Who Should Control Healthcare?

The American Academy of Emergency Medicine (AAEM) is urging stiffer enforcement of decades-old statutes that prohibit the ownership of medical practices by corporations not owned by licensed doctors (1). These century-old laws and regulations were meant to fight the commercialization of medicine, maintain the independence of physicians, and prioritize the doctor-patient relationship over the interests of investors and shareholders (2). Thirty-three states (click to see list of states that prohibit corporate ownership) plus the District of Columbia have rules on their books against the so-called corporate practice of medicine. In Arizona ownership by nonprofit entities is permitted, however as most of us know, nonprofit healthcare organizations are nonprofit in name only. Furthermore, over the years, companies have successfully sidestepped bans on owning medical practices by buying or establishing local staffing groups that are nominally owned by doctors and restricting the physicians so they have no direct control.

Those campaigning for stiffer enforcement of the laws say that physician-staffing firms owned by private equity investors are the guiltiest offenders. Private equity-backed staffing companies manage a quarter of the nation’s emergency rooms (2). The two largest are Nashville-based Envision Healthcare, owned by investment giant KKR & Co., and Knoxville-based TeamHealth, owned by Blackstone. Court filings in multiple states, including California, Missouri, Texas, and Tennessee, have called out Envision and TeamHealth for allegedly using doctor groups as straw men to sidestep corporate practice laws (2).

Physicians and consumer advocates around the country are anticipating a California lawsuit against Envision. The trial is scheduled to start in January 2024 in Federal court. The case involves Placentia-Linda Hospital in northern Orange County, where the plaintiff physician group lost its ER management contract to Envision. The complaint  by Milwaukee-based American Academy of Emergency Medicine Physician Group alleges that Envision uses the same business model at numerous hospitals around the Nation. Furthermore, the complaint alleges that Envision uses shell business structures to retain de facto ownership of ER staffing groups, and it is asking the court to declare them illegal. “We’re not asking them to pay money, and we will not accept being paid to drop the case,” said David Millstein, lead attorney for the plaintiff. “We are simply asking the court to ban this practice model.” Although Envision filed for Chapter 11 bankruptcy, AAEM has vowed to pursue the lawsuit (3,4).

The plaintiff — along with many doctors, nurses and consumer advocates, as well as some lawmakers — hopes that success in the case will spur regulators and prosecutors in other states to take corporate medicine prohibitions more seriously. The corporate practice of medicine has “a very interesting and not a very flattering history” said Barak Richman, a law professor at Duke University (2). This is a gross understatement in my opinion. The physicians, nurses, and technicians are not responsible for poorer care at higher prices that we now see. Businessmen are responsible by squeezing caregivers and patients for every penny, a practice some call “hyperfinancialization”(5). It is not surprising charging as much as possible while delivering minimal care has evolved. Businessmen in healthcare maximize profits in these situations, especially when they can avoid any responsibility for the healthcare delivered. Rather, a system of “quality assurance” has evolved which is more concerned with controlling caregivers than quality (6).

If not businessmen, then who should control healthcare? Doctors are alleged to be poor businessmen. If by this it is meant that physicians are more likely to try and deliver the best healthcare at the best price rather than bill the maximum for minimal care, I would hope most of physicians would plead guilty. Most physicians are concerned about delivering quality healthcare at reasonable prices. I suspect that the rumor that doctors are poor businessmen was started by business interests for their own financial gratification.

Not all doctors are qualified to lead healthcare. Some are straw managers which will do whatever their business supervisors tell them to do. Physician leaders practicing medical administration should be held to the same high standards that doctors are held in care of patients. Therefore, some degree of local control must be kept. Those of us who advocate for better healthcare can hope the courts enforce existing laws where applicable. We also need to take action in supporting each other for the good of medicine and the health of our patients. However, we also need to do a better job policing ourselves. Those ordering unnecessary or questionable diagnostic testing or treatments need to be called out. If successful, the Envision Case could prompt legislators, regulators and prosecutors in other states to focus attention on clinical practice of medicine prohibitions in their own states and take up arms against potential violations or reinvigorate prohibitions of clinical practice with new legislation and/or regulation.

Richard A. Robbins MD

Editor, SWJPCCS

References

1. American Academy of Emergency Medicine. Emergency Medicine and the Physician Practice Management Industry: History, Overview, and Current Problems. Available at: https://www.aaem.org/publications/key-issues/corporate-practice/emergency-medicine-and-the-physician-practice-management-industry-history-overview-and-current-problems/ (accessed 8/23/23).
2. Wolfson B. ER Doctors Call Private Equity Staffing Practices Illegal, Seek to Ban Them. Kaiser Health News. December 22, 2022. Available at: https://www.virginiamercury.com/author/kaiser-health-news/ (accessed 8/23/23).
3. Condon A, Thomas N. From private equity to bankruptcy: Envision's last 5 years. May 18, 2023. Available at: https://www.beckershospitalreview.com/finance/from-private-equity-to-bankruptcy-envisions-last-5-years.html (accessed 8/23/23).
4. Holland & Knight Law. Federal Bankruptcy Court Stays Envision Healthcare Litigation in California. August 3, 2023. Available at: https://www.hklaw.com/en/insights/publications/2023/08/federal-bankruptcy-court-stays-envision-healthcare-litigation (accessed 8/23/23).
5. Robbins RA. Who are the medically poor and who will care for them? Southwest J Pulm Crit Care. 2019;19(6):158-62. [CrossRef]
6. Robbins RA. The Potential Dangers of Quality Assurance, Physician Credentialing and Solutions for Their Improvement. Southwest J Pulm Crit Care Sleep. 2022;25(4):52-58. [CrossRef]

