https://www.propublica.org/article/medical-staffing-companies-owned-by-rich-investors-cut-doctor-pay-and-now-want-bailout-money#182688
[links in online article]
Medical Staffing Companies Owned by Rich Investors Cut Doctor Pay and
Now Want Bailout Money
Companies that employ emergency room medical personnel, many owned by
private equity firms, say they are reeling from vanishing demand for
non-coronavirus care. But critics worry that bailout money would be a
windfall for rich investors.
by Isaac Arnsdorf April 10, 10:40 a.m. EDT
Medical staffing companies — some of which are owned by some of the
country’s richest investors and have been cutting pay for doctors on the
front lines of the coronavirus pandemic — are seeking government bailout
money.
Private equity firms have increasingly bought up doctors’ practices that
contract with hospitals to staff emergency rooms and other departments.
These staffing companies say the coronavirus pandemic is,
counterintuitively, bad for business because most everyone who isn’t
critically ill with COVID-19 is avoiding the ER. The companies have
responded with pay cuts, reduced hours and furloughs for doctors.
Emergency room visits across the country have fallen roughly 30%, and
the patients who are coming tend to be sicker and costlier to treat, the
American College of Emergency Physicians said in an April 3 letter to
Health and Human Services Secretary Alex Azar. The professional group
asked the Trump administration to provide $3.6 billion of aid to
emergency physician practices.
“Without immediate federal financial resources and support separate from
what is provided to hospitals, fewer emergency physicians will be left
to care for patients, a shortfall which will only be further exacerbated
as they try to make preparations for the COVID-19 surge,” the
organization said in the letter.
The American College of Emergency Physicians’ 38,000 members include
employees of large staffing firms as well as academic medical centers
and small doctor-owned practice groups. The letter was signed by the
group’s president, William P. Jaquis, whose day job is as a senior vice
president at Envision Healthcare, a top staffing firm owned by private
equity giant KKR.
Envision, which has 27,000 clinicians, said it’s cutting doctors’ pay in
areas that are seeing fewer patients, as well as delaying bonuses and
profit-sharing, retirement contributions, raises and promotions. The
company also cut senior executives’ salaries in half and will impose pay
cuts or furloughs for nonclinical employees. However, Envision said that
it’s adding doctors in hard-hit New York and other coronavirus hot spots.
“Where they lose their normal billing revenue, medical groups are losing
money. Where medical groups are losing money, they have to reduce
salaries and furlough workers,” Envision CEO Jim Rechtin said in a
statement. “Unfortunately, we are no different.”
KKR didn’t respond to requests for comment. Co-founders Henry Kravis and
George Roberts said they’ll donate $50 million to first responders and
health workers, as well as forgoing bonuses and the rest of their
salaries for the year, Forbes reported. Forbes estimates Kravis’ wealth
at $5.6 billion and Roberts’ at $5.8 billion.
Before the pandemic, Envision made a lucrative business out of buying
practice groups in specialties where patients don’t choose their
provider, such as ER physicians and anesthesiologists, according to Dr.
Marty Makary, a surgical oncologist at Johns Hopkins Medicine who
studies health care costs. Envision could then charge patients high
prices for out-of-network care, a practice known as “surprise billing.”
The model was profitable until a public backlash led lawmakers to
investigate the practice, according to Makary.
“Private equity consolidated large physician groups in an unprecedented
financial gamble using capital and banking on revenue not skipping a
beat,” Makary said. “When the investment model works, investors get
rich. When the investment goes sour, who bears the risk? As in the
mortgage crisis of 2008, taxpayers are bearing the risk of financial
gambles of investors.”
Envision won’t send surprise bills to COVID-19 patients, the company
said; patients will be responsible only for in-network copays.
Health insurance companies, which are often at odds with doctors and
staffing companies over payment disputes, have said they support
government aid to hospitals and doctors, but they specified that relief
should go to “small and independent practices.” A lobbying group
representing insurers and business groups raised concerns about the
potential for investors to benefit from the emergency physicians’
request for $3.6 billion.
“We need to do everything to support health care workers on the
frontlines of this pandemic, and we want to make sure they get the
resources they need to care for patients and protect themselves,” the
Coalition Against Surprise Medical Billing said in a statement to
ProPublica. “At the same time, federal funds should not be used to bail
out private equity firms during a public health emergency, especially
when there are no federal surprise billing protections in place to
protect consumers at their most vulnerable.”
The top lobbyist for the American College of Emergency Physicians, Laura
Wooster, warned that efforts to single out companies with rich backers
could catch patients in the crossfire. “If you start trying to parse big
or small, independent or not, it’s going to get messy really quickly,”
Wooster said in an interview. “This isn’t the time to figure out too
late that unintended consequences left a rural emergency department
understaffed because it happened to be staffed by one of the bigger groups.”
Wooster noted that it’s not only big private equity-backed staffing
firms that are hurting, and she provided data from small practice groups
that are also losing business and scaling back. She said she couldn’t
commit to conditions on receiving aid — such as restricting “surprise
billing,” investor payouts or executive bonuses — without seeing how the
terms are structured. She said the administration hasn’t offered a
proposal at that level of detail nor asked for one.
Katy Talento, a health adviser to President Donald Trump from 2017 to
2019, offered a different view. “If they’re private equity-owned, I have
no sympathy, and I don’t think any patient out there struggling paycheck
to paycheck — if they have a paycheck — is remotely interested in the
crocodile tears of private equity firms and their revenue losses,” she
said. “We have to target rescue funds to the hardest-hit areas, and
emergency physicians are not the hardest-hit target of our charity.”
The administration hasn’t said much about how it plans to distribute a
$100 billion fund for health care providers that was part of the $2
trillion coronavirus stimulus package. Last Friday, Azar said “a
portion” of the money would reimburse hospitals for caring for uninsured
patients. He said providers would get paid at Medicare rates and
prohibited from billing patients beyond that.
Lawmakers have spent months working on legislation to address surprise
billing, attempting to accommodate the interests of patients, doctors
and insurers. Medical staffing companies including Envision launched
attack ads against some proposals but agreed to a provider-friendly bill
advanced by Sen. Bill Cassidy, R-La. (who is a gastroenterologist). A
bipartisan compromise failed to make it into the December spending deal
because of a turf war between congressional committees. Lawmakers
briefly considered reviving the compromise as part of the coronavirus
stimulus package but didn’t want to slow down getting relief into the
economy quickly, according to congressional aides.
Medical staffing companies said they have benefited from tax relief and
advance Medicare payments included in the stimulus package. Still,
Envision and other private equity-backed staffing firms have swiftly
responded to lost income by cutting pay and hours for doctors.
One Envision anesthesiologist in the mid-Atlantic region said his base
salary was cut by 30% even as he’s being asked to intubate COVID-19
patients — a procedure that puts providers at high risk of exposure to
the virus.
“My hope in any type of bailout going toward health care providers is it
should go to them,” said the anesthesiologist, who spoke on the
condition of anonymity for fear of losing his job. “It should not be
going toward rewarding executives or shareholder profits. Anybody
actually coming in physical contact is taking all the risk, so that’s
where the relief should be going.”
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