As Kansas scrambled to combat the pandemic in April, Rep. Roger Marshall signed a letter to top congressional leaders proposing 10 actions to fight COVID-19. Item six called for lifting a decade-old ban on new hospitals owned by physicians.

The letter came after Marshall’s wife had made at least $195,000 and possibly as much as $450,000 in the previous three years from real estate investments involving physician-owned hospitals.

A review of financial disclosures and congressional documents by The Kansas City Star reveals several instances in which Marshall, a Great Bend OB-GYN and the Republican nominee for U.S. Senate, pushed Congress to overturn restrictions on physician-owned hospitals while his wife, Laina Marshall, held a financial stake in the industry.

Marshall is in a close race with Democrat Barbara Bollier, a retired anesthesiologist and state senator from Mission Hills, to fill the seat of retiring Sen. Pat Roberts. Their shared medical background has loomed large in the race, with both seeking to present their professional credentials for political advantage.

Marshall has personal experience with physician-owned hospitals. With medical colleagues he transformed what had been a Great Bend surgery center into a full physician-owned hospital in 2009.

All of that makes Marshall a potentially powerful ally for the industry if elevated to the Senate. Kansas has 11 physician-owned hospitals, according to Physician Hospitals of Kansas, an industry group.

The Affordable Care Act placed several restrictions on such hospitals. Marshall would vote on and potentially help draft any replacement to the landmark law if the U.S. Supreme Court strikes it down. Oral arguments in a case challenging the ACA are scheduled for Nov. 10.

Physician-owned hospitals are just that: hospitals owned by doctors that are often run for profit. They are frequently called specialty hospitals because they sometimes offer only certain types of procedures and care.

They have been controversial within the medical community because of concerns that they undercut traditional hospitals by “cherry picking” profitable patients. Critics also contend they create an environment where doctors may have financial incentive in the care they provide, creating a conflict of interest.

“They were just going to take easy cases,” said Paul Ginsburg, professor of health policy at the University of Southern California. “And so the major opposition to them was the community, the general hospitals, because they’re the losers.”

Congress responded by placing significant restrictions on the industry when it passed the Affordable Care Act in 2010. The law effectively stopped the creation of new physician-owned hospitals by limiting their ability to accept Medicare patients— a vital revenue source. It also largely prohibited the expansion of existing physician-owned hospitals.

The Bollier campaign said she supports the ACA, including the law’s restrictions on physician-owned hospitals. Spokeswoman Alexandra De Luca said Bollier will prioritize healthcare access and affordability if elected.

“She does not believe that profits should be the primary driver on health care policy. She wants to ensure that patients are the focus and that they have affordable health care options available to their families,” De Luca said in a statement.

Marshall’s campaign said concerns about physician-owned hospitals are unfounded. Spokesman Eric Pahls said federal laws are in place to prevent financial conflicts and that such facilities provide high-quality care.

The moratorium and similar policies have cut down on competition while driving up prices for patients, Pahls said.

“Competition drives innovation and incentivizes the best quality level of care the American health system has to offer,” Pahls said in a statement. “How has the American health system benefited from the POH moratorium? It hasn’t.”

Financial investments

Some physician-owned hospitals have flourished, despite restrictions. In recent years, traditional hospitals and hospital systems have increased their level of cooperation with physician-owned hospitals and some have been sold to traditional hospital chains.

And, as Marshall’s financial disclosures show, the industry can be profitable for investors.

Annual reports filed by Marshall show that in the years he’s been in Congress, Laina Marshall has held income-generating investments in land and buildings for two physician-owned hospitals in Texas.

In 2017, 2018 and 2019 Laina Marshall through a healthcare properties fund held a 2 percent interest in Methodist McKinney Hospital Property in McKinney, Texas. The interest is valued between $15,001 and $50,000 and income she reported on each disclosure was between $15,001 and $50,000.

The disclosure reports provide ranges, not exact amounts.

During those same years, Laina Marshall also held a 2 percent interest labeled in disclosure reports as “HPH Building”— a reference to Houston Physicians Hospital. The interest in the hospital’s land and building was valued between $15,001 and $50,000, with income between $50,001 and $100,000 each year.

Pahls said in a statement that these real estate investments are separate from the operation of the hospitals.

“Neither Dr. or Laina Marshall own interest in a physician owned hospital. Period. Methodist McKinney Hospital Properties and HPH Building Company, as stated in their name, are real estate holdings. They are not related to the operations of the hospital,” Pahls said. “The real estate investments were in companies that owned the land, and the bricks and mortar that comprised the hospital, which was then leased to the physician owned hospital. The hospital’s operations and the real estate are two separate, distinct entities. The investments were executed by a real estate fund, and they weren’t directed by the Marshalls.”

He continued: “The Marshall‘s investment in the find was actually very small – less than 2% – and they had no say over its decisions. Attempts to make this into some sort of conflict are dishonest, and ignore basic knowledge of how hospitals operate.”

Pahls then pointed to Bollier’s family, who he said also has a history of “profiting off of private health care.”

