After the Blackstone Group
acquired one of the nation’s largest physician staffing firms in 2017,
low-income patients faced far more aggressive debt collection lawsuits. They
only stopped after ProPublica and MLK50 asked about it.
by Wendi C. Thomas, MLK50, with Maya Miller, Beena Raghavendran and Doris Burke,
ProPublica
Nov. 27, 1 p.m. EST
MEMPHIS, Tenn. — After nine
visits to the emergency room at Baptist Memorial Hospital in 2016 and 2017,
Jennifer Brooks began receiving bills from an entity she’d never heard of,
Southeastern Emergency Physicians.
Unsure what the bills were
for, Brooks, a stay-at-home mother, said she ignored them until they were sent
to collections. She made payment arrangements, but when she was late, she said
the collection agency demanded $500, which she didn’t have.
In December, Southeastern sued
her for more than $8,500 in unpaid bills — a third of what her husband makes
per year as a cook.
The case against Brooks is one
of more than 4,800 lawsuits Southeastern has filed against patients in Shelby
County General Sessions Court since 2017. In the first six months of this year,
Southeastern filed more lawsuits than local hospitals Methodist Le Bonheur
Healthcare, Baptist and Regional One combined.
Bottom of Form
Lawsuits against poor patients
over unpaid medical debts have received widespread media attention over the
past few years. In almost all cases, the plaintiff has been a hospital system,
often a nonprofit.
What sets the practices of
Southeastern, and its parent, TeamHealth,
apart is that it is a physician staffing firm that contracts with the doctors
who treat patients in four of Baptist’s emergency rooms around the region.
Physicians historically have avoided suing patients en masse, instead choosing
to send unpaid bills to collections or writing them off as bad debt.
TeamHealth is owned by
the Blackstone Group, a private
equity firm. In 2017, Blackstone acquired TeamHealth and its subsidiary
Southeastern in
a $6.1 billion deal. It was just one in a growing number of large private
equity investments in health care in the last decade.
“There is this tension between
being a health care provider and doing what’s best for their care … and being a
profit-maximizing firm that aggressively goes after patients,” said Brian
Shearer, legal director for Justice
Catalyst Law, a New York-based social justice nonprofit, though he added
that he wasn’t aware of any lawsuits by providers like Southeastern.
TeamHealth initially defended
the lawsuits in an interview with MLK50 and ProPublica, saying they reserved
legal action only for patients who’d made no attempt to pay.
But late last week, faced with
additional questions by the news organizations, the company reversed course,
issuing a statement saying it would no longer sue patients and wouldn’t pursue
the lawsuits it has already filed. “It’s difficult to ensure that only patients
with a strong ability to pay are ultimately impacted, so we’ve decided to
eliminate it,” a TeamHealth spokesman said.
TeamHealth also had policies
in place that made it difficult for patients to access charity care, a form of
financial assistance for low-income patients. Two former TeamHealth employees
told MLK50 and ProPublica that they were instructed not to mention the term charity
care when patients called with questions about their bills.
After the company was asked
about this, TeamHealth president and chief executive officer Leif Murphy
announced a new discount policy for patients without insurance.
“Effective December 1, 2019,
we are implementing discount policies for our uninsured population to reduce
the cost of care by as much 90%, and up to 100[%] when necessary. We will
proactively include eligibility criteria in our invoices to help promote
participation rather than force patients to seek assistance,” Murphy wrote in
a letter
to employees.
TeamHealth’s abandonment of
its lawsuits, as well as the implementation of a new financial assistance
policy, marks the second time in five months that a major health care entity in
Memphis has overhauled its practices amid questions from
MLK50 and ProPublica. In July, Methodist, a nonprofit faith-based hospital
system, announced it would curtail its lawsuits over unpaid debt against poor
patients. It has since zeroed
out the balances owed by more than 5,100 patients and reduced bills
for more than 2,200 others, according to a hospital spokesperson.
TeamHealth declined to talk
about the suits involving patients interviewed for this story, even though the
patients gave the company permission to do so.
Mark Rukavina, business
development manager at Community
Catalyst’s Center for Consumer Engagement in Health Innovation, a
national advocacy organization, said nonprofit hospitals shouldn’t work with
physicians groups that aggressively pursue patients for medical debts.
