Until recently, the American College of Emergency Physicians (ACEP), the largest specialty organization for emergency physicians, has largely ignored the issues of the corporate practice of medicine and contract management groups (CMGs). Despite their own data demonstrating the concerns of their members, ACEP leadership has been historically riddled with private equity-owned CMG executives and those who sold their practices to them. Long before private equity firms were involved, warnings of commoditization of emergency physician colleagues was detailed in the 1992 book, The Rape of Emergency Medicine, which led to the formation of the American Academy of Emergency Medicine, the organization now suing (the now bankrupt) physician staffing firm Envision Healthcare for violations of the corporate practice of medicine in California.
Fast forward 30 years, and private equity has super-charged this commoditization. In just the past year, we have now witnessed the dramatic failure of two private equity-owned CMGs in emergency medicine, KKR’s Envision and Brown Brothers Harriman & Co’s American Physician Partners. In June 2023, the ACEP released an uncharacteristically strong statement opposing the corporate practice of medicine after emergency medicine experienced what ACEP qualified as a catastrophic match. The ACEP’s national board of directors is now nearly bereft of CMG executives. Nearly. There remains one CMG represented by the chair of the ACEP board: US Acute Care Solutions (USACS).
USACS, started with minority private equity owner Welsh, Carson, Anderson & Stowe, shares a similar origin to U.S. Anesthesia Partners. In 2021, as criticism of private equity in emergency medicine heated up, USACS “bought back” their group with a $711 million 10.5% interest loan from the notorious private equity firm Apollo Global Management, placing a private equity executive on their board.
Recently, Jesse M. Pines, MD, MBA, MSCE, and Amer Aldeen, MD, two USACS leaders, wrote an opinion piece titled “Questions you should be asking about how your physician group works,” and sub-titled, “some of the wrath toward CMGs may be misdirected.” In this editorial, they mention how some groups are taking strategies contrary to the best interests of physicians and their patients, but fail to mention how their own employer, USACS, has at times acted in this manner. An infamous example is the 2017 switch at Summa Health when it began staffing some of its ERs with physicians from USACS, which led to a number of complaints from local EMS, patients, and staff. The residency program was shut down and could not be accredited to be re-established.
There are other examples too. One would hope the USACS leadership role at the ACEP would not affect the support of physicians fighting for patients. But when USACS was at the center of controversy after firing the medical director, Jeff Chien, MD, for speaking out about dangerous staffing levels at the Santa Clara Valley Medical Center in San Jose, the then-president of ACEP, Gillian Schmitz, MD, posted on social media to upwards of 20,000 emergency physicians saying, “Look at the sources when you read these ridiculous articles and please be smarter than some of our patients who are drinking their own urine because someone read it ‘cured’ COVID on social media.” Eventually, with the vocal support of many of the nurses at the hospital, the county decided not to renew their agreement with USACS.
A novice to the business side of emergency medicine may ask, “Why would a company with no tangible assets have over $700 million in debt?” USACS is saddled with debt from a bygone era of emergency medicine characterized by massive leveraged growth and consolidation. The American Antitrust Institute report on private equity in healthcare concluded that private equity acts as an “anticompetitive catalyst in healthcare markets.” Many private equity-backed companies used debt to grow while employing out of network/surprise billing strategies, maximizing profit to pay off the debt. The No Surprises Act ended that practice and emboldened insurance companies to really hammer all emergency medicine groups in the arbitration process. Leaders of these companies like to say the debt is akin to a mortgage on your home. The difference is they own nothing tangible and need the labor of the groups’ “owners” to pay down this massive debt. Substantial amounts of debt are simply not needed to run a successful emergency medicine practice that is locally accountable and provides autonomy to the practicing physician to serve their patients’ best interests.
Some might contend this debt is necessary to compete with insurance companies. What they fail to mention is the regional labor monopsonies simultaneously created by debt-driven-consolidation, where market power can just as easily be applied to driving down wages and worsening working conditions for its physician-labor. USACS has a reputation among some of being significantly below market in their pay but often touts their “benefits.” Some are meaningful, like a 401k match, while others are effectively worthless in our opinion, but allow them to bloat the value of the benefits package. We believe the strategy is to prey on physicians who are geographically limited or buy into the “ownership matters” mantra.
The Pines and Aldeen op-ed mentions doctors should ask if physicians are owners. USACS “owners” should ask themselves if their “ownership” in USACS is at all more meaningful than owning index funds in the S&P 500 as far as control of those businesses is concerned. I ask of any USACS “owner” how many shares are outstanding, what the market cap is of the company, and how much debt has been paid off? What will happen to ownership and control in 2026 when Apollo (the private equity behemoth) can force the sale of USACS if they don’t recover their investment? Do they have a say in the staffing ratios of nurse practitioners and physician assistants in the department, or is this dictated to them top-down with the bottom line likely to be top of mind? Do they have easy access to what is billed and collected in their names using their professional licenses, and can they find out without fear of retaliation?
While it is true there is no perfect model that will satisfy everyone, it is clear the massive debt burden falling to younger physicians is due, at least in large part, to the sale of their labor to private equity. As emergency medicine plummets in popularity and the fallout of staffing group failures ripples throughout the profession, the public’s health is at risk, and the profession faces a reckoning.
Mitchell Louis Judge Li, MD, is a practicing emergency physician and founder of the advocacy group, Take Medicine Back. Arthur Smolensky, MD, is CFO and COO of Middle Tennessee Emergency Physicians, and assistant professor of the University of Tennessee Health Science Center Nashville/Murfreesboro Emergency Medicine residency.
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