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The Cost of Corporatized Medicine

— Worse outcomes, increased burnout, and higher costs linked to corporate influence

MedpageToday

In this interview, Jane Zhu, MD, MPP, MSHP, associate professor of medicine at Oregon Health & Science University in Portland, discusses a recent article she co-authored on the corporatization of healthcare in the New England Journal of Medicine: "."

The following is a transcript of her remarks:

So, just for a little bit of context, what we should know is that there's just really been a tidal wave of corporatization, commercialization, and consolidation in healthcare in the past decade or two.

When I'm talking about corporatization, I'm talking about large insurance companies, retail chains, and private equity firms buying up healthcare organizations, physician practices, and then folding them into larger and larger entities.

UnitedHealthcare, for example, which is primarily an insurance company, is now one of the largest employers of physicians in the U.S. with over 70,000 employed or affiliated physicians across the country. You add in CVS, Amazon, Walmart, all of these companies have really embarked on strategic paths to become more dominant players in the healthcare industry.

And so, as a result, what we're really seeing is that the landscape of medicine has changed and is continuing to change rapidly. As of 2021, for example, about , which is really a departure from the time when physicians were more likely to be owners or partners in medical practices. Half of all physician practices are now owned by a hospital or health system or by another larger corporate entity.

So this is really a trend that's coming home to roost in the U.S. and something that all physicians should be paying attention to.

There are lots of appeals in terms of corporate practice. Today's practice landscape looks really different from what it used to look like in years past. It's really becoming harder and harder for smaller practices to negotiate, for example, against larger insurance companies. Adjusted for inflation, Medicare reimbursement rates have actually gone down considerably in recent years, and that creates financial uncertainty for smaller practices as well. Then you add in having to maintain electronic health records, you have to engage in these complex billing and revenue cycle management operations, you have to keep up with administrative burdens, quality metrics, reporting.

For a lot of these reasons, it's really harder for smaller practices to really engage in some of the dynamics that are needed to keep up in the modern healthcare industry. In this context, corporate ownership, corporate investment really seems like a logical answer to a lot of these potential issues.

But there are also a number of potential disadvantages. The preponderance of existing evidence really suggests that corporate medicine poses three major risks. One is . Another is changes in practice patterns and utilization of care. Then the third is that it , moral injury, or professional dissatisfaction among clinicians in a practice environment where a lot of clinicians already are getting burned out.

So if we focus on an example -- like private equity, for example. Private equity firms are financial firms. They're really utilizing a strategy of buying a practice in order to sell it for profits. Typically, their investment period is 3 to 8 years on average. Our research in that space, for example, is really showing that when private equity acquires a practice, prices go up in terms of what insurance companies pay and about 20% in terms of what practices charge -- the volume of patients goes up, billing for longer visits goes up. These patterns and findings have been represented across specialties and across healthcare sectors from hospitals to nursing homes.

Additional evidence has also suggested that in certain circumstances, there are increases in procedures, there are changes to staffing. One study in nursing homes acquired by private equity showed , actually, among Medicare patients who were staying in these nursing homes. [They] showed an increase in use of anti-psychotic medications and reductions in frontline nursing staffing. So we have some research here that suggests more solid evidence of potential risks.

The chief concerns about corporate medicine lie in that intersection here, to the extent that these ownership structures aren't just providing business operational support, ancillary support, and they're actually influencing clinical operations, management, and staffing. That is the chief source of concern.

Corporate medicine is not inherently a bad thing, so long as they're not unduly influencing clinical practice and physician autonomy. I think it could be naive to think that we can significantly reverse this trend now that it's sort of part and parcel of how clinical practices are operationalized in the U.S.

But there are some notable federal policies already in place to prevent what we really would call "egregious practices" from happening at both the physician and the practice level. Those are policies like the physician self-referral or Stark Law, and the Anti-Kickback Statute. In about half of the states in the U.S. there's something called a corporate practice of medicine (CPOM) doctrine. These are regulations that are meant to bar unlicensed entities from owning or controlling a practice or from directly practicing clinical medicine themselves.

But these laws have generally been pretty ineffective, and there's really no evidence that the presence of these doctrines have corresponded with corporate activity in healthcare.

I'm a practicing primary care physician myself, and as a physician, I really recognize that there are just a lot of challenges out there for medical practices. It's very, very hard and increasingly challenging to resist corporate pressures when they're seemingly everywhere.

I think it's increasingly important for physicians themselves to ensure that their clinical autonomy, their professional satisfaction, their career longevity, and most importantly, the sacredness of the patient/physician relationship aren't superseded by the interests of investors and shareholders in this context.

A first step is increased transparency and attention to this issue -- education on the part of physicians, empowerment on the part of physicians. So I really appreciate the opportunity to talk about this issue today on MedPage.

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    Emily Hutto is an Associate Video Producer & Editor for 51˶. She is based in Manhattan.