Viewpoint: Corporate Monopolies Rob Patients and Muzzle EPs : Emergency Medicine News

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Corporate Monopolies Rob Patients and Muzzle EPs

Derlet, Robert W. MD; Borden, Mark MD

doi: 10.1097/01.EEM.0000898256.23784.80
    monopoly, contract management groups

    COVID precautions eased, so I (RWD) finally drove to a nearby California city for an in-person CME conference. I parked my car and scanned the street for a coffee shop. I hurried inside to order but suddenly froze. The overhead menu listed a 16-ounce coffee for $6. I walked out, headed down the block, and bought a delightful 16-ounce coffee for $2.75.

    How feasible is it for our patients to do the same? They are rarely told the cost of an ED visit in advance. They are captive customers once they enter the ED, just walking in to seek care, but they should be able to compare prices for ED care. That, however, is nearly impossible. Retail or so-called list prices for services are not posted in the ED or easily obtained on the internet. Try asking at ED registration, and you will often be met with a puzzled face.

    Why are prices not posted like in a supermarket? Because there is no need. Hospitals have little competition because too many have formed regional monopolies. Federal law requires hospitals to post prices on the web, but a recent NBC study found that fewer than six percent do. (June 8, 2022; Even when it is posted, it may be coded in chargemaster jargon that is too confusing for most patients or even us emergency physicians.

    The evils of monopolies and the resultant price gouging, poor quality, and lack of choice were recognized more than 130 years ago. The Sherman Act outlawed attempts to monopolize a market in 1890, and President Theodore Roosevelt used the full force of the federal government to break up monopolies. The Clayton Antitrust Act outlawed mergers and active acquisitions that lessened competition in 1914.

    Physicians and hospitals were competitive, small, independent businesses outside the scope of a monopoly until the latter part of the 20th century. Then, hospital mergers, acquisitions, and consolidation began about the time emergency medicine became a board-certified specialty, and those were followed by contract management groups forming regional monopolies on the supply of EPs.

    Consolidation of hospitals has ended competition and choice in health care through monopolies. (Derlet, Robert W. Corporatizing American Health Care: How We Lost Our Health Care System. Johns Hopkins University Press: Baltimore, 2021.) Cities that had 10 independent competing hospitals may now have only one system monopolizing health care there and elsewhere. Examples abound: HCA controls 184 hospitals, CommonSpirit 140, Ascension 143, and Community Health Systems 83, to name a few of the many mega systems. (HCA Healthcare.; CommonSpirit Health.; Ascension.; Community Health Systems.

    The locally controlled community hospital has faded into a thing of the past. The University of Pittsburgh Medical Center has a virtual monopoly in a city of two million, with 40 hospitals and more than 8000 beds. (UPMC. Many hospital systems have created pricing monopolies through mergers and acquisitions that violate federal antitrust laws.

    Pushback has been weak. Sutter Health in California was sued in 2019 by then-Attorney General Xavier Becerra for noncompetitive pricing. This action resulted in a landmark settlement of $575 million to resolve charges that it engaged in anticompetitive business practices against consumers and employers, a milestone legal case against the hospital industry. (California Office of the Attorney General. March 9, 2021;

    A New Jersey court ruling in 2022 blocked Hackensack Meridian Health's purchase of Englewood Health. ( March 22, 2022; But these tiny interventions in a large sea of health care corporate monopolies do not do much to help our patients or EP colleagues.

    Monopolies in hospital EDs result in economic pain to patients as well as their employers, who pay for some of their health care insurance premiums. Individual annual deductibles exceed $8000 for many people and insurers often refuse to cover certain ED costs (e.g., MRIs), so a visit to an ED can throw a family into bankruptcy. Too many EPs are also beholden to mega CMGs, often owned by Wall Street private equity or stockholders.

