Dr. Ming Lin, and healthcare providers like him, are fighting to take back control of medicine from private equity firms that are gobbling up practices and facilities. Should Wall Street make life-and-death decisions based on the bottom line?
So stealthily you probably never noticed, private equity firms have transformed American health care over the last decade — and not for the better, critics say. These Wall Street players have their eye on medical practices and facilities as so many untapped sources of revenue.
Over the last decade, the private equity industry has been on a massive shopping spree, taking over toy stores, restaurant chains, clothing stores, you name it — and too often leaving the businesses a shadow of their former selves, even bankrupt. The pandemic only jet-fueled the momentum: 2022 was the biggest year in the industry’s history, followed by a record-breaking 2021. According to industry tracker PitchBook, in 2021 alone these firms invested $206 billion into over 1,400 healthcare acquisitions.
With private equity’s aggressive entry into medicine, this is no longer about squeezing profits from shoe stores. This is about human life.
Private equity companies make their money by acquiring ownership or majority stakes in businesses, taking over management in order to boost revenue and “efficiency,” then flipping them in a few years for huge profits. Over the last decade, industry players have been quietly snapping up medical specialties like dermatology, anesthesiology, and gastroenterology for their vast profit potential. Some of these financial firms end up dominating such services in a growing number of metropolitan areas. Consider, if you’re being put under by an anesthesiologist in Orlando, Florida, chances are that doctor is employed by a private equity-owned firm.
Some experts warn that the private equity industry has become as rapacious and unaccountable as the robber barons of yore. Is that who you want sticking a needle in your arm?
Firms that much of the public has never heard of, with names like KKR, Shore Capital Partners, and TPG, have set their sights on a broad range of healthcare businesses, from orthopedic practices to hospices to addiction treatment centers. They’re gobbling up emergency rooms, ambulatory surgical centers, even entire hospitals. Physician owners of private medical practices find themselves wooed by sweet-sounding deals when private equity comes calling, and those worn out by the financial challenges of owning a practice, or reaching retirement age, or just plain greedy, find them hard to resist.
Private equity firms argue that they bring value to health care through better management techniques and investment in newer technologies. But critics say their presence is nothing more than money-driven medicine on steroids, pointing out that the private equity business model is particularly ill-suited for healthcare, when human lives hang on the balance sheet. In order to squeeze greater profits from businesses, say the critics, private equity firms cut corners in dangerous ways, like reducing staff or replacing physicians with less qualified personnel.
Critics also charge that federal regulators are practically blind to what is happening. Because many state laws restrict the corporate practice of medicine, private equity firms have become clever in how they structure takeovers so that the firm does not acquire a practice or facility outright, but instead buys a majority interest, often flying below the radar of regulators.
The stakes are high, and studies on the impact of private equity on health care are far from comforting. Research published in the JAMA Health Forum shows that private equity acquisitions of medical practices result in more lengthy and costly care for patients as well as reduced access to services. A 2021 working paper from the National Bureau of Economic Research found that entering a nursing home owned by private equity increases your chances of dying by 10%.
Every day, the private equity takeover of medicine impacts more people – more doctors, nurses, and medical staff. More human beings who depend on them for health and life. One thing seems clear: private equity executives with MBAs may know little about medicine, but they are determined to profit from your body, cradle to grave – literally: they’re even getting into funeral homes.
So, is anybody fighting back? The answer is yes: increasingly, doctors themselves are challenging an industry they say has forced them to violate their ethics.
When the pandemic struck, Dr. Ming Lin was on the front lines as an emergency physician at PeaceHealth St. Joseph Medical Center in Bellingham, Washington. But when he spoke out about the need for Covid safety measures like masking, improving ventilation, and limiting visitors, he was fired from a position he had held for 17 years. TeamHealth, a corporation that contracts with hospitals to staff emergency rooms (and is owned by the Blackstone Group, a private equity firm), offered to find Lin a new position in another state, or lower-paid, part-time work, but Lin found these conditions unacceptable for him and his family. He initiated a lawsuit in 2020 for wrongful termination against PeaceHealth and TeamHealth. The case is still pending.
