Given my interest in healthcare corruption and wrongdoing I’ve developed a certain immunity to the filth the engulfs me reading a daily parade of stories underscoring why the U.S. has the most expensive, inefficient, and inhumane healthcare system of any developed country. But after reading this story about the intimate relationship between the major organization representing emergency room doctors and private equity, I needed a long, hot shower.
The self-published story by Maureen Tkacik, a former Wall Street Journal reporter who interestingly was also a co-founder of the feminist website Jezebel, exposes the close ties the American College of Emergency Physicians (ACEP) has with private equity firms and how it seeks to further and protect the interests of Wall Street’s healthcare marauders. Tkacik obtained a document the ACEP circulated to its roughly 400-member council warning that a proposed resolution by an industry gadfly requiring that PE-owned staffing firms provide ER docs with data on the services and procedures billed under their license numbers could expose the physicians to fraud charges.
“ACEP engaged outside counsel to advise on whether securing regular reporting of billing in a physician’s name could inadvertently subject that physician to potential liability under the False Claims Act since provision of this information could now leave them considered to be ‘knowing,’” the document says.
The ACEP thinks its best that ER physicians employed by PE-owned staffing firms remain blissfully ignorant that insurance companies are paying their corporate owners a far higher multiple of Medicare rates for their services than every other medical specialty. It’s not clear to me why higher reimbursement rates paid by insurance companies would constitute fraud, but multiple lawyers saw a potential legal issue.
“If emergency physicians saw what was being billed in their name they would be shocked,” said Robert McNamara, chair of emergency medicine at Temple University’s medical school, who proposed the billing transparency resolution. “We know that these companies are regularly charging nine times the Medicare reimbursement rate, and we know that we aren’t making that kind of money, but we don’t know what’s actually being charged in our names.”
McNamara says that insurance company CEOs and private equity executives are “greedy” but notes that KKR has four executives making more than $100 million a year, while Blackstone founder Steve Schwarzman was paid more than $600 million. By comparison, United Health CEO David Wichmann made $42 million.
KKR and Blackstone respectfully control Envision and Team Health, two of the biggest ER physician staffing companies.
Tkacik does a deft job highlighting how the ACEP has morphed into “a willing mouthpiece for the private equity industry that controls most of the biggest ER staffing firms and has pushed the aggressive billing practices for which they have become notorious.”
Among her disclosures:
Rebecca Parker, who all but shrugged off surprise billing as “fake news” during her tenure as ACEP president in a 2016 New York Times story on the issue, was named chief medical affairs officer of Envision Physician Services in 2018;
Former ACEP board member and Texas affiliate president Gregory Byrne — who “owns” hundreds of EmCare subsidiaries in at least 20 states in what appears to be a scheme to circumvent corporate practice of medicine laws— as well as longtime ACEP board member and immediate past president William Jacquis are currently both Envision Healthcare executives;
The organization’s current board includes the lead lobbyist for US Acute Care Solutions, an ER staffing firm that recently went “independent” by buying out Welsh Carson Anderson & Stowe’s stake in the company with a loan from another private equity firm, Apollo Global Management.
This isn’t Tkacik’s only hot shower inducing expose about how private equity is harming U.S. healthcare. In October 2020, she wrote this article for American Prospect headlined, “The Corporatization of Nursing Homes,” one of the best business takedowns ever published in the English language.
Here’s a taste of that article:
The American nursing home industry is a hellscape whose history is generously paved with bad intentions. I began my research under the assumption that senior care facilities were much like other private equity–stripped health care institutions: bought up and saddled with debt and forced to cut costs wherever possible, leading to unconscionable outcomes for workers and residents. I assumed financial firms perverted a formerly well-intentioned system for providing vital care. The truth is almost the inverse. The private equity guys learned a lot of their tricks from the original nursing home predators. Most good people were driven out of the business generations ago, and the ones who have hung on have been mostly punished for refusing to play the game.
A study by the National Bureau of Economic Research revealed the nursing homes controlled by private equity firms have a mortality rate for patients 10 percent higher than the national average.
American Prospect is all over the private equity industry. In October 2019, it published this article headlined, “How Private Equity Makes You Sicker,” detailing how these firms have consolidated hospitals across the country, leading to closures, higher prices, and human suffering. For a taste of what can happen when a private equity firm acquires a hospital, read this ProPublica story about how a PE firm in cahoots with the CEO extracted more than $400 million from a hospital chain that couldn’t pay for medical supplies or gas for ambulances. The chain, which served low-income patients, suffered a litany of problems including broken elevators, dirty surgical gear, bedbugs and more.
Private equity healthcare investments have soared to $750 million over the past decade. PE firms own four percent of U.S. hospitals and 11 percent of nursing homes, according to the Medicare Payment Advisory Commission. PE healthcare investments are expected to increase because they are more profitable than other industries.
A study by UC Berkeley School of Public Health and the American Antitrust Institute published in May warned that the private equity business model is “fundamentally incompatible with a stable, competitive healthcare system that serves patients and promotes the health and wellbeing of the population.” The study’s authors said the industry operates “under the public and regulatory ‘radar,” leaving the vast majority of private equity deals in healthcare unreported, unreviewed, and unregulated.”
Reading a myriad of hot shower inducing stories about private equity’s detrimental impact on healthcare and patient safety causes one skin to dry up like a prune, possibly requiring treatment from a dermatologist. Be forewarned, private equity has also stuck its greedy tentacles into that specialty. Here’s a Bloomberg investigative report about how that’s working out.
It’s bad for doctors who want to practice ethical medicine, bad for patients, but great for the PE dermatology overlords. How they live with themselves is beyond me.