Senator probes private equity, physician staffing firms for emergency care cost cutting

Yet another congressional inquiry is seeking information on private equity’s role in care delivery, this time on whether their investments in emergency physician staffing firms are leaving hospital emergency departments unprepared.

On Monday, Sen. Gary Peters, D-Michigan, who is chairman of the Homeland Security and Governmental Affairs Committee, sent letters requesting information from three private equity firms and the distressed, or bankrupt, physician staffing companies they control.

The inquiries broadly cover ownership transactions, operations and staffing decisions and metrics or internal communications related to care quality and patient safety.

Four letters seeking the information were delivered by Peters’ office Monday and were addressed to: Blackstone, which is invested in TeamHealth; KKR & Co. Inc., in Envision; and Apollo Global Management, in US Acute Care Solutions and Lifepoint Health.

In the letters and a release announcing the inquiries, Peters said his office has recently conducted interviews with more than 40 emergency medicine physicians around the country.

Those clinicians “raised substantial concerns” regarding private-equity-owned contract management groups and hospitals, which the senator said can have “homeland security implications, such as the ability of emergency departments to respond to a mass casualty event, terrorist attack, pandemic or other emergency that would require treating high volumes of patients.”

“I am pressing these companies and their private equity owners for needed transparency so that we better understand how their business practices could be affecting patient safety, quality care and physicians’ abilities to exercise independent judgment in providing patient care,” Peters said in a release.

In the letters, Peters noted that each of the staffing firms has or is facing financial challenges. Envision Healthcare filed for bankruptcy within the past year; TeamHealth has over $1 billion in loans due this year; US Acute Care Solutions could face a forced sale by 2026; and American Physician Partners “abruptly” halted operations and declared bankruptcy last summer.

Much of the distress, Peters noted, has been a consequence of the No Surprises Act that “rightfully banned” the staffing firms from sending predatory surprise bills to out-of-network patients. However, the senator wrote in the letters that he’s concerned “companies that previously engaged in surprise billing may now consider other cost cutting efforts that more directly risk negatively impacting patient safety and care.”

Peters requested that the companies deliver all documents, communications and other information relevant to the inquiry to his office by April 17. He also asked them to arrange a meeting with the Homeland Security and Governmental Affairs Committee “as soon as possible, but no later than May 3, 2024.”

Josh Hopson, vice president of communications for TeamHealth, told Fierce Healthcare in an emailed statement that the company had received the letter on Monday afternoon and was "still reviewing" its contents. However, he said that the company "has not balance billed patients in its 44 year history," and that its "top priority ... is always delivering high-quality, safe patient care."

"We look forward to engaging with the Committee and demonstrating our uncompromised commitment to our clinicians and communities," Hopson wrote.

Private-equity-owned physician staffing groups operate almost a third of the country’s emergency departments, and more than a quarter of rural hospitals are owned by private equity, according to data cited by Peters’ office.

His committee’s probe is the latest in a steady stream of Senate scrutiny of private equity firms and their healthcare investments. These include inquiries launched last year by Senate Budget Committee Sens. Chuck Grassley, R-Iowa, and Sheldon Whitehouse, D-Rhode Island; Sens. Elizabeth Warren, D-Massachusetts, and Richard Blumenthal, D-Connecticut; and Senate HELP Subcommittee on Primary Health and Retirement Security Chair Edward Markey, D-Massachusetts.

Private equity firms, the lawmakers and policy researchers say, have built-in financial incentives to cut costs or even saddle provider groups with debts that run counter to high-quality healthcare delivery. Others wield their market power to secure anticompetitive advantages over competitors, which regulators warn can lead to higher costs and slipping care standards.

Steward Health Care has lately become the lightning rod for such critiques. The for-profit picked up significant debts during its time under former owner Cerberus Capital Management and is now selling off assets to resolve its obligations. It’s also led to service limitations and facility closures widely condemned by government leaders including Markey and Warren, who will be participating in a congressional field hearing on the subject tomorrow.