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

Is It Time for a National Tort Reform?

With the Supreme Court upholding the nationwide implementation of the ACA, the topic of tort reform adoption on a national scale has been in the limelight again.

Since the 1970s, the issue of national tort reform has had several reincarnations in the country’s different legislative bodies (1). The duration of the debates and discussions are largely dependent on the interest and influence of the two major stakeholders - the insurance companies and the physicians.

Currently, 38 states have implemented various versions of tort reform, mostly centered on the caps on noneconomic damages (2).

Groups advocating for national tort reform argue that having no limits on medical malpractice financial awards, has fueled the practice of ‘defensive medicine’. This leads to costly but ineffective medical interventions and higher insurance premiums. Both consequences are cited as major contributors to the country’s spiraling healthcare expenditure (1,2). Proponents also contend that the absence of tort reform negatively affects the size and composition of the physician workforce (3). Statistics show that states with damage caps have 12% more physicians per capita than those without (4).

On the other hand, those against national tort reform claim that caps on medical malpractice lawsuits would lead to more medical errors and negligent physician practices. They also cited the lack of supporting evidence of tort reform’s favorable effect on the reduction of healthcare spending (1).

Most studies on tort reform are related to healthcare spending and based on state-level enforcement. The data show that healthcare costs are only modestly affected by increases in malpractice premiums and litigation costs (3,5). The CBO estimated that if a national tort reform package was enacted, healthcare spending would be reduced by 0.5% (5). Baiker and Chandra (3), showed that state implementation of tort reform did not lead to physician shortages except for a minor reduction in some rural areas. The CBO (2009) reported that state tort reforms did not result in adverse patient health outcomes (2,5).

It is evident from these findings that there needs to be a comprehensive tort reform that does not solely focus on the cost and risk of malpractice litigation. Tort reform should be approached from a different perspective where the emphasis is on interventions that improve physicians’ efficiency, promote patient safety and reduce costs. Once studies consistently show the benefits of a multidimensional tort reform package adhering to nationally-accepted standards, then its nationwide implementation may be closer to becoming a reality.

Cielo Marie Maca, MD

Pulmonary, Critical Care and Sleep Medicine

Covering VA Medical Centers in VHA 23, VHA 16, VHA 18

References

1. Scott B. Who benefits from tort reform?. Medical Economics. Aug. 9, 2013. Available at: http://medicaleconomics.modernmedicine.com/medical-economics/content/tags/alice-g-gosfield/who-benefits-tort-reform?page=full (Accessed July 9, 2015).
2. Congressional Budget Office. A CBO Paper: The effects of Tort reform: Evidence from the States. June 2004. Available at: http://www.cbo.gov/sites/default/files/report_2.pdf (Accessed July 9, 2015).
3. Baicker K, Chandra A. The effect of malpractice liability on the delivery of health care. Forum for Health Economics & Policy (Abstract) 2005;8(1). http://www.degruyter.com/view/j/fhep.2005.8.1/fhep.2005.8.1.1010/fhep.2005.8.1.1010.xml?format=INT DOI: 10.2202/1558-9544.1010 (Accessed July 10, 2015).
4. New Physician. Which States Have Tort Reform? http://www.newphysician.com/articles/tort_reform_list.html (accessed July 10, 2015).
5. Congressional Budget Office. Letter of the CBO to US Senator Orrin G. Hatch. Oct. 9, 2009. https://www.cbo.gov/sites/default/files/10-09-tort_reform.pdf (Accessed July 10, 2015).

Reference as: Maca CM. Is it time for a national tort reform? Southwest J Pulm Crit Care. 2015;11(1):45-6. doi: http://dx.doi.org/10.13175/swjpcc092-15 PDF