Private equity ruins U.S. healthcare
For-profit insurance companies have long been seen as the ultimate culprits of medical windfall. However, they are distracting from the unscrupulous involvement of private equity (PE) in medicine, an equally culpable and even more insidious economic titan.
PE is a unique, unregulated investment platform with the goal of aggressively generating short-term income for the company and its investors without considering long-term value to the company, including health public.
Private equity firms typically operate on a 3-7 year cycle in which a company is acquired by an investment manager with funds from “limited partners” who are often institutional investors. The business is often acquired as part of a leveraged buyout in which the business is grappling with high interest rate debt and takes the full risk of not becoming more profitable, which usually results in cost reductions and shameless layoffs.
The private equity firm and manager get considerably richer regardless of the outcome due to exorbitant fees, such as assets under management.
In May 2021, a American Antitrust Institute White Paper found that investment in PE accelerates consolidation and “is fundamentally incompatible with a stable and competitive healthcare system that serves patients and promotes the well-being of the population”.
The rise of PE in medicine has resulted in a proxy war against insurance companies for the exclusive benefit of underground shareholders and investment fund managers rather than patients or clinicians.
In 2019, for example, the New York Times exposed the backers of Doctor Patient Unity, a secret organization that created a $ 28 million ad campaign demonizing insurance companies for “bill surprises” and opposing legislation to eliminate off-grid bills. These funders turned out to be two of the largest emergency medicine staffing companies supported by PE – contract management groups (CMGs) Envision and TeamHealth, which are owned by PE firms KKR and Blackstone, respectively.
Here’s an example of the deterrent effect of owning a PE: During the early days of the COVID-19 pandemic, Ming Lin, MD, a certified emergency physician, was fired for speaking out about the lack of PPE and protection for front-line personnel at PeaceHealth in Washington State. Lin was directly employed by a PE-supported CMG, TeamHealth, who had been hired by the hospital system.
This arrangement eliminated any due process rights for Lin, as is the case for approximately 50% of US emergency physicians employed by the GMCs.
Envision attempted the same with Cleavon Gilman, MD, who tweeted that there were no more intensive care beds available in Arizona during the height of the pandemic and was subsequently fired without due process. [MedPage Today had the details here.]
While Gilman leveraged his numerous social media channels to shed light on his unjust dismissal, Lin is now backed by the ACLU and is suing TeamHealth and PeaceHealth for violation of due process rights.
Sadly, countless doctors never make the news, suffer hurt feelings as a condition of paid employment, and are intimidated in standing up for patients and healthcare workers.
Emergency medicine may just be the “canary in the coal mine” of health care consolidation and PE influence. Dermatology groups have been a recent target of PE buyouts. Hospital, radiology and anesthesia groups are following suit. Indeed, all anesthetists have recently been replaced by certified nurse anesthetists at a hospital operated by Envision in Watertown, Wisconsin. The reach of PE in medicine extends far beyond physician staffing groups.
Organizations such as Restoring Medicine, Practicing Physicians of America, Free2Care, DPC Alliance, and the American Academy of Emergency Medicine actively support physician autonomy and independent practice to restore the rapidly eroding integrity in the physician relationship. -patient.
The specialty of emergency medicine pioneered sales to contract management and private equity groups. This is why the #TakeEMBack campaign will be at the center of this movement, starting with the TakeEMBack Summit in September in Chicago.
It is time for medicine, including individuals and professional societies, to restore the integrity of the doctor-patient relationship by taking a firm stand against all forms of corporate greed. It’s time to get back on the meds.
Mitchell Louis Judge Li, MD, is the Founder of Thrive Direct Care in Chicago and the Chief Medical Officer of the AAEM-Locum Group. He recently launched the advocacy group, Resume your medication.