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Private Equity Owned Doctor’s Firm Repeatedly Sued Poor Patients

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Proactive and preventative healthcare focuses on preventing chronic disease and improving healthcare outcomes which could save Americans millions.(Photo: Gerd Altmann from Pixabay)

“There is this tension between being a health care provider and doing what’s best for their care … and being a profit-maximizing firm that aggressively goes after patients.”

After private equity firm Blackstone acquired TeamHealth, one of the largest physician firms in the country, the group began to pursue low-income patients with aggressive debt collection lawsuits. Although TeamHealth issued a statement saying it would end its debt collection practices after being questioned by ProPublica, the episode reflects the problems in the for-profit model of American healthcare that critics say have been exacerbated by Wall Street firms like Blackstone.

“There is this tension between being a health care provider and doing what’s best for their care … and being a profit-maximizing firm that aggressively goes after patients,” Brian Shearer, legal director for Justice Catalyst Law, a New York-based social justice nonprofit, told ProPublica, who published a report on TeamHealth’s debt collection practices on Tuesday.

ProPublica spoke to two former TeamHealth workers who said they were specifically instructed not to mention charity care, a type of financial assistance for poor patients, unless patients did so first. “I was miserable working there,” former employee Sharon Lovingood told ProPublica, who quit because she “could not stomach the restrictions that stopped her from helping people.”

After shortly attempting to defend its practices, TeamHealth agreed to stop pursuing debt from poor patients. “It’s difficult to ensure that only patients with a strong ability to pay are ultimately impacted, so we’ve decided to eliminate it,” a spokesman said. The firm said it would also move to help patients without insurance.

“Effective December 1, 2019, we are implementing discount policies for our uninsured population to reduce the cost of care by as much 90%, and up to 100[%] when necessary. We will proactively include eligibility criteria in our invoices to help promote participation rather than force patients to seek assistance,” TeamHealth CEO Leif Murphy wrote in a letter to employees.

Predatory Hospitals

The new ProPublica report marks the second time in five months the investigative outlet has pressured a health provider to stop predatory collection practices. In July, the outlet published a story on nonprofit Methodist Le Bonheur Healthcare’s predatory collections practices in Memphis, Tennessee, which included garnishing wages and filing thousands of lawsuits against poor people.

While it is not clear how widespread predatory behavior is among national hospitals, journalist have reported on patient lawsuits in North CarolinaNebraskaOhioMissouri, and Virginia in the last few years. One Virginia hospital, Mary Washington, reserves a day every month in the court for its cases.

“To see these aggressive, and even predatory, collection strategies affect everyday teachers, farmers, even nurses — it’s heartbreaking and it’s wrong and it needs to stop,” Dr. Martin Makary, a researcher and surgeon at John Hopkins, told NPR. ProPublica notes that its newest report is unique because it marks the first known example of private equity-backed doctors groups suing patients.

Private Equity

TeamHealth is owned by private equity firm Blackstone. “In 2017, Blackstone acquired TeamHealth and its subsidiary Southeastern in a $6.1 billion deal,” writes ProPublica. “It was just one in a growing number of large private equity investments in health care in the last decade.” With $554 billion in assets under management, it is one of the biggest private equity firms in the world.

“The 2017 acquisition was Blackstone’s second investment in TeamHealth, after buying it in 2005, taking it public in 2009 and then selling its interest four years later,” writes ProPublica. Over the same period, collection lawsuits rapidly increased. TeamHealth subsidiary Southeastern did not appear as a plaintiff in any lawsuit in 2011. In 2013, there were around 100 suits filed by Southeastern and by 2014, more than 600. From 2016 to 2018 they increased from 798 to 1,855, reports ProPublica.

Blackstone CEO Steven Schwarzman, who made $786 million in 2017 and at least $568 million in 2018, was singled out by United Nations Special Rapporteur for Adequate Housing Leilani Farha in March for driving the global housing crisis. Farha alleges that Blackstone inflates rents and charges unfair fees for ordinary repairs, and conducts “aggressive evictions” that have “devastating consequences” for people around the world.

As Citizen Truth has previously written, private equity firms have been widely criticized for representing the worst of modern capitalism. With a business model that involves buying other companies, supporters argue these investment firms buy troubled companies with the intention of turning them around, but critics point to numerous cases of the industry taking healthy companies and driving them into bankruptcy while looting their assets for profit.

From housing to retail to nursing homes, critics argue these firms suck the value out of the companies they purchase at the expense of workers and consumers. “Workers have been abused by many facets of today’s American capitalism. But if you see a company with particularly brutal layoffs, pay cuts, and scams to loot pension funds, the owner is often a private equity firm,” argues the American Prospect’s Robert Kuttner.

Eileen Appelbaum, co-director of the nonprofit Center for Economic and Policy Research, a left-leaning think tank, is a fierce critic of private equity’s growing influence in health care and other sectors of the economy. In a congressional committee hearing last week, Appelbaum singled out TeamHealth and its rival Envision Healthcare as prime examples of how private equity hurts consumers: “They use surprise medical bills, or the threat of such bills, to get much higher payments than other doctors receive, driving up health care costs.”

Since private equity began buying up ambulance companies in the wake of the 2008 recession, costs have soared while the quality of emergency medical service has declined, with a 2017 GAO report showing that the median price for air ambulance services doubled from $15,000 to $30,000 between 2010 and 2014, reaching over $36,000 by 2017.

“What is inarguable is that the current emergency medical transportation system represents a market failure. What was once a community service, provided at little or no charge to the patient, has become a financialized moneymaker for the wealthy,” wrote the American Prospect’s Olivia Webb. “Patients in their most vulnerable state should not be forced to pay monopoly rents to private equity firms.”

Peter Castagno

Peter Castagno is a co-owner Citizen Truth.

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