Cite as: Robbins RA. Who Should Control Healthcare? Southwest J Pulm Crit Care Sleep. 2023;27(3):33-35. doi: https://doi.org/10.13175/swjpccs039-23 PDF

What Will Happen with the Generic Drug Companies’ Lawsuit: Lessons from the Tobacco Settlement

The State Attorney General of Connecticut, William Tong, has sued generic drug companies claiming they conspired to inflate prices and defraud the public of billions of dollars (1). To date, 43 state attorney generals have joined the suit. Tong, who takes doxycycline for rosacea, saw the price increase from $20 for 500 tablets in 2013 to $1,829 a year later. Although several generic companies sell doxycycline, one of the largest is Mylan. Both Mylan and their CEO, Heather Bresch, became infamous for the $10,000 EpiPen and a 4000% price hike in albuterol after testifying before the Senate Judiciary Committee in 2016 (2). The committee took no action and itself came under scrutiny when it was revealed that Mylan had made substantial campaign contributions to nearly all members of the committee (2).  Other companies named in this lawsuit include Teva, Sandoz, Pfizer and 16 other drug manufacturers. 

Now the states’ attorney generals, like knights on their shining armor, are rushing to protect the public from these “evil generic drug company price gougers.” The present suit is reminiscent of a prior generation of states’ attorney generals who 20 years ago filed and eventually settled a lawsuit against tobacco manufacturers for $206 billion (not a typo that is b as in billion) over 25 years (3). Based on that Tobacco Settlement we can predict what will happen with the generic drug company lawsuit. After legal wrangling for several years, a settlement of at least several billion will be reached. Payments will be placed in the states’ general funds. Like the tobacco companies, the drug companies will negotiate as a condition of the settlement to continue their business largely unregulated.

In 2007, the Government Accountability Office (GAO) reported that 22.9 % of proceeds from the Tobacco Settlement had gone to close state budget shortfalls, often to make up deficits caused by tax cuts (Figure 1) (3).

Figure 1. GAO analysis of categories to which states allocated their Tobacco Settlement payments (fiscal years 2000-2005) (3).

Another 7.1 percent had been spent on “general purposes” and another 6 percent on the politically popular term “infrastructure.”  Other notable highlights were that 11.9 percent of funds were “unallocated” and 7.8 percent had been devoted to “Other.”  Only about a third of the settlement revenues had been spent on health and tobacco control.

Much the same is likely to happen with the generic drug manufacturers lawsuit. A settlement will be reached and go into state funds and be viewed as a cash cow by legislators enthusiastic to cut taxes and/or fund their own pet projects. It seems likely that only a small portion will be spent on the public who for years have suffered inflated drug prices. After the settlement the generic manufacturers will be free to conduct business and fix prices as before.

If we can learn from the Tobacco Settlement, interventions can be taken to ensure the money is spent appropriately. States attorney generals should not be allowed to settle the suit benefiting those who were not harmed by unscrupulous price fixing. The spending of any settlement money should be supervised by the courts and the money should go directly to the state departments of health, away from tampering by state legislators and others. The money should be used to supplement healthcare for those who need the financial assistance the most. Since market forces regulating generic drug prices have apparently been corrupted, generic drug companies will need to have prices in the future approved assuring fair competition. Lastly, as a condition of settlement, CEOs need to sign agreements that impose severe penalties on both them and their companies for price fixing in the future.

Richard A. Robbins, MD

Editor, SWJPCC

References

1. Simmons-Duffin S. States sue drugmakers over alleged generic-price-fixing scheme. All Things Considered. NPR. May 13, 2019. Available at: https://www.npr.org/sections/health-shots/2019/05/13/722881642/states-sue-drugmakers-over-alleged-generic-price-fixing-scheme (accessed 5/14/19).
2. Pramuk J. Senators probing EpiPen price hike received donations from Mylan PAC. CNBC.  Aug 26, 2016. Available at: https://www.cnbc.com/2016/08/26/senators-probing-epipen-price-hike-received-donations-from-mylan-pac.html (accessed 5/14/19).
3. GAO. States’ allocations of payments from tobacco companies for fiscal years 2000 through 2005. US Government publication GAO-07-534T. February 27, 2007. Available at: https://www.gao.gov/assets/120/115580.pdf (accessed 5/14/19).

