ACEP to US Senate: Size Matters.
Also: The 411 on SCP & APP, OMC losing money, physician-owned hospitals cost less, M&A bonanza, and inverse correlation between smoking & weight.
Top of the Week
SCP Health, formerly Schumacher Clinical Partners, is in late-stage talks to buy American Physician Partners (sources: here, here, here). Based on Ivy Clinicians’ data, SCP staffs 241 emergency departments, while APP staffs 112 EDs. Private equity firms own both. The combined entity would be the third largest in the US, behind only TeamHealth and Envision.
Does it matter that emergency medicine groups have rapidly grown through mergers and acquisitions over the past decade? And does it matter that everything in US healthcare seems to be consolidating? ACEP testified to the US Senate’s Finance Committee last week to answer these questions.
The bottom line, per ACEP President Dr. Christopher Kang: “All in all, with some notable exceptions, it appears that the current practice of consolidation in EM detrimentally affects physicians’ interests and well-being, which in turn may affect their ability to serve their patients.”
ACEP’s testimony is based both on evidence and surveys of emergency physicians. The analysis addresses market consolidation’s impact on wages, workload & staffing, job security, labor market dynamics, negotiations with insurers, physician autonomy, due process, and burnout.
Per the ACEP survey, 60% of physician respondents reported that practice consolidation led to wage reductions. This finding is consistent with the 2021 study, “Employer Consolidation and Wages: Evidence from Hospitals”.
Physicians reported increased workloads post-consolidation. A surveyed physician wrote, “There are endless cuts to staffing and hours that cause significant patient safety concerns and poor patient experiences and outcomes. I feel like my medical license is being exploited by private equity to maximize profits to shareholders at the expense of my patients and coworkers.”
Another theme was larger groups' increased utilization of PAs and nurse practitioners. A physician reported: “Shortly after taking over, the corporation moved to cut physician hours and instead increase the use of non-physician providers in the emergency department such as PAs and NPs. By cutting hours, it made it more difficult to get a job in the local area because there were not as many physicians required to perform the same services.”
63% of physician respondents indicated that the presence of larger national groups made it more difficult to find and keep their job. Per one emergency physician, “Merger made it harder to find jobs since the new group monopolized the market in my area. The monopoly essentially lowered over market value and drove down the pay significantly.” In addition, physicians indicated feeling trapped by the non-compete agreements they had to sign.
Consolidation appears to limit emergency physicians’ ability to report and address problems with management without fear of repercussions. “Over fifty percent of respondents indicated that their due process rights worsened or were eliminated after the merger, which can result in physicians being left unable to advocate for their patients or for their own mental well-being in fear of employer retaliation.”
ACEP’s testimony addresses the financial pressures small groups face. As hospitals and insurers rapidly consolidate, small medical practices find negotiations increasingly difficult. A 2022 AMA study showed that the health insurance market was highly concentrated in 73% of US metropolitan areas. Per one emergency physician, “Because we were a small group, insurers gave us very poor contract rates which led to low reimbursement and difficulty recruiting. Now our pay rates and benefits are better and we are competitive in our market.”
Emergency Medicine’s practice consolidation should be viewed within the context of hospital and insurance market consolidation. Yale’s Zack Cooper, Ph.D., testified at the same Senate hearing about the effects of the broader healthcare market’s mergers, acquisitions, and corporate ownership.
Cooper on the impact of physician practice consolidation: “While both vertical and horizontal integration of physician practices could, in theory, lead to efficiency gains, the empirical evidence thus far suggests both types of transactions have raised the prices physicians negotiate with insurers and increased health spending on Medicare beneficiaries and the privately insured. For example, recently published work by economists at the FTC found that horizontal physician practice mergers led to increases of between 10% and 20% in the prices negotiated with insurers. This finding builds on past work showing that physicians in more concentrated markets have higher prices. Likewise, evidence on the effect of hospital acquisition of physician practices (e.g., vertical integration) has found that these transactions raised prices, on average, by more than 10% and led to marked increases in both public and private health spending. Notably, this literature has not found that the vertical integration of hospitals and physicians has led to improvements in quality.”
On hospital & insurance markets: “From 2000 to the present, there have been well over 1,000 mergers among the nation’s approximately 5,000 hospitals. Partly as a function of this consolidation, at present, nearly 90% of US metropolitan areas have hospital markets that make them “highly concentrated” according to the 2010 Department of Justice and Federal Trade Commission Horizontal Merger Guidelines. While not all mergers are harmful, evidence clearly shows that hospital mergers of neighboring facilities can raise prices (so too can so-called “cross-market mergers” of hospitals in the same state).
Like hospital markets, insurance markets in the US are also generally regarded as highly concentrated. More concentrated health insurance markets have higher premiums, and mergers of insurance companies raise premiums and lower payments to doctors.”
Cooper’s conclusion: “This rise in concentration is harmful to the public.”
EM Practice
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Peru Emergency Physicians sued their former hospital for non-payment of $676,245.23 after the hospital closed.
AI appears poised to simplify physician documentation - and sooner than you think.
House of Medicine
In JAMA: Physician-owned hospitals are less expensive (negotiated rates and cash prices) than comparable non-physician-owned hospitals for common hospital procedures.
Why physicians should care about non-compete contract clauses.
JAMA article on care transformation: “Reducing costs and improving outcomes are often in conflict with one another, and innovators must weigh difficult tradeoffs in their attempts to achieve the theoretical promise of value-based care.”
Fitch Ratings added Radiology Partners to a list of companies most likely to default on their debt within two years.
Hospitals & Health Systems
“HCA Healthcare accused of pushing patients toward end-of-life care to boost performance metrics.”
Health systems are rapidly merging. Those healthcare mergers are under scrutiny at the state level.
The Dispo
Source: https://annekadet.substack.com/p/franchise
Note: Emergency Medicine Workforce Productions will be on vacation for the July 4th holiday week.