    Kaiser Health News recently reported that a Tennessee man who needed six sutures to repair a leg laceration was billed $4582 by Southern Tennessee Regional Health System-Pulaski, a regional monopoly owned by LifePoint that manages 63 hospitals. (Nov. 19, 2021; How much choice did he have? Imagine that all coffee shops in a town have the same owner who charges outrageous prices. You may be able to forgo coffee, but can you forgo care for an emergency medical condition?

    Hospitals arbitrarily set their fees for ED services. They can charge anything they want, although contracts with some insurance plans may lower their fees and designate them as an in-network facility. Too many of these hospitals operate on a monopoly business model and in some cases are the only hospital in town. Patients may be billed thousands of dollars for even simple ED visits.

    More concerning is patients with common complaints such as chest or abdominal pain who may be charged $10,000 to $30,000, even if no serious cause of the symptoms is uncovered. (J Emerg Med. 2022;62[5]:675.) We have seen reports of surcharges by hospitals because a special designation, such as trauma center, provides them with the justification to add another $50,000 to an ED bill.

    CMGs contract with hospitals to hire and supply EPs to work in their respective EDs. The largest ones control more than 50 percent of EPs and include Envision, TeamHealth, SCP Health (formerly Schumacher), and US Acute Care Solutions. TeamHealth is owned by Blackstone, a large private equity group while Envision and SCP are owned by the private equity giants KKR & Co., Inc., and the Onex Group, respectively.

    These Wall Street regional monopolies bill and collect professional fees, and keep a large piece of the pie for profit and administrative salaries. If an EP has a problem with a large CMG, he cannot simply quit and get a job at another ED nearby. Chances are the CMG has a contract with all the other hospital EDs in town, especially if they are owned by the same corporation.

    Too many physicians feel muzzled and inhibited to speak out about patient safety issues for fear of being fired by the CMG. EPs who are fired may not even be able to get a job in a neighboring city or even the same state if their CMG owns all the regional ED hospitals contracts. The president of the American Academy of Emergency Medicine recently wrote that he had been fired by a CMG, presumably to replace him with less expensive nonphysician providers. (Common Sense. July/August 2022;

    As an ED medical director, I (MB) fought for policies and procedures that were in the best interests of my patients. My objections to harmful policies within the hospital, a regional monopoly, were met with outrage from the CMG that employed me. The regional director acknowledged that poor patient care needed to be remedied, but he stated repeatedly that “contract retention needs to be our number one priority.” The CMG could lose its contract, and it cared only about profit, not ED patients. I was told that I needed to drop my efforts at reform or be fired!

    That CMG had a monopoly on physician staffing in my region, and I was unlikely to get an equivalent job within commuting distance of my home. Fighting for the best care for my patients cost me my job, but I would do the same again. The regional director agreed that I had to shut up or be shut out. Sadly, “contract retention” has become the top priority of too many CMGs.

    Congress needs to step up to the plate to prevent abuses by health care monopolies by first including health care under the umbrella of the Sherman and Clayton acts, which were passed to prevent the many evils of monopolies. The cottage industry of thousands of individual hospitals and independent physicians of the recent past has now morphed into a corporate monolith, one that wants to enjoy monopoly power and profit but not be subject to the law.

    Emergency departments, an essential public service, should have prices regulated like a public utility. This is not a new concept; Medicare sets maximum prices that a hospital ED can charge, and many European countries regulate ED prices as well. Congress also needs to provide front-line EPs with protection from CMGs by outlawing monopoly control of towns and cities, requiring due process before termination, eliminating noncompete contracts, and opening the books on physician billing and collections.

    We encourage our fellow EPs to describe their experience with monopoly hospitals and CMGs to the media and to write to their state and federal legislators. We EPs also need to raise the issue to the top of the list with our emergency medicine professional organizations and local and state medical societies.

    Dr. Derletis a professor and the chief emeritus in emergency medicine at the University of California, Davis. He founded the EM residency training program there, and is the author of the book Corporatizing American Healthcare; How We Lost our Healthcare System. Dr. Bordenis an emergency physician in Washington State and the author of the book Medical Wisdom.

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