Bollier’s father, Robert Goolsbee, founded and operated Surgicenter of Kansas City until it was sold to HCA Healthcare in 1999. Bollier worked at the center beginning in the 1980s after becoming a doctor. The facility was outpatient-only, and didn’t perform procedures that kept patients overnight, according to the Bollier campaign.

As his wife’s Texas land investments yielded income, Congressman Marshall took steps to try to improve the market for physician-owned hospitals. In 2017, he co-sponsored the Patient Access to Higher Quality Health Care Act. The legislation would have lifted limits on the construction and expansion of physician-owned hospitals.

Republican Rep. Sam Johnson of Texas, who died in May, was the bill’s lead sponsor. His district, north of Dallas, included Methodist McKinney Hospital.

The bill didn’t advance out of committee. Marshall again co-sponsored a similar bill introduced in 2019.

In May 2019, Marshall wrote to Seema Verma, administrator of the Centers for Medicare and Medicaid Services, asking that the agency launch a demonstration project that would allow some physician-owned hospitals to treat more Medicare patients.

Marshall was one of two lead signatories on the letter, which was signed by 34 legislators.

As the coronavirus swept the country, CMS announced on March 30 that physician-owned hospitals would be allowed to temporarily increase their total beds, operating and procedure rooms.

On April 26, Marshall pushed to go further. He joined Louisiana Rep. Mike Johnson in calling for suspension of the ban on new physician-owned hospitals. The recommendation was among 10 proposals for responding to COVID-19 from the Republican Study Committee, which Johnson chairs. Marshall heads the committee’s health care task force.

The recommendation said a suspension would “allow for hospital supply to catch up with the rapid uptick in demand for hospital services.”

Craig Holman, a lobbyist for Public Citizen, a watchdog group that pushes tougher ethics laws, said Marshall’s involvement in legislation and advocacy for physician-owned hospitals wouldn’t violate congressional ethical rules.

However, he said Marshall should still recuse himself from involvement in legislation on the issue.

“It poses a conflict of interest. His family, his wife, will personally benefit from passage of legislation like that and that also means the lawmaker will benefit,” Holman said.

One city, two hospitals

Marshall’s support of physician-owned hospitals predates his election to Congress. He co-founded Great Bend Regional Hospital in 2009, taking what had been a surgical and diagnostic center opened in 2001 and transforming it into a physician-owned general hospital.

The other hospital in town, Central Kansas Medical Center, a Catholic non-profit, curtailed its operations soon after. In 2011, it stopped offering in-patient care. Hospital officials at the time cited a drop off in admissions.

“It was happening just about the same time this issue was really being seen in places like Wichita and Kansas City, especially,” said Tom Bell, who was president and CEO of the Kansas Hospital Association for 15 years before retiring last month.

Bollier has attacked Marshall over his history with Great Bend Regional -- one ad from her campaign says he was a “big healthcare executive” before he became a politician. Duty and Country, a Democratic PAC, released an ad saying the for-profit hospital Marshall co-opened forced the non-profit hospital to close.

“Roger Marshall follows the money,” the ad says. It also includes the label “profits over people.”

But Adina Gregory, a nurse who worked at both hospitals, said that while many physician-owned facilities were focused on making money, doctors at Great Bend Regional wanted the operation to be focused on the needs of the community.

“If they wanted to make money, they would have been different,” Gregory said, noting that the hospital offered maternity care, a service that many physician-owned hospitals avoid.

In a statement, Marshall said Central Kansas Medical Center had an “antique and failing infrastructure” that prevented it from adapting to modern outpatient services.

“It represented the older style of having patients come in days before surgery, and frankly had become consumer unfriendly. Utility costs and labor costs were out of proportion to similar-sized hospitals,” Marshall said. “It was on an unsustainable course.”

Marshall said when CKMC refused to build a new surgery center and modernize, he and other physicians organized and decided to open their own surgery center. Their new facility opened in 2001.

Marshall reported selling up to $100,000 of his stake in Great Bend Regional in March 2017, shortly after he entered Congress.

Financial disclosures show that Laina Marshall continued to hold a 14 percent stake in GBRH Properties 2009, LLC -- a company that owns land adjacent to Great Bend Regional. The disclosure describes the investment as “building, helicopter pad, intangible assets, cash.” The use of the helicopter pad was discontinued in 2018.

Mike Allison, who was mayor of Great Bend from 1999 through 2017, said at the time he didn’t think the city could afford two full-service hospitals. In an interview for this story, Allison said Marshall “didn’t destroy” Central Kansas Medical Center. The hospital, opened in 1963, was old and outdated, he said.

Allison said he became upset when he saw that ad on television attacking Marshall for opening the hospital.

“He supported his community. There are certain people who were just easy to work with in the community,” Allison said of Marshall. “That ad is wrong.”

Mark Hall, a professor of law and public health at Wake Forest University, told The Star it’s more difficult for a small community to sustain both a general hospital and a physician-owned facility compared to a city with a larger population.

“It’s very hard for the established community hospital to survive,” Hall said, speaking generally.