A group of emergency physicians and consumer advocates in many states are pushing for stricter enforcement of decades-old laws that forbid companies not owned by licensed physicians. Licensing ownership of medical operations.
Thirty-three states plus the District of Columbia have rules in their books against so-called corporate medical practice. But over the years, critics say, companies have succeeded in circumventing laws prohibiting owning medical practices by buying or forming local teams of staff owned by doctors across the country. nominal and limited powers of physicians so that they have no direct control.
These laws and regulations, which emerged nearly a century ago, are aimed at combating the commercialization of drugs, preserving the independence and authority of physicians, and prioritizing the physician-physician relationship. and patients over the interests of investors and shareholders.
Campaigners for stricter law enforcement say that companies that provide physician staff owned by private equity investors are the most serious offenders. According to a Raleigh, North Carolina-based physician who runs a job site for ER doctors, privately-run staffing companies help manage a quarter of emergency rooms nationwide. The two largest are Nashville, Tennessee-based Envision Healthcare, owned by investment giant KKR & Co., and Knoxville, Tennessee-based TeamHealth, owned by Blackstone.
Court records in multiple states, including California, Missouri, Texas and Tennessee, point to Envision and TeamHealth for allegedly using groups of doctors as straw men to circumvent company practice laws. But those filings are often in financial cases involving wrongful termination, breach of contract, and overpayment.
Now, doctors and consumer advocates around the country are awaiting a lawsuit in California against Envision, scheduled to begin January 2024 in federal court. The plaintiff in the lawsuit, the Milwaukee-based American Corporation of Emergency Medicine Physicians, alleges that Envision uses shell business structures to retain de facto ownership of groups of ER employees and they are asking the court to declare them illegal.
“We’re not asking them to pay and we won’t accept being paid to drop the case,” said David Millstein, the plaintiff’s lead attorney. “We are simply asking the court to ban this model of practice.”
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‘The ability to reverberate throughout the country’
The team believes victory will lead to a ban on this practice across California — and not just at the ER, but also for other employees provided by Envision and TeamHealth, including anesthesiologists and medical staff. hospital. The California Medical Association backed the lawsuit, saying it “will shape the boundaries of California’s ban on corporate medical practice.”
The plaintiffs – along with many doctors, nurses and consumer advocates, as well as some lawmakers – hope that success in the case will motivate regulators and prosecutors in different states. Other states take corporate drug bans more seriously. “Any decision anywhere in the country that says corporate ownership of a medical facility is illegal has the potential to be illegal,” said Julie Mayfield, a state senator from North Carolina. It resonates across the country — and I hope it does,” said Julie Mayfield, a state senator from North Carolina.
But the push to reinstate laws restricting the company’s medical practices has many skeptics, who see it as an attempt to return to a golden age in medicine that is long gone or may never have been. existed from the very beginning. They say the genie is out of the bottle, noting that the profit motive has penetrated every nook and cranny of the healthcare industry, and that nearly 70% of doctors in the United States now work for corporations and hospitals .
Barak Richman, a professor of law at Duke University, said the company’s practice of medical theory has “a very interesting and not very flattering history”. “The medical industry is trying to assert its professional dominance, which has accumulated a lot of benefit for itself in ways that don’t do much for the patient or the market.”
The California lawsuit involves Placentia-Linda Hospital in Orange County, where the plaintiff physician team lost its contract to manage the ER to Envision. The complaint alleges that Envision uses the same business model at multiple hospitals across the state.
“Envision exercises direct and pervasive direct and indirect control and influence over healthcare operations, making decisions that directly and indirectly affect medical operations, causing physicians are employees only and reduces the physician’s independence and freedom from commercial interests,” according to the complaint.
Envision said the company complies with state law and its operating structure is common in the healthcare industry. Envision wrote in an email: “Legal challenges to that structure have proven futile. It added that “care decisions have been and will always be between the clinician and the patient.”
TeamHealth, an indirect target in the case, said its “world-class executive team” provides management services that “allow clinicians to focus on medical practice and patient care.” through a structure commonly used by hospitals, health systems, and other providers around the world. Nation.”
The rules of the state are very different
State laws and regulations governing corporate medical practice vary widely on a variety of factors, including whether there are exceptions for nonprofits, revenue by physicians outside of the companies. management company can keep, who can own the device and how violations are punished. New York, Texas and California are considered to have some of the toughest restrictions, while Florida and 16 other states do not.
