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Corporate Control of Emergency Departments – A Growing Monster?

May 20, 2022

Written by Clay Smith

Spoon Feed
There is undeniable corporate influence in the practice of emergency medicine, and this could cause problems for patients or for those of us who care for them. We need to thoughtfully consider this.

Why does this matter?
Please note, this post is sure to offend everyone! Are you a leader or employee of an ED contract management group (CMG)? Do you work for a so-called “non-profit” (like me!)? This article steps on all our toes. Know this, it is not my intent to offend. However, we need to talk openly about the issues facing our specialty. So, here we go. There are laws against the corporate practice of medicine. Medicine is meant to be between and doctor and a patient. Corporate influence to do more unnecessary things (to increase profit) or to do fewer necessary things (to reduce expenses) harms patients. I have tried to fairly present the authors’ opinions, but I have also tried to fairly present the other side. This is a feature article and critical issue and is longer than the usual JournalFeed summary. How has corporate control of emergency medicine groups changed the landscape?

Tiptoeing through the minefield
This was an opinion piece with this objective: “To describe the growing corporate influence in the practice of emergency medicine and associated dangers to the public’s safety and well-being.” So, keep the authors’ point of view in mind as you read.

The authors make the case that corporate control of emergency medicine has become a major issue, and many of the, “companies employing physicians often are owned by private equity or are publicly traded corporations. The estimated annual deal values for private equity healthcare acquisitions has increased from $42 billion in 2010 to almost $120 billion in 2019.” They argue that an ED, like a fire department, serves as a public good. We all need the 24/7/365 expert healthcare that EDs provide. The problem is, hospitals and health systems have merged or have been acquired and have become effective monopolies, which has driven up prices. The entrance of private equity into ED CMGs has added fuel to the fire, as they seek profits first. And publicly traded companies are beholden to shareholders, not patients. Profit first means a, “physician can be fired or threatened if they resist the corporate directives.” It also means these hospitals and health systems can raise charges, creatively invent new facility charges, and inflate old charges; authors note, for example, trauma activation charges for one publicly traded healthcare corporation are as high as $50,000.00.

Up to 50% of emergency physicians are now employed by ED CMGs, many of which are owned or backed by private equity. That means half of U.S. readers are reflected in this statement. Of course, it’s not just EDs, but also radiology, anesthesia, hospitalist, orthopedic surgeon, and intensivist groups that are affected. This may mean the physician loses due process rights and, “generally must sign a contract that denies them the right to a fair hearing regarding termination that other members of the medical staff possess.” Some CMGs or corporations can also exert pressure to admit patients (to increase charges), perform more tests, up-code visits to the highest level, and not allow access by the physicians to see what has been billed in their name. This is not to mention non-compete clauses. Another concern raised by the authors is the increasing control of corporations over education, in the form of a proliferation of new residency training programs. They worry that this is an attempt to flood the market with physicians to force lower compensation, which is in keeping with recent EM workforce projections predicting an oversupply of emergency physicians by 2030. Authors state, “Having a private equity-backed company employing the teachers of the next generation of emergency physicians does not seem to be a good idea for patients.” On the other hand, some argue that we need to be cautious; it’s possible to get workforce calculations wrong. We are one team, no matter where we trained, and we need to support all emergency physicians as well as to, “ensure business interests do not supersede the needs of educating the workforce.” It’s also important to realize that healthcare is a business, and learning about this during residency training is smart and is the reality we live in.

The authors propose the following solutions to minimize the profit motive: treat ED care more like a utility; cap charges; protect physicians who blow the whistle on bad practices or unsafe conditions; actually enforce the prohibition of the corporate practice of medicine; open the books so physicians know what they’re billing; use transparent ED pricing; revise rules for so-called “non-profits”; restrict healthcare corporation lobbying; and hold CEOs accountable when they violate state and federal rules. Essentially, the authors are calling for legislative and regulatory solutions.

And now, I will opine…
It’s important to acknowledge, there are ED CMGs that are doing this right. They are providing needed ED staffing with high quality physicians and doing it using smart business sense. It’s also important to acknowledge that many corporations and ED CMGs are not doing this right, and that is why these authors are publicly calling for heightened external control. I must say, I am always wary of asking for the government to save us through increased legislation and regulation. So, what is the alternative? If you are a reader and are leading a corporation or ED CMG, consider what the authors are saying. Then get the full text of this article and read it (feel free to email me). Not everything will apply to your situation, but is there a kernel of truth that does? If you are an investor, consider that medicine isn’t like any other kind of business. It is a business of one human entering into the suffering of another human, in a position of trust, to do them good and to avoid harming them. A profit-first mindset is not welcome and doesn’t work in this sacred space. I get it; sometimes we need capital to keep the lights on, but there are places that are off-limits for finance. For those of us who are physicians, we took an oath. I know…that may feel anachronistic, but it is highly relevant and important. We have a responsibility to do what is best for our patients. The doctor-patient relationship is unique and precious, and it is possible for this to be corrupted through undue financial influence. Ask yourself, is my employer (or someone else) exerting financial pressure on me to influence the way I am caring for my patients in a way that makes me feel uncomfortable? If so, what will your response be? At the end of the day, you have to do right by the patient in front of you…period…no matter what the corporation, ED CMG, insurance company, CFO, investor, shareholder, or bean counter says. On the other hand, physician, do you need to listen to those on the business side more carefully? There are very real business realities that must be faced in order for you to make a good income and to continue caring for patients every day. Are there smart ways you can change that could be a win-win? It seems there is room for restraint and humility on both the business and the physician side.

The only way to slay this monster is to work together and for all parties who choose healthcare to ALWAYS put the patient first and not profit first.

And now, you will opine…
Please leave your comments on this blog post. There are many sides to this issue, and we have much to learn from each other. The authors present one side of the argument. I have tried to fairly represent both sides, but there is much more to be said. I only have experience in an academic medical center setting. I would love to hear from others who practice in different settings. Please discuss (with fair-mindedness and civility) in the comments.

Another Spoonful
Dr. Glaucomflecken takes a swipe!

Corporate Control of Emergency Departments: Dangers from the Growing Monster. J Emerg Med. 2022 Apr 7;S0736-4679(22)00074-9. doi: 10.1016/j.jemermed.2022.01.026. Online ahead of print.

What are your thoughts?