the policy conversation around physician autonomy is shifting.

Three bills in the current Congress address Section 6001 directly. H.R. 4002 would repeal it entirely. H.R. 2191 and S. 1390 would carve out rural exceptions, backed by a coalition of 88 organizations. None has advanced yet, but the CMS RFI creates parallel pressure from the regulatory side.

What This Means

You don’t need to want to own a hospital to care about this. The physician-owned hospital fight is a proxy for the broader question of whether doctors or corporations control healthcare delivery. Every time a policy door opens for physician-led models, it validates the path DPC practices have already taken.

If you’re a DPC physician who started your practice because the traditional system left you no room to practice on your own terms, you’re living proof of what happens when physician ownership gets restricted. The doctors trying to own hospitals are fighting a version of the same battle.

Comments on CMS-1849-P are due by 5 p.m. EDT on June 9, 2026, and can be submitted at regulations.gov under docket CMS-1849-P. If physician autonomy matters to you, this is one of the rare moments when the government is actually asking for your opinion.