Cite as: Robbins RA. What will happen with the generic drug companies’ lawsuit: Lessons from the Tobacco Settlement. Southwest J Pulm Crit Care. 2019;18(6):155-6. doi: https://doi.org/10.13175/swjpcc032-19 PDF

Equitable Peer Review and the National Practitioner Data Bank

The General Accounting Office (GAO) recently reported that Department of Veterans Affairs (VA) did not report most physicians whose clinical care was found to be, or suspected of being, substandard to the National Practitioner Data Bank (NPDB) or to state licensing boards (1). The GAO examined 5 VAMCs and found required reviews of 148 providers’ clinical care after concerns were raised from October 2013 through March 2017. Of the 148, 5 were subjected to adverse privileging actions and 4 resigned or retired while under review but before adverse actions were taken. Only 1 of these 9 was reported to the NPDB and none was reported to his or her state medical board.

In response to GAO's report and in testimony to the Subcommittee on Oversight and Investigations, VA officials said the agency was taking three steps to improve reporting of providers who don't meet required standards:

1. Reporting more clinical occupations to the NPDB;
2. Improving the timeliness of reporting;
3. Enhancing oversight to ensure that no settlement agreements waive the VA's ability to report to NPDB and state licensing boards (2).

What is lacking in the report is determination if substandard actually occurred and how it was determined. The VA has 3 ways of identifying substandard care (1).

1. Tort claims (the VA equivalent of a medical malpractice lawsuit);
2. Complaints or incident reports;
3. Peer review.

Each has major problems of accuracy and fairness at the VA.

The majority of US physicians have been sued (3). The minority of suits are associated with malpractice and malpractice has no apparent association with the outcome of the litigation (4). Over 90% of medical malpractice cases are settled out of court (5). A common misconception is that settling a case before trial means a large financial settlement. However, 90% of the 90% or 82% of all claims, close with no payment (5). However, the VA uses US District Attorney to defend malpractice claims (6). In many instances, the US District Attorney’s office settles the case without determining if there is malpractice. The VA then submits the offending physician(s) name to the NPDB or state boards whether malpractice has been shown or not.

Complaints or incident reports are common in many hospitals, and many, if not most, have little merit (7). However, the weight given to a complaint should be viewed differently depending on the source. When colleagues raise concern about a physician’s care this is more credible than a patient complaining about not receiving their narcotics to a patient advocate. In the GAO report it is unclear if this was a source the of possible substandard care.

Lastly, there is peer review. There are several problems with this process in the VA. The VA selects the “peers”. In many instances the reviewers are un- or under-qualified to review the case (6). Furthermore, the selected reviewers may be conflicted clouding a balanced and fair determination if the physician’s care met the standard of care. There are multiple instances of this at the VA, of which a couple have been cited in the SWJPCC (6).

No surprisingly, a bureaucracy in the federal government has suggested a bureaucratic solution to a nonexistent problem. The goal should not be for more bureaucratic reporting, but a system for determining if a physician’s care has met the standard of care. The VA has shown it is incapable of making this determination fairly and accurately. What is needed is an outside review separated from VA influence and politics. If malpractice is still questioned after an initial VA review, the medical schools or private practioners could provide a source of physician peer review. The case could be presented to a panel of non-VA physician peers chosen in an equitable ratio by the VA and the accused practitioner. In the absence of a more equitable review process, the VA will only succeed in driving away the quality practitioners the veterans need.

Richard A. Robbins, MD

Editor, SWJPCC

References

1. General Accounting Office. VA health care: improved policies and oversight needed for reviewing and reporting providers for quality and safety concerns. Report to the chairman, committee on veterans’ affairs, House of Representatives. GAO-18-63 (Washington, D.C.: November, 2017). Available at: http://www.gao.gov/assets/690/688378.pdf (accessed 12/6/17).
2. Terry K. VA medical centers fail to report substandard doctors, GAO says. Medscape. December 5, 2017. Available at: https://www.medscape.com/viewarticle/889600?nlid=119420_4502&src=wnl_dne_171206_mscpedit&uac=9273DT&impID=1501593&faf=1 (accessed 12/6/17).
3. Matray M. Medscape malpractice report 2017 finds the majority of physicians sued. Medical Liability Monitor. November 15, 2017. Available at: http://medicalliabilitymonitor.com/news/2017/11/medscape-malpractice-report-2017-finds-the-majority-of-physicians-sued/ (accessed 12/6/17).
4. Brennan TA, Sox CM, Burstin HR. Relation between negligent adverse events and the outcomes of medical-malpractice litigation. N Engl J Med. 1996 Dec 26;335(26):1963-7. [CrossRef] [PubMed]
5. Chesanow N. Malpractice: when to settle a suit and when to fight. Medscape. September 25, 2013. Available at: https://www.medscape.com/viewarticle/811323_3 (accessed 12/6/17).
6. Pham JC, Girard T, Pronovost PJ. What to do with healthcare incident reporting systems. J Public Health Res. 2013 Dec 1;2(3):e27. [CrossRef] [PubMed]
7. Robbins RA. Profiles in medical courage: Thomas Kummet and the courage to fight bureaucracy. Southwest J Pulm Crit Care. 2013;6(1):29-35.

Cite as: Robbins RA. Equitable peer review and the national practitioner data bank. Southwest J Pulm Crit Care. 2017;15(6):271-3. doi: https://doi.org/10.13175/swjpcc152-17 PDF