“They could say, ‘If you’re
going to provide services in our hospital, you’re going to comply with our
financial assistance policy,’” Rukavina said.
The lawsuit from Southeastern
was just a small part of Brooks’ debt, but learning that TeamHealth won’t
pursue her case was good news, she said. Plus, she now has TennCare, the
state’s version of Medicaid, which she hopes will spare her from other large
medical bills.
She and her husband still “go
from paycheck to paycheck,” she said, and with $60,000 in student loans and
thousands more in credit card debt, she thinks bankruptcy – or a winning
lottery ticket – is the most likely path out.
“It definitely helps though,
that you’re not having that [doctor’s bill] hanging over your head,” she said.
From a Closet to National
Leader
TeamHealth’s roots in
Tennessee stretch back 40 years, to when emergency medicine was recognized as
a specialty.
In 1979, a small group of ER
doctors in Knoxville, Tennessee, landed contracts to operate two emergency
rooms, including at the University of Tennessee Medical Center in Knoxville,
where administrators allowed them to use a closet as their office,
according to a company video. It was a step up from their makeshift workspace
at Mrs. Winner’s, a fast-food restaurant.
Southeastern’s initial
strategy was to focus on hospitals within a two-hour drive of Knoxville, said
co-founder Dr. Lynn
Massingale in the video. But his ambition to be the nation’s biggest
staffing firm led him to expand that radius to a two-hour plane ride, he said
in an interview posted
on TeamHealth’s website, and, gradually, across the country.
Hospitals “needed reliable,
24-7 physician coverage in their emergency departments, but no one was
ultimately responsible for making sure the shifts were covered,” wrote
co-founder Dr. Randal Dabbs in a 2018 column in
an industry publication.
Southeastern would take on
that responsibility. “Our goals have never included conquest, but instead, true
collaboration and servant leadership,” Dabbs wrote.
In 1994, Southeastern merged
with three other doctors groups to become TeamHealth. It had 200 ER physicians
at 27 hospitals in four states, according to a Modern Healthcare article published
that year.
TeamHealth now has more than 16,000 physicians and
clinicians, according to the company’s website. It provides medical
professionals to 3,300 medical
facilities and physician groups in 47 states.
“They provided great care in
our emergency room, and because they provided great care, they continued to
grow,” said Baptist Memorial Health Care’s president and chief executive
officer Jason Little, who in 2003 signed the TeamHealth contract for Baptist
Collierville’s emergency department.
Private Equity’s Rise in
Health Care
With $554 billion in
assets under management, the Blackstone Group is one of the world’s largest
private equity firms.
Increasingly, health care is
an attractive target for private equity, thanks to an aging population and a
rise in chronic disease. The growth is highest in specialties where the need for
a long-standing doctor-patient relationship is low, such as emergency medicine,
anesthesia and care provided to patients when they are hospitalized (a medical
specialty known as hospitalists).
The 2017 acquisition was
Blackstone’s second investment in TeamHealth, after buying it in 2005, taking
it public in 2009 and then selling its interest four years later.
Proponents of private equity
argue that its profit-driven mission helps keep afloat sectors that serve the
public good. At least 150 public pension funds invest in private equity,
including Blackstone, with higher annual returns than other types of
investments, according to a recent report produced
by an industry lobbying firm.
But critics such as Eileen
Appelbaum, co-director of the nonprofit Center
for Economic and Policy Research, a left-leaning think tank based in
Washington, D.C., lament its growing influence in health care.
“Private equity firms buy
small competitors to add on to an initial acquisition, building national
powerhouses without any antitrust supervision,” Appelbaum testified at a
congressional committee hearing last
week about private equity. She cited TeamHealth and its competitor Envision Healthcare as prime examples of
how this practice harms consumers. “They use surprise medical bills, or the
threat of such bills, to get much higher payments than other doctors receive,
driving up health care costs.”
A New
York Times investigation in
2016 found that after private equity firms took over ambulance companies,
some response times slowed and billing practices became more aggressive. Soon
after, the companies went bankrupt — leaving gaps in emergency response across
the northeast. Citing that report, Rep.
Maxine Waters, D-Calif., the chairwoman of the House Financial Services
Committee, raised
concerns in the hearing last week about private equity firms managing
public services including health care.
