WASHINGTON — The corporatization of medicine threatens both clinicians and patients, but state and federal authorities have not done enough to crack down on the problem, said physicians and academicians during Capitol Forum’s Health Care Competition Conference at the National Press Club on Thursday.
Li doesn’t blame the pandemic. Rather, he blames “the consolidation and opportunism” of private equity firms, which have taken advantage of the situation COVID created — struggling smaller hospitals and practices became even more vulnerable, while the flow of government dollars, such as CARES ACT funding, increased, he noted.
Prior to the pandemic, Li witnessed this “opportunism” firsthand, he said.
In 2014, Ascension St. John Hospital in Detroit was staffed by Emergency Medicine Specialists, a physician-owned group, until TeamHealth, a medical staffing firm acquired it. Two years later, TeamHealth was taken over by Blackstone, a giant private equity firm, Li told MedPage Today after the panel discussion. Li noticed changes in the hospital almost immediately.
Today, three-quarters of all physicians are employed, Li said.
In 2021, he and several other physicians formed Take Medicine Back, an advocacy group focused on wresting control of the profession from corporate interests. In July 2023, some of Li’s former attending physicians alongside other clinicians and staff formed one of the first unions to push back against a private equity contract group.
Anesthesiology, Hospice Care
Anesthesiology practices have been similarly targeted.
Marco Fernandez, MD, president of Midwest Anesthesia Partners in Arlington Heights, Illinois, said he and the over 30 physicians he works with were “blindsided” after losing a couple of contracts to private-equity owned groups.
“We were terminated … partly because we refused to adopt a production model,” said Fernandez, who later formed the Association for Independent Medicine.
“From the human side of it, we feel like we’re drowning,” Fernandez said.
Loren Adler, a fellow and associate director at the Brookings Schaeffer Initiative for Health Policy in Washington, D.C., shared key features of the groups private equity tends to target: places where quality is harder to measure — for example, nursing homes and behavioral health organizations — or where patients have less choice of provider. Emergency physicians and anesthesiologists fall into the latter category.
Hospice groups are also sought by private equity and for-profit corporations, Eileen Appelbaum, co-director of the Center for Economic and Policy Research in Washington, D.C., pointed out.
In a value-based — or more specifically, a capitated payment model — hospice providers get a flat fee in order to tailor patients’ care to their needs. Whatever money is not spent on patient care they keep as a profit, she explained.
Using this model, nonprofit hospices provide additional services such as music therapy and after-hours visits. For-profit hospices, in contrast, offer only minimal services and fewer visits. Appelbaum wrote a recent report on this problem.
The net margin for nonprofit hospices was on average 3-4% and no higher than 6%, but among for-profit groups, that figure was closer to 19%, she noted.
Where Are the Watchdogs?
“I really see CMS [the Centers for Medicare & Medicaid Services] as a big part of the problem,” Appelbaum said.
When inspections of these groups actually occur, it’s easy to find evidence of misbehavior, she added.
CMS has, on occasion, suspended enrollment of misbehaving hospices or revoked their certification, but rarely.
“They have that ability. They almost never use it,” Appelbaum said.
Li argued that CMS has also not done enough to address misconduct in other areas.
In North Carolina, a False Claims lawsuit against HCA Healthcare and TeamHealth was unsealed, then later dropped, reflecting, Li said, “a complete failure by CMS” and other federal agencies.
In addition, the Anti-trust Division of the Department of Justice has a role to play in preventing certain inappropriate mergers, Adler said, but, in part, due to resource constraints, it has not been very aggressive in this area.
Hayden Rooke-Ley, JD, of Healthcare for All Oregon, pointed out that historically, states — through legislation, attorneys general, or state medical boards — instituted bans on the “corporate practice of medicine” (CPOM) decades ago. But a growing number of exemptions and “smart lawyers” have essentially gutted those bans, he said.
However, there is interest in reviving them, Rooke-Ley noted.
Both Li and Fernandez are on board with resurrecting the CPOM bans and are looking to medical societies to help with those efforts.
Li is also advocating for a bill to return “due process” rights to emergency physicians who are terminated. Under Medicare, physicians are entitled to such a right, but third parties are not subject to those requirements. He said he hopes to see that legislation expanded to all physicians.