The Michigan State Medical Society (MSMS) is urging State Attorney General Dana Nessel to investigate violations of a state law prohibiting unlicensed corporations from owning medical practices.
MSMS sent a five-page letter to Nessel on October 23 stating that private equity groups have used a “series of deceptive legal loopholes” in states, including Michigan, to hire physicians to serve as sham owners to circumvent the Corporate Practice of Medicine Doctrine (CPOM). The doctrine requires health care practices to be owned by licensed physicians only. The one exception is a non-profit entity that employs doctors to provide health care.
Private equity groups are buying up medical practices across the country and as owners can make decisions regarding the practice of medicine. The letter singles out the example of TeamHealth, which has been sued in at least one state for overcharging for services and not compensating physicians.
Some equity groups have served as staffing organizations, allowing them to file for bankruptcy, which causes disruptions in care. The letter also cites reports of private groups utilizing “efficiency consultants,” understaffing, intimidating whistleblowers, and allowing non-physician managers to question health care decisions. “Michigan does have a law and we’re asking that it be enforced,” MSMS CEO Tom George, M.D., told Crain’s Grand Rapids Business Journal on November 30.
Nessel’s office made 110 announcements between the day the letter was sent and December 28, but none mentioned CPOM.
Private Equity Ownership Growing
Michigan is not the only state where physicians are crying foul. The Minnesota Medical Association (MMA) made private equity in medicine a top policy priority in 2023.
“Physician dual allegiance to corporate profits and the professional duty to work entirely for the benefit of our patients could be avoided if enforced corporate practice of medicine laws were enacted,” said Robert Koshnick, M.D., MMA’s policy committee chair in 2023. “This applies to both for-profit and non-profit corporate medicine.”
In a commentary in Health Care News, on July 11, Koshnick wrote, “(t)he corporatization of medicine has changed medical practice from a profession to a business, to the detriment of patient care and the patient-physician relationship. Physicians’ loyalty should be to their patients, not the corporate bottom line and rules set by nonphysicians.”
The issue of corporate control of medicine prompted the formation of the advocacy organization “Take Medicine Back,” in 2019. This year, the group released a white paper calling for a national prohibition on the corporate practice of medicine.
FTC Challenges Monopolistic Practices
In September, the Federal Trade Commission (FTC) sued U.S. Anesthesia Partners and Welsh, Carson, Anderson & Stowe for buying up anesthesia practices in metropolitan areas in Texas. The FTC has traditionally been slow to act when it has come to monopolistic practices in health care, notes Devon Herrick, a health economist who writes for the Health Bog of the Goodman Institute, which co-publishes Health Care News.
“One reason the FTC has been slow to act on monopolistic practices in health care is the threshold for reporting acquisitions is high enough that firms can gradually gobble up physician practices one at a time without oversight,” wrote Herrick, on December 1.
It is important to understand why “corporate practice of medicine” laws were written in the first place, Herrick told Health Care News.
“The problem with allowing the corporate practice of medicine is that doctors are no longer advocates for their patients,” said Herrick. “When physicians are employed by hospitals, private equity, health plans, or corporations, they answer to their employers rather than to their patients. That can result in unnecessary care and unnecessarily expensive care.”
AnneMarie Schieber (amschieber@heartland.org) is the managing editor of Health Care News.
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