The Case of a Patient Who Didn’t See a Doctor Before Going to a Hospital: Private Equity Investment in a Medical Staffing Company
Pregnant and scared, Natasha Valle went to a Tennova Healthcare hospital in Clarksville, Tenn., in January 2021 because she was bleeding. She didn’t know much about miscarriage, but this seemed like one.
“At the time I wasn’t thinking, ‘Oh, I need to see a doctor,’ ” Valle said. When you think about it, you wonder why I didn’t see a doctor. ” It’s unclear if the repeat ER visits were due to delays in seeing a physician, or if that affected her care, but the experience worried her. She’s still paying her bills.
The hospital declined to discuss Valle’s care, citing patient privacy. But 17 months before her three-day ordeal, Tennova had outsourced its emergency rooms to American Physician Partners, a medical staffing company owned by private equity investors. APP employs fewer doctors in its ERs as one of its cost-saving initiatives to increase earnings, according to a confidential company document obtained by KHN and NPR.
Allen is one of many midlevel practitioners finding work in emergency departments. Nurse practitioners and physician assistants are among the fastest-growing occupations in the nation, according to the U.S. Bureau of Labor Statistics.
“APP has numerous cost saving initiatives underway as part of the Company’s continual focus on cost optimization,” the document says, including a “shift of staffing” between doctors and midlevel practitioners.
But definitive evidence remains elusive that replacing ER doctors with nonphysicians has a negative impact on patients, said Dr. Cameron Gettel, an assistant professor of emergency medicine at Yale. Private equity investment and the use of midlevel practitioners rose in lockstep in the ER, Gettel said, and in the absence of game-changing research, the pattern will likely continue.
A working paper, published in October by the National Bureau of Economic Research, analyzed roughly 1.1 million visits to 44 ERs throughout the Veterans Health Administration, where nurse practitioners can treat patients without oversight from doctors.
The study also found that ER patients treated by a nurse practitioner were 20% more likely to be readmitted to the hospital for a preventable reason within 30 days, although the overall risk of readmission remained very small.
Yiqun Chen, who is an assistant professor of economics at the University of Illinois-Chicago and co-authored the study, said these findings are not an indictment of nurse practitioners in the ER. Instead, she said, she hopes the study will guide how to best deploy nurse practitioners: in treatment of simpler cases or in circumstances when no doctor is available.
It’s more than a question of if nurse practitioners can substitute for physicians. It depends on how we use them. We don’t seem to be a very good use if we just use them as independent providers.
He said worse patient outcomes haven’t been shown. They will continue to play an increasing role if that is shown.
Private equity and the health care staffing giants: How doctors are taking care of themselves? Dr. Robert McNamara, an emergency medicine professor at Temple University
Over the past 10 years, private equity funds have spent more than 1 trillion dollars on health care transactions.
Two firms dominate the ER staffing industry, TeamHealth was bought by a private equity firm in 2016, while Envision is owned by KKR. Trying to undercut these staffing giants is American Physician Partners, a rapidly expanding company that runs ERs in at least 17 states and is 50% owned by private equity firm BBH Capital Partners.
Dr. Robert McNamara, who is the chair of emergency medicine at Temple University, said that staffing companies have been more aggressive in replacing doctors to cut costs.
McNamara said that the equation was a relatively simple one. “Their No. 1 expense is the board-certified emergency physician. So they are going to want to keep that expense as low as possible.”
The “shift” is nearly invisible to patients because hospitals rarely promote branding from their ER staffing firms and there is little public documentation of private equity investments.
Smolensky hopes to publish his full study, expanding to 55 metro areas, later this year. But this research will merely quantify what many doctors already know: The ER has changed. Demoralized by an increased focus on profit, and wary of a looming surplus of emergency medicine residents because there are fewer jobs to fill, many experienced doctors are leaving the ER on their own, he said.
A lot of doctors didn’t go into medicine to watch people who aren’t well trained. “We want to take care of patients.”
How to care for patients? A spokesperson for American Physician Partners told KHN that the ER was staffed with midlevel practitioners despite the No Surprises Act
Joshua Allen at a small Kentucky hospital used a rubber hose to snake through a rack of pork ribs to practice performing a chest tube on a collapsed lung.
The ER was being restructured in 2020 by American Physician Partners, shortening shifts from two doctors to one. Allen would be allowed to do it himself once he had put 10 tubes under the care of a doctor.
“I guess we’re the first guinea pigs for our ER,” he said. “If we do have a major trauma and multiple victims come in, there’s only one doctor there. … We need to be prepared.”
Generally, they have master’s degrees and receive several years of specialized schooling but have significantly less training than doctors. It’s possible to diagnose patients and prescriptions with little or no supervision, although restrictions vary by state.
There isn’t much mystery about why. Emergency medicine doctors earn about $310,000 a year on average, while nurse practitioners and physician assistants earn less, according to federal data. Generally, hospitals can bill for care by a midlevel practitioner at 85% the rate of a doctor while paying them less than half as much.
According to the online presentation, Envision once encouraged ERs to treat up to 35% of their patients with midlevel practitioners. The presentation disappeared from the website after it drew ridicule on social media.
Envision declined a request for a phone interview. In a written statement to KHN, spokesperson Aliese Polk said the company does not direct its physician leaders on how to care for patients and called the presentation a “concept guide” that does not represent current views.
The No Surprises Act threatened the company’s profits by outlawing surprise medical bills, so American Physician Partners promoted the same staffing strategy in 2021. In its confidential pitch to lenders, the company estimated it could cut almost $6 million by shifting more staffing from physicians to midlevel practitioners.