Lin warns that a storm is coming in our healthcare system, and if we don’t challenge private equity and corporate medicine now, we will all pay dearly. He shares his story and his newfound role in activism with the Institute for New Economic Thinking.
Lynn Parramore: How did you become concerned about private equity in health care?
Ming Lin: I noticed the problem of private equity growing gradually over the last 10 to 15 years. It all started slowly. I’d say to myself, “Oh, we can’t admit this patient because the hospital says it’s not financially viable.” Or maybe we would be told to find a way to get rid of a patient.
In the past, doctors would have been making the decisions about who should and shouldn’t be admitted. But when a private equity company has a contract with the hospital, they will make the rules and you either follow them or you’ll be terminated. It forces doctors into a position where you have to tell the patient, well, sorry, your hospitalization may not be paid for, it may cost you a lot of money. I’ve seen that private equity and corporate-driven medicine is not just dangerous, it’s costly to patients who are confronted with things like surprise billing. Private equity-controlled practices are also known to sue patients. And if the hospital or practice you work for is under the control of a private equity company, you can’t speak out about these dilemmas.
LP: You were terminated from your position three years ago for raising safety concerns during the pandemic. What have you been doing in the meantime, workwise?
ML: I’ve worked at over 13 different hospitals. Most have been remote reservation hospitals that are hard to get to, like in northern Minnesota, the Dakotas, and Arizona. I’ve also done some volunteer work along the Texas border and worked in some of the emergency rooms along El Paso. I’m working on trying to improve my Spanish!
LP: Your family is still in Washington, where you held the job for 17 years at PeaceHealth. That must be difficult.
ML: Yes, it has been. I’ve had to spend a lot of time away – up to a month at a time. I’ve missed a lot of things, not just family dinners but my kids’ recitals and performances. Events I will never get to experience again. So, it has been difficult.
LP: Why did you go into medicine in the first place? Why did you want to become a doctor?
ML: I went into medicine because I enjoy helping people. I enjoy helping to solve their problems. I particularly liked emergency medicine because they treat everybody the same. When financial considerations come into the emergency room, it makes it very difficult for me to treat everybody the same.
LP: So you feel you’re being asked to go against your value system, your medical ethics?
ML: Yes, it’s a real moral dilemma for a lot of people, including myself. I’ve had to tell patients I feel should be admitted that their hospitalization may cost 10k as their insurance may not authorize their stay. Or I’ve been asked to let mentally unstable, suicidal patients leave because we were not authorized to detain them for a more thorough evaluation. Over the years I have had more and more patients tell me about the exorbitant bills they have received on visits to the emergency room – we’re talking several thousand dollars for the application of some glue to a half-inch wound.
Disturbingly, this exorbitant billing was done unbeknown to me. Unlike hospitals and insurance companies, private equity companies can hide behind the physician and not absorb any of the outcry over such fraudulent profiteering.
LP: Would you say there is an atmosphere of fear among physicians who are afraid to speak out?
ML: Absolutely. There are so many physicians who are afraid to speak out. In many cases, when they do they feel they have to do so anonymously.
LP: Do you think the transformation of medicine by the private equity industry is impacting medical students?
ML: When they come out of school, I think a lot of them are appalled by the fact that the medical decisions are not being made in terms of what’s best for the patient, but in terms of what’s best for profit. That’s a real moral problem, and it’s very hard for people who trained all these years and went into medicine to help people.
LP: Private equity is notoriously a shape-shifting industry that likes to fly under the radar, hiding behind complicated business structures and jargon which makes it hard for the public to understand. Do you think there is growing public awareness of what this industry does?
ML: I think there’s increasing awareness. We just had a conference for Take Medicine Back, an advocacy group started by emergency room doctors to take medicine back from corporate interests. There were high-profile journalists and academics, and a special message from Senator Elizabeth Warren (D) and Senator Roger Marshall (R). Just a few days ago, there was an article in the New York Times [“The Moral Crisis of America’s Doctors”] about the stress doctors feel dealing with corporate medicine. Finally, there’s some media coverage. Physicians that have been impacted have been joining associations that are against private equity-driven and corporate healthcare.
