Hedge funds under fire as doctor wins $26 million case on short-staffing

Medical leaders and politicians carp endlessly about medical malpractice suits, but when an emergency medical specialist diagnosed staffing shortfalls that threatened patient safety, guess what legal mechanism became crucial to his corrective crusade? Why, yes, of course, it was a lawsuit. A big one over wrongful termination.

Let’s not over-focus on the irony of a legal process that has won the doctor at long last a $26-million judgment, and, instead, pay keen attention to the blaring alarm raised by Dr. Raymond Brovont, an emergency medical specialist in Missouri (shown, right). In brief, he was fired after objecting to persistent understaffing in a hospital’s emergency department as part of the policies of a private contracting firm. As NBC News reported of this increasingly pernicious health care problem:

“What happened to … a former Army doctor named Ray Brovont … isn’t an anomaly, some physicians say. It is a growing problem as more emergency departments are staffed by for-profit companies. A laser focus on profits in health care can imperil patients, they say, but when some doctors have questioned the practices, they have been let go. Physicians who remain employed see that speaking out can put their careers on the line.

“Today, an estimated 40-plus percent of the country’s hospital emergency departments are overseen by for-profit health care staffing companies owned by private equity firms, academic research, regulatory filings and internal documents show. Two of the largest, according to their websites and news releases, are Envision Healthcare, owned by KKR, and TeamHealth, of the Blackstone Group. EmCare, the health care staffing company that managed Brovont, is part of Envision.

“Private equity firms have taken over a broad swath of health care entities in recent years. They use large amounts of debt to acquire companies, aiming to increase their profits quickly so they can resell them at gains in a few years. There’s a reason private equity firms have invested in companies staffing hospital emergency departments, said Richard M. Scheffler, a professor of health economics and public policy at the University of California, Berkeley. ‘The money in the hospital is in the ER,’ he said. ‘It is the biggest net generator and a huge profit center for almost all hospitals.’ The problem, he said, is that ‘ER doctors are being told how to practice medicine’ by financial managers.”

Brovont showed that he alerted his bosses with increasing urgency about risks he saw to patients with rising demands on him and his fellow emergency care doctors. The hospital expanded, including adding pediatric emergency services. And the situation for the ER docs became unacceptable — and a nightmare for patients — when their bosses from the hedge fund agreed with the hospital that they needed to handle “code blue” calls throughout the facility. But responding to patients across the hospital with heart or breathing stoppages also meant that the ER would go for periods without the very doctors specializing in emergency care.

Brovont protested to his superiors, who acknowledged that more emergency docs were needed but they were unwilling to pay — even though federal law requires emergency departments at his hospital’s level to have an M.D. available 24/7 to examine patients brought in for care. After weeks of in-person and written exchanges, the private firm that ran the ER fired Brovont. He was a contract physician, meaning he had no access to appeal his dismissal in the hospital system, and he now was barred from practicing in multiple area hospitals for which the private firm ran ERs.

The doctor sued the company for wrongful firing and won a $29 million judgment, including $20 million in punitive damages, from a trial court in 2017. The verdict was appealed and the recently finalized judgment set the sum the wrongdoing parties owed Brovont at $26 million, also freeing the still-practicing physician to discuss the case and its implications publicly.

As NBC News reported, Brovont’s case brought to light the legal legerdemain that hedge funds and corporate types employ to work around commonsense laws aimed at preventing corporations from practicing medicine: They include a handful of physicians as executives, so companies can claim that crucial matters like staffing are not driven by bean-counting MBAs in suits, worried about maximizing profits, but by M.D.s. focused on medicine and patients’ health safety. The broadcast news report offers a stark, reality-based rebuttal to this contention:

“A push for profits can also result in inappropriate and costly admissions to hospitals from emergency departments, which was the basis for a 2017 case against EmCare. After physicians came forward with allegations of Medicare fraud involving EmCare and a hospital chain that had hired it, the Justice Department filed civil suits against both entities. EmCare had admitted Medicare patients unnecessarily to the hospitals whose emergency departments it oversaw, prosecutors said, and received remuneration from the hospital chain for doing so. Medicare pays at least three times more for inpatient admissions than it does for care billed as observation or emergency room visits.

“Without admitting the allegations, EmCare agreed to pay $29.8 million in December 2017 to settle the Justice Department’s case. (The hospital chain settled with prosecutors later, paying $260 million without admitting the allegations.) When EmCare settled, Envision, its parent, entered into a corporate integrity agreement with the Department of Health and Human Services. As is typical under such a deal, the HHS inspector general agreed not to seek to exclude Envision from participating in Medicare or other federal health care programs if it changed its practices.”

Not good. In my practice, I see not only the harms that patients suffer while seeking medical services, but also their struggles to access and afford safe, efficient, and excellent health care. This has become an ordeal due to the skyrocketing cost, complexity, and uncertainty of treatment and prescription medications, too many of which turn out to be dangerous drugs.

Sick and injured patients, atop their other battles with the health care system, should not need to worry about financial structures and internal profit-seeking driving medical services, especially when it comes to urgent and emergency treatment. It’s worth noting that reputable opinion polls show that a top worry for patients was and remains surprise medical bills, excessive charges that patients get hit with when they get services from providers outside narrow choices approved by their insurers. They don’t get much chance to quiz ER docs, of course, as to which plans they participate in.

But a sizable part of the push for nosebleed charges, before Congress and the Biden Administration stepped into curb surprise medical bills, came from ER docs — and the private companies that run emergency departments.

We have a capitalist system, and participants in it have a right to make a reasonable return on their investments of money, talent, and resources. But it’s an unwelcome sight to see profit-ravenous hedge funds push ever deeper into health care, especially at a time when the coronavirus pandemic has battered the system and patient safety advocates are warning, big time, about the risks of demoralized, exhausted, and fed-up doctors, nurses, and other health workers are fleeing the field, increasing risks to patients.

We have much work to do to ensure the safety and wellbeing of patients in all aspects of their medical care and to ensure that craven buck-grabbers don’t degrade the quality of our medical services.

Patrick Malone & Associates, P.C. listed in Best Lawyers Rated by Super Lawyers Patrick A. Malone
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