This type of management structure predates the emergence of private equity in the industry, says Kirk Ogrosky, a partner at law firm Goodwin Procter. “I would be surprised if a company interested in investing in this space falsified the formation documents; it would shock me,” Ogrosky said.
In recent years, private equity-backed companies have been attracted to emergency rooms because ERs are profitable and because they can charge inflated amounts for out-of-network care – At least until federal law provides for surprise billing. Critics say Envision and TeamHealth prioritize profits by maximizing revenue, cutting costs, and consolidating smaller practices into ever-larger teams — to the point of dominating the region. .
Envision and TeamHealth are privately owned, which makes it difficult to find reliable data on their finances and market penetration.
Dr Leon Adelman, co-founder and CEO of Ivy Clinicians, a job site for emergency physicians based in Raleigh, spent 18 months collecting data and found that the companies private equity-backed staffing that runs 25% of the nation’s emergency rooms. Adelman said TeamHealth and Envision have the two largest market shares, 8.6% and 8.3%, respectively.
Other estimates put the ER penetration rate of private equity closer to 40%.
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Doctors push for investigation
So far, efforts by emergency physicians and others to challenge private equity staffing companies over their alleged violations have yielded disappointing results.
An advocacy group called Take Medicine Back, founded last year by several ER doctors, sent a letter in July to North Carolina Attorney General Josh Stein, asking him to investigate the violations. the company’s ban on practicing medicine. And because Stein holds a senior position at the National Association of Attorney Generals, the letter also asks him to take the lead in persuading his fellow AGs to “launch a multinational investigation into the situation.” widespread lack of enforcement” of corporate medical practice laws.
Team leader Dr. Mitchell Li said he was initially disappointed by the response he received from Stein’s office, which promised to review his request, saying it raised legal issues. complex management of the company’s medical operations in the state. But now Li has more hope, as he secured an appointment in January with officials in Stein’s office.
Dr. Robert McNamara, co-founder of Li’s team and chair of the emergency department at Temple University’s Lewis Katz School of Medicine, drafted the complaint to the Texas Medical Board, along with Houston-based physician David Hoyer. , asked the board to intervene against two physicians accused of fronting professional organizations controlled by Envision and TeamHealth. In both cases, the board refused to intervene.
McNamara, who served as the medical director of the group of doctors in the California Envision case, also filed a complaint with Pennsylvania Attorney General Josh Shapiro, alleging that a group called the Urgent Care Services of California. PC Pennsylvania, trying to contract with ER. doctors of the Crozer Keystone Health System, which is wholly owned by TeamHealth and acts as a cover to avoid scrutiny.
A senior official in Shapiro’s office responded, saying the complaint had been forwarded to two state agencies, but McNamara said he had received no response in more than three years.
Different perspectives on the role of private equity
Private equity proponents say it has done a lot of good for healthcare. Jamal Hagler, vice president of research for the American Investment Council, said private equity brings expertise to hospital systems, “whether it’s hiring new staff, growing and opening up markets. new school, integrating new technology or developing new technology.”
But many doctors who have worked for private equity firms say their mandate is incompatible with best medical practice. They cite an emphasis on speed and higher patient numbers over safety; preference for cheaper, less trained medical providers; and treatment regimens are not suitable for some patients.
Sean Jones, an emergency physician in Asheville, North Carolina, said his first full-time job was at a Florida hospital, where EmCare, a subsidiary of Envision, runs the emergency room . Jones said EmCare, in collaboration with the hospital’s owner, pushed doctors to hit performance goals related to wait times and treatments, which weren’t always good for the patient. patient.
For example, if a patient came in with an abnormally high heart rate and breathing rate — a sign of sepsis — doctors would have to give them large amounts of fluids and antibiotics within an hour, Jones said. But those symptoms can also be caused by a panic attack or heart failure.
“You don’t want to give a heart failure patient 2 or 3 liters of fluid, and I get emails saying, ‘You don’t do this,’” he says. “Ah, no, I don’t, because the reason they can’t breathe is because they have too much fluid in their lungs.”
Envision says the company’s 25,000 clinicians, “like all clinicians, exercise their independent judgment to provide clinically relevant, compassionate, quality care.” .”
Jones feels different. “We don’t need some MBA telling us what to do,” he said.
Kaiser Health News is a national health policy news service. This is an editorially independent program of the Henry J. Kaiser Family Foundation not affiliated with Kaiser Permanente.
