It wasn’t all that long ago that the House Financial Services Committee held hearing on private equity that turned out to be a damp squib, despite a key witness, Eileen Appelbaum, describing one of the industry’s predatory practices that hurt ordinary consumers on a mass basis, that of surprise billing. That came about because hospitals have shockingly outsourced many of their practices, in particular emergency room doctors, to private-equity owned companies like Blackstone’s TeamHealth and KKR’s EmCare.
Is it any surprise that going to the emergency room early on to try to get tested resulted in $3000 and up bills?
But even worse, the private equity titans care more about their image than patient care. Not that should come as any surprise.
Many of you have likely already heard of the scandal of the firing of St. Joseph Medical Center emergency room doctor, Ming Lin, for criticizing the hospital for failing to take measure to protect patients and fellow medical professionals from unnecessary coronavirus risks. Even though the press dutifully reported that it was TeamHealth that lowered the axe on Dr. Lin, they didn’t connect TeamHealth to the power behind the scenes, private equity fund manager Blackstone.1
For instance, from the Seattle Times’ account:
An emergency room physician who publicly decried what he called a lack of protective measures against the novel coronavirus at his workplace, PeaceHealth St. Joseph Medical Center, has been fired.
Ming Lin, who has worked at the hospital for 17 years and became a local cause célèbre for his pleas for more safety equipment and more urgent measures to protect staff, was informed of his termination as he was preparing for a shift at the hospital Friday afternoon, he said.
“I got a message that said, ‘Your shift has been covered,’” Lin told The Seattle Times. He phoned his supervisor and was told, “You’ve been terminated.” Lin said he was told he would be contacted by human resources staff from his employer, TeamHealth, a national firm that contracts with PeaceHealth’s emergency department….
A spokesperson for PeaceHealth St. Joseph confirmed that Lin had been fired but said the hospital had no comment because Lin wasn’t a PeaceHealth employee….
Specifically, Lin had written that PeaceHealth St. Joseph refused to screen all patients outside the hospital, rather than in an often-crowded emergency room waiting area where the virus could easily spread. Two emergency department workers, who both asked not to be named for fear of reprisals, told The Times they shared Lin’s concerns about the possible spread of infection because of that practice.
Lin and other doctors have also persistently complained about the availability of testing approved by PeaceHealth, even as testing capacity ramps up in Washington state.
Notice that the Seattle Times has not changed this text despite TeamHealth attempting the ridiculous dodge that it hasn’t fired Dr. Lin after the story went viral. That means the Seattle Times stands by its reporting. The News Tribune didn’t buy it either, per its headline Bellingham ER doctor who criticized hospital’s coronavirus measures says he was fired versus the detail further in the piece, where TeamHealth backpedaled by pretending it might find a job for Dr. Lin somewhere else:
The Seattle Times reported Saturday that Lin, who has worked at the hospital for 17 years and earlier this month posted a letter he sent to PeaceHealth asking for more safety equipment and better protection for staff against COVID-19, was informed he was terminated as he prepared for a shift Friday afternoon, March 27.
But a spokesperson for TeamHealth said in an emailed statement to The Herald Saturday that Lin has not been fired.
“Dr. Lin has not been terminated by TeamHealth and we are committed to engaging with him to try to find a path forward,” the statement said. “Now more than ever, we need every available doctor, and we will work with Dr. Lin to find the right location for him.”
Lin scoffed at the notion he hadn’t been fired in an interview with the Associated Press, and said he expected the company might offer him work at a different hospital in the area, but that he’s not interested.
And even if this weren’t a partial reversal, who does TeamHealth think it is kidding? Assigning someone to a location that’s a much longer commute from where they once worked is a demotion.
However, the furor over the mistreatment of Dr. Lin did largely manage to skip over the question of how TeamHealth is even legally in the position to effectively provide hospital services when they are not licensed to do so. Several groups protested Dr. Lin’s ouster and one, the American Academy of Emergency Medicine, focused squarely on this issue. From a position statement on its website (emphasis ours):
According to public statements, TeamHealth and PeaceHealth St. Joseph Medical Center have terminated Dr. Ming Lin. If this is so, AAEM condemns TeamHealth and PeaceHealth St. Joseph Medical Center for terminating Dr. Ming Lin an emergency physician who went public with his concerns over the safety of the hospital staff and his patients in this pandemic. It is an essential duty of a physician to advocate for the health of others. Dr. Lin, as a member of the medical staff, is entitled to full due process and a fair hearing from his peers on the medical staff. TeamHealth, a lay corporation owned by the private equity company the Blackstone Group, should not be the employer of Dr. Lin according to the laws of the state of Washington. Their hand in this termination is not only inexcusable but likely impermissible. We call on the WA state Attorney General and the State Board of Medicine to investigate this circumstance.
Needless to say, those clever private equity lawyers have tried to make the dubious and in some (many?) jurisdictions, illegal practices of having a non-licensed organization provide medical services work by keeping doctors-owned companies in the legal structure. The wee problem is that they are straws, devoid of any substance and authority. Eileen Appelbaum explained by e-mail:
TeamHealth is structured as a Management Services Organization (MSO) that doesn’t ‘own’ the doctors’ practices it provides services to. Each practice is ‘owned’ by a doctor or committee of doctors that establishes medical standards for the practice. Sometimes (not sure if this is true of TeamHealth), a single doctor is the owner of record for as many as 60 doctor practices.
The question of what ‘own” means in this context is a bit tricky. Rosemary Batt and I paid money for me to sit in on a webinar organized by a well-respected source of data and information on health care where private equity people experienced in acquiring doctor practices were instructing newbies in how to structure it. They practically snickered as the explained how the doctors that essentially sold their practices to a PE-owned company like TeamHealth were reassured by the fact that it would be doctors that ‘owned’ and ran the practices.
Of course, the deal required them to sell all their assets – building, equipment, supplies, receivables – to the TeamHealth-type organization. So, what does it mean that the doctors own the practice if the practice has no assets that can be sold, moved, used as collateral for a loan, etc.?
Yves here. I can pretty much guarantee that the lack of substance of ownership on the asset side is reflected by a services agreement that strips the nominal owners of any say. This could be pretty overt, or or it could be achieved by having the doctor sham-owners of a particular entity have no role in operating decisions and participate only in policy decisions via a committee where TeamHealth appointed other MDs that were guaranteed to vote the way Blackstone and TeamHealth bean-counters wanted.
Appelbaum was dubious that Washington State could win a suit, even if the attorney general were to take up the case. I’m not as negative, provided the attorney general understands what he is up against and it prepared to get the operating contracts in discovery as well as document actual decision processes to show that the legal structure is a con, that the contracts vitiate the control of the nominal owners and the behaviors confirm that.
But that charitably assumes any public official is willing to take on private equity. So far, finding one has been the modern analogue to Diogenes’ search for an honest man.
1 If you believe that TeamHealth has meaningful independence, I have a bridge I’d like to sell you.