Private Equity Brings Inequity to the ER

As experienced whistleblower counsel, with more than a decade of representing emergency providers in false claims act (FCA) cases against large hospital systems and national hospital-based staffing groups, the recent investigation by the US Senate into the impact of private equity on emergency care is no surprise. The FCA cases our firm has been filing since 2010 netted hundreds of millions of dollars for the federal government for damages suffered as a result of fraudulent conduct, including at least one guilty plea for conspiracy to commit healthcare fraud. The underlying fraud has included relationships between hospital systems and national emergency staffing companies that violate the Anti-Kickback statute (ER contracts alleged to have been granted in exchange for the staffing company’s participation in fraudulent schemes to admit ER patients without regard to medical necessity). See here.

These relationships between hospital systems and equity-owned emergency medicine and hospitalist staffing companies are particularly susceptible to profit-driven malfeasance, as an estimated 50% to 70% of all hospital admissions for Medicare-aged patients originate in the ER.

These cases, initiated by emergency physicians, have demonstrated the fraudulent conduct of hospitals and national contract management groups that creates victims beyond the government healthcare programs. The emergency providers and their patients are exploited by healthcare behemoths, which since the early 2000s have increasingly been controlled by private equity. Currently, approximately 30% of for-profit hospitals are controlled by private equity, and the same percentage of all hospital ERs are operated by private equity owned physician staffing groups. Both the hospital systems and the private equity backed ER staffing companies have similarly been sued by emergency groups (including our firm’s clients) for retaliation, unfair and deceptive trade practices, defamation, and for tortious interference with the private emergency group’s contracts. See example here.

Emergency providers have sued large contract management groups for engaging in the corporate practice of medicine, and relatedly interfering with the independent medical judgment of the emergency providers tasked with putting patient care first.

The government, 13 years after these first cases were brought, is now focused on how private equity-controlled physician staffing groups’ “business practices could be affecting patient safety, quality care, and physicians’ abilities to exercise independent judgment in providing patient care.”