In 2017, the year Blackstone
acquired TeamHealth, the disclosed value of private equity health care deals
exceeded $42 billion — the highest level since 2007 — according to a
market research
report. The following year, the private equity firm KKR acquired Envision,
which operates Emcare, another
physician staffing firm, for $9.9 billion.
In public filings,
Emcare reported that
it operated in 45 states in 2017, while TeamHealth said it
had a presence in 47 states that year.
TeamHealth estimated that the
market for emergency medicine was $12 billion, according to its filing with
the U.S. Securities and Exchange Commission. It claimed a 17% share of that
market, which in 2016 accounted for 57% of its revenue.
Appelbaum, like other experts
interviewed for this story, had not heard of instances in which private
equity-backed doctors groups sued patients.
In separate interviews before
TeamHealth said it would stop suing patients, officials at TeamHealth and
Baptist said Blackstone’s acquisition had no effect on collection efforts.
“Yes, we were acquired by
Blackstone in 2017,” said Joe Carman,
TeamHealth’s chief administrative officer. “But we have not had any change in
practice as it relates to pursuing patients and legal strategies in that time.”
Baptist’s Little agreed.
“We’ve not seen any changes,” he said.
But the lawsuits show
something began to change about the same time.
From Zero to Hundreds of
Lawsuits
In 2011, Southeastern did not
appear as a plaintiff in any lawsuit filed in Shelby County General Session
Court. In 2013, there were just over 100 suits filed by Southeastern, and the
next year, more than 600.
Both Little and Carman
speculated that increased volumes of patients treated at Baptist’s emergency
departments were partially to blame.
However, such an explanation
is not borne out by the data.
Between fiscal 2016 and 2018,
the number of visits to three of the ERs staffed by Southeastern doctors —
Baptist Memphis, the suburban Baptist Collierville and Baptist DeSoto in
Southaven, Mississippi, just over the state line — grew by 12%, according to
figures provided by Baptist. But the number of Southeastern lawsuits grew by
132% — from 798 to 1,855 — from calendar year 2016 to 2018, according to Shelby
County General Sessions Court records.
One of the defendants is
Laurie Kimbrough, 62, who went to Baptist Memphis in March 2017 complaining of
flu symptoms.
When the bill arrived, she
tried to make payment plans with Baptist but said the representative she talked
to wouldn’t agree to a payment she could afford.
The bill went to collections
and this March, Baptist sued her for nearly $1,300, not including court costs
and attorney’s fees.
By that time, she’d lost her
job and had started a small lawn care business. When the weather is good, she
manages to make a few hundred dollars per week, if the lawn mower and blower
don’t need repairs.
Family friends gave her money
to pay off the Baptist bill, but three weeks after Baptist sued her, she was
sued by Southeastern.
Even though she owed around
$400, Kimbrough said she didn’t have it. When a longtime friend learned she’d
have to pay interest on the relatively small bill, he gave her the money and
refused to let her pay him back.
Health care expenses have an
oversized impact in Tennessee, where 1 in 4 residents has a medical debt on
their credit report, the 10th highest rate in the nation, according to a report this
year by the Sycamore
Institute, a nonpartisan think tank.
Memphis is the second-poorest
large metropolitan area in the United States, so the impact is even more acute
here. Inside the city limits, more than a quarter of residents live below the
poverty line, according to the most recent census figures. More than 40%
percent of workers in the city earn less than $15 an hour, according to
one economic
development report.
Kimbrough’s current insurance
plan covers just three primary care doctor visits per year, which she’s already
used. She doesn’t have the $60 copay to see a neurologist for her ongoing leg
pain, much less any other diagnostic tests the doctor might order.
In February 2018, Kimbrough
went to Baptist’s emergency room again with flu symptoms. The bill was over
$1,300, but she was able to negotiate the hospital down from the $100 per month
payment it initially demanded.
“I said I’ll come up with the
$55 a month, even if it means I have to eat Vienna sausages 7 days a week,”
Kimbrough said.
Court records show that on
Nov. 4, Southeastern sued Kimbrough again. She has yet to be served with the
lawsuit.
Charity Care Elusive by
Design?
Baptist, which started in 1912
with a single 150-bed hospital, is a faith-based institution whose mission is “in keeping with
the three-fold ministry of Christ — Healing, Preaching and Teaching.” It now
has 22 hospitals, dotted mostly in rural communities in eastern Arkansas, West
Tennessee and Mississippi.
“If it