AMA adopts policy to curb influence of private equity on new doctor training

The American Medical Association (AMA) passed a new policy aimed at protecting new residents who train at teaching hospitals acquired by private equity firms. 

The AMA released Thursday a new policy adopted at its interim meeting of its house of delegates surrounding private equity’s role in medical education. The goal of the policy is to protect residents in case a teaching hospital gets acquired, including ensuring that funds are transferred after a facility closure. 

AMA officials said the new policy is in response to several concerns about private equity's impact on graduate medical education. The top doctor organization cited the closure of Hahnemann University Hospital in Pennsylvania in 2019, which left more than 500 residents without malpractice insurance. 

“While positive developments have been made to implement protections for residents since the unexpected closure of Hahnemann, we are concerned that these changes are only temporary," said AMA immediate past board chair Bobby Mukkamala, M.D., in a statement.

The organization warned that private equity firms invest in healthcare to make a profit by acquiring hospitals and practices and then trimming operations. 

“To help address these negative trends, the new policy affirms that the academic mission of an institution or medical education program should not be compromised by a clinical training site’s fiduciary relationship to an external corporate or for-profit entity,” a release on the policy said. 

The policy would encourage residency programs to be transparent on mergers and acquisitions, especially if they involve private equity. It also calls on programs to “uphold comprehensive policies to protect trainees, including those not funded by Medicare, to ensure the obligatory transfer of funds after institution closure,” the release said. 

AMA’s policy comes amid heightened scrutiny of private equity’s role in healthcare overall. The Federal Trade Commission and the Justice Department both signaled closer scrutiny of private equity deals amid concerns over the impact of such mergers on quality and patient access to care.

In addition to private equity, the AMA also adopted new policies on:

  • Reproductive care: AMA approved several policies aimed at ensuring access to reproductive care in light of the Supreme Court’s decision overturning the constitutional right to abortion. It opposed criminal charges against a patient or physician when “pregnancy loss results from medically necessary treatment for cancer and other illnesses,” according to a release on the policies. It also clarified ethical guidance on abortion bans, noting that it expressly permits “physicians to perform abortions in keeping with good medical practice,” AMA said.
  • Medicare Advantage: The group also passed a policy calling for a federally run public database of physicians that participate in Medicare Advantage. The goal is to ensure beneficiaries have an accurate list of any in-network physicians in their plan. Medicare Advantage has been criticized for provider directories that have “ghost networks” where the providers aren’t in the network anymore or are not taking any new patients.
  • Pharmacy benefit managers: AMA recommends that third-party administrators (TPAs) of specialty pharmacy benefits be included in any state or federal oversight of drug middlemen. AMA said the policy is needed as pharmacy benefit managers (PBMs) are on the rise. “For specialty pharmacy benefits, TPAs provide many of the same services as PBMs, including developing and maintaining formularies, processing claims and negotiating discounts and rebates between payers and manufacturers,” AMA said.