You have to realize that there are a lot of Ming Lins out there. I’ve sort of become the poster child for a problem that impacts so many people. A lot of physicians are demoralized. They’re being terminated for advocating for patient safety, or for no reason at all. One reason I’ve wanted to pursue this lawsuit is so that we can have a spotlight on this important issue. There will never be a more opportune moment to bring attention to these issues of due process and the fact that private equity and corporate health care are dangerous to patients. There are clear scientific data that show that corporate health care and private equity costs patients more money, and it’s also unsafe and dangerous.
LP: What are the most pressing things that need to be done to address the problem?
ML: We have to understand that private equity and corporate-driven health care costs more and is unsafe. We need to let people know that we now have scientific data to prove that it increases mortality and costs. Professional organizations need to recognize this and disassociate themselves from any private equity company. You can’t just say, oh, we don’t agree with private equity companies, and yet accept their money. We also need to realize that there are actually laws against the corporate practice of medicine in many states. We have to tell our attorneys general, hey, we need to pursue this. It’s illegal! People who have business degrees cannot be owning and running medical practices.
LP: What has surprised you most in your personal saga with private equity-driven medicine?
ML: I’m really surprised at the amount of attention I got. It feels like I’ve hit the perfect storm in some ways. This has been ongoing, this issue of the right to speak out for our patients and the demoralization of physicians. I feel that I need to continue this, that this is the right moment. It has put a lot of stress on myself and my family, and sometimes I question whether I should go on with it, but it’s an opportune moment and the problem with health care is bigger than any problem at home.
I think the public has a hard time understanding what private equity is and how dangerous it is. A regular person might think of a company or a corporation wanting to make money to make their business better, but private equity’s main objective is to make money to enrich themselves. There’s no interest in improving the business. They just want it to generate revenue before they flip a business, even if that means the business is failing its customers. And remember, this is not a coffee shop we’re talking about. It’s our health care system – a vital part of our lives, our communities, our society.
LP: Have you found a role in activism alongside your career in medicine?
ML: Yes. This is important for the well-being of my patients and the field of medicine — more important than myself or my career. It feels like a typhoon is coming that’s going to destroy the whole town, not just you and your family. It was a difficult decision we made as a family. How could we walk away from this knowing that we could have at least tried to help?
To me, this lawsuit is about having a voice in healthcare. Doctors and nurses need a voice to protect our patients. I guess you can say that the anger I felt toward the hospital’s lack of Covid response to protect our staff and patients was the straw that broke the camel’s back. This may be a small battle against the private equity and the corporate healthcare system. But it’s an important one. You have to win battles to win a war. History is filled with small battles, even losing ones, that have inspired people to win the war. Hopefully, my suit will encourage more people to be bold and more aggressive, to realize that we have to fight against the system because it’s just getting worse.
To me, corporate greed in our healthcare system is one big continuum where the drive to generate revenue exploits patients at their most vulnerable moment. I see private equity as the more extreme form of this greed as their sole purpose is to generate revenue at any cost. Unlike most businesses, they are not held accountable to customers or communities – only their investors. We need to take greed out of the equation, and getting private equity out of medicine would be a big step in the right direction.
LP: What positive signs have you seen in the fight? How is the Biden administration responding to this problem?
ML: AAEM [the American Academy of Emergency Medicine] is involved in a lawsuit against Envision Healthcare for its takeover of an emergency department contract at Placentia Linda Hospital in California. They’re not doing it for the money, but rather to make a point that the corporate practice of medicine is illegal. This lawsuit is ongoing, and it’s an encouraging sign.
I think the Biden administration has made some progress with the Federal Trade Commission proposing a ban on “restrictive covenants,” which are non-compete agreements that private equity companies tend to put in their contracts. Getting rid of these would eliminate restrictions that doctors and other workers face when they leave a practice or facility. Also, I’ve heard whistleblower laws have been better enforced under the Biden administration. But there’s a lot of progress still to be made. The problem is with the whole greed and revenue-driven system that is causing danger to our patients and costing us a surprising amount of money.
