Profits over patients? Doctors take issue with private investors’ staffing decisions

Thirty-three states plus the District of Columbia have laws and regulations keeping people who are not doctors from owning and/or controlling medical practices, according to Kaiser Health News.

These rules, first adopted nearly a century ago, are designed to protect doctors’ independent decisions concerning patient care. But more recently, health care has seen an influx of private investors who aren’t medical professionals but are finding ways around the rules to buy up hospitals, laboratories and physician practices.

Today, according to one study, private equity-backed staffing companies manage a quarter of the nation’s emergency rooms. The two largest are Nashville, Tennessee-based Envision Healthcare, owned by investment giant KKR & Co., and Knoxville, Tennessee-based TeamHealth, owned by Blackstone.

These and other private equity-backed firms have been attracted to emergency rooms in recent years because ERs are profitable.

But that’s not the only way private investors have gained ground in health care. Today, according to Kaiser Health News, nearly 70% of U.S. physicians now work for corporations and/or hospitals.

But now, there’s an effort to reverse the trend. A group of physicians and consumer advocates have filed lawsuits in multiple states seeking reinstatement of state ownership rules. These lawsuits are based on claims that private equity owners engage in bad behaviors, including wrongful termination and overbilling.

While there’s little comment in the media on the lawsuits, proponents of private equity ownership of health care facilities argue it has brought a lot of good. Jamal Hagler, vice president of research at the American Investment Council, told Kaiser Health News that private investment brings expertise to hospital systems, “whether it’s to hire new staff, grow and open up to new markets, integrate new technologies, or develop new technologies.”

Many physicians who have worked for private equity companies cite an emphasis on speed over safety; staffing that is less trained (and therefore cheaper) and questionable treatment protocols. A recent op-ed in the Seattle Times from a former pediatrician at Seattle Children’s notes that issues like these are not appreciated by political leaders.

What do you think? Has your local hospital or physician’s practice been taken over by private investors? Would you care if it was? Share your views with Voices for Affordable Health.