Employers Treat Emergency Physicians as Disorganized Labor

Also: Boarding kills, law enforcement in NC EDs, practice downgrades, Lina Khan on USAP, CommonSpirit's uncommon losses, & increased EM residency applicants.

Nov 17, 2023

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Medical practices used to be organizational units run by physicians, representing their interests and priorities. Times are changing. In an increasing share of emergency medicine practices, non-physician owners are attempting to maximize profits in ways that do not align with their physicians’ interests.

Let’s look at this week’s examples from private equity-backed and publicly traded hospital-managed emergency medicine practices.

Based on several credible sources, Dr. Tony Briningstool has been named Sound Physicians' next CEO of emergency medicine. Sound is owned by a combination of the private equity firm Summit Partners and UnitedHealth’s Optum division.

Sound staffs 44 EDs across the US. The company recently named Jeff Alter - a non-physician with 15 years of executive experience at Blue Cross Blue Shield and UnitedHealth - to replace Dr. Robert Bessler as Chief Executive Officer.

From my interactions with Tony (and others who know him), Dr. Briningstool is a very nice man. I have no reason to doubt Tony’s sincerity and intentions. However, hiring Dr. Briningstool to lead Sound’s emergency medicine group is the business equivalent of giving their physician employees the middle finger.

Dr. Briningstool co-founded American Physician Partners by selling AlignMD - a practice led by Briningstool and now US Representative Dr. Mark Greene - to the private equity firm Brown Brothers Herriman in 2015. With Briningstool as Chief Medical Officer, APP grew rapidly, primarily through debt-fueled acquisitions, to staff 125 EDs by 2021.

American Physician Partners’ ability to pay its debts depended on money made through the balance billing of patients. APP's finances crumbled when the No Surprises Act made balance billing illegal starting in January 2022. The usual remedy for such situations is Chapter 11 bankruptcy. The company could have paid its employees with remaining funds, defaulted on some of its debts to lenders, and reorganized (or liquidated). An orderly bankruptcy process is so integral to this country’s social fabric that it is written into the US Constitution (Article I, Section 8).

Briningstool’s leadership team chose another path, which harmed APP’s physicians. APP shut down operations with two weeks' notice, then did not declare bankruptcy for another seven weeks. APP skirted WARN Act employee protections - including a 60-day notice of mass layoffs requirement - likely because many of APP’s physicians were independent contractors. Though American Physicians Partners continued its billing and collections, APP has not paid many of its physicians for their final month of work with the company and did not maintain tail malpractice coverage for many of those physicians. Meanwhile, bankruptcy filings show that Dr. Briningstool will receive $1,624,999.72 in severance pay in addition to his salary.

Dr. Heather Carone - a former APP emergency physician from Ohio who was left with unpaid wages and uncovered malpractice insurance - wrote the following about Dr. Briningstool and APP’s CEO in an ACEP email: “They ran a company to the ground and left hundreds of doctors screwed. Doesn't sound like they were worth the massive paychecks they were taking. They could've just walked away with their pockets already lined. But that wasn't enough. They are willing to blatantly rub their salaries in our faces just so they still try and take the scraps that are left…. They should be ashamed.”

Emergency physicians at Sound are unlikely to see Dr. Briningstool as a trustworthy representative of their interests.

The last few weeks have also featured HCA announcing massive financial losses on its acute care physician practices. In its Q3 2023 earnings call, HCA said that it lost over $100,000,000 in the quarter on the service lines it in-housed from Envision and projected 20-25% losses on those physician practices.

Fierce Healthcare’s summary of HCA’s Chief Financial Officer’s comments on HCA’s physician practice finances:

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“Physician professional fees remain the primary black spot for now. Those costs spiked due to the No Surprises Act and caught HCA and other large systems off guard. In October, HCA had disclosed during its earnings call that a physician staffing joint venture it recently increased ownership in, Valesco Physician Services, would be bleeding $50 million per quarter for the foreseeable future.

Speaking at the conference, Rutherford said HCA believes it has already ‘dealt with the most acute issues’ related to the high professional fees. The company needs more time before it can give a road map for when those losses will be mitigated, he said, but it has 'every expectation’ that performance will improve following hospital adjustments, programmatic changes and other efficiency efforts.

‘Clearly the marketplace has got some disruption—we're managing through it,’ he said. ‘We have expectations, we'll address it just like we've asked other issues, but we expect to improve the run rate of not only Valesco but our physician pro fees going forward.’”

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“Dealt with” and “managing through it” appear to mean decreased emergency physician compensation, replacing physician hours with PAs & nurse practitioners, and training younger and less experienced physicians who are willing to work harder for less. The following is a slide from HCA’s November 9, 2023, Investor Day, describing the company as “the country’s largest GME [Graduate Medical Education] program.”

Also last week, HCA Mission Hospital in Asheville, NC attempted to codify its ability to fire physicians for publicly disagreeing with their employer. The hospital has been under regulatory scrutiny for decreasing levels of emergency, oncology, and surgical services in western North Carolina.

HCA proposed changing the 815-bed HCA Mission Hospital’s bylaws to include the following sentence: “All Practitioners are subject to termination or modification of their medical staff Membership and/or Clinical Privileges by the Board of Trustees (BOT), based on factors deemed relevant by the Board of Trustees.” The Board of Trustees is chosen by HCA, not the hospital’s physicians. Mission’s Medical Executive Committee voted against adopting this language.

As employers increasingly treat physicians as labor costs, some clinicians have responded by unionizing. Primary care clinicians at Allina Health in Minnesota recently voted to form the largest US private sector physician, PA, and nurse practitioner union. In an interview, Dr. Matt Hoffman, a primary care physician and union leader, explained his motivation for unionizing:

“We had a huge kickstart in terms of this petition we were circulating. It wasn’t about unionizing at first — it was about changes we wanted to see. We’re primary care. We don’t have the support that other people do. We wanted help with staffing; we wanted help with administrative work, with paperwork, so that we can see our patients more.

At that time, Medicare had tried to get more money into primary care by paying us more for the work we do. It said, we want to increase compensation of primary care by about 20 percent. But that money goes to the companies; it doesn’t go directly to us. Our company redistributed that money elsewhere essentially…

You think: Who set up the system? Who’s benefiting in this system? It’s the health care corporations, it’s drug companies, it’s insurance companies, it’s Allina, it’s companies like Allina. You see this squeeze. I’ve been working for nine years, and the squeeze is getting tighter every year.

We have to work collectively to force change in the system. I think that message is the message that resonated with people because everybody feels that. When I would call people to talk to them about unionizing — in different words, maybe — they said the same thing back to me.”

EM Practice

The North Carolina Legislature passed a law requiring hospitals with emergency departments to have a law enforcement officer on site at all times unless they get local authorities to sign off on an exemption. Per NC Health News, “The legislation is a response to an alarming rise in violence against doctors and nurses in North Carolina and across the country. Federal data show that health care workers are five times more likely to experience workplace violence than workers in other industries, and they accounted for 73 percent of nonfatal injuries from workplace violence in 2018, the most recent year for which statistics are available.”

USACS and Dispatch Health have partnered on delivering post-acute care: “DispatchHealth has teamed up with US Acute Care Solutions (USACS) to make healthcare better by expanding access to additional support for patients after a hospital stay or when they need hospital alternative care at home. This joint effort centers on shared education and alignment in offering DispatchHealth’s in-home care models, when medically appropriate, while addressing patient preferences and care needs.”

Yet another study - this one in JAMA - showed that boarding admitted patients in the ED increases their mortality rate. “The findings of this prospective cohort study indicate that for older patients, waiting overnight in the ED for admission to a ward was associated with increased in-hospital mortality and morbidity, particularly in patients with limited autonomy.”

ACEP survey of public perspectives re boarding in the ED:

House of Medicine

Bloomberg: “Ban on Surprise Medical Bills Pushes More Health Bonds to Brink.” From the article: At TeamHealth, the stakes are also high, even as it recently addressed a portion of its debt stack. The company still has $714 million of unsecured 2025 notes outstanding. If a majority of those notes aren’t refinanced, TeamHealth could face a springing maturity on all secured debt of more than $2.5 billion in November 2024.

Fitch downgraded TeamHealth’s debt rating to CCC- (substantial credit risk, default is a real possibility). USACS’s debt rating was also recently downgraded to B3 (bottom end of junk bonds) by Moody’s.

Lina Khan, FTC Chair, explained the lawsuit against US Anesthesia Partners and its PE owner Welsh Carson on the Bloomberg Odd Lots Podcast.

From The Economist: “Why Doctors in America Earn So Much.” Missing context: proceduralists earn vastly more than other specialties.

The American Medical Association failed to pass a resolution introduced by Dr. Vicki Norton to “seek a federal ban on the corporate practice of medicine”.

Today’s Hospitalist 2023 salary survey

Hospitals & Health Systems

Insightful Twitter thread about UnitedHealth’s vertical integration playbook.

Amazon is ramping up its One Medical health system. Prime members can now access One Medical’s services for $99 per year. One Medical also announced partnerships with Virginia Mason Franciscan Health, Hackensack Meridian Health, and the Health Transformation Alliance (a network of large self-insured employers).

CommonSpirit, the US’ second-largest nonprofit hospital chain, posted a Q3 2023 operating loss of $441 million.

Nursing & Allied Health

CDC survey of US healthcare workers: “From 2018 to 2022, the percentage of health workers who reported being very likely to look for a new job with another employer increased from 11.1% to 16.5%; overall, 44.2% of health workers reported being somewhat likely or very likely to look for a new job in 2022. In contrast, among all other workers, turnover intention declined from 18.6% to 13.7% during this period. Health workers’ reports of being harassed at work more than doubled, from 6.4% in 2018 to 13.4% in 2022. The rates of trusting management decreased from 2018 to 2022 among health workers (from 28.8% to 21.8%) and other essential workers (from 24.9% to 20.6%); however, overall, 78.2% of health workers in 2022 agreed or strongly agreed that they trusted management. Feeling that workplace conditions support productivity declined from 2018 to 2022 among health workers (from 30.4% to 16.2%) and other essential workers (from 19.0% to 12.8%). Overall, 81.5% of health workers agreed or strongly agreed that workplace conditions supported productivity.”

McKinsey report: “Understanding and prioritizing nurses’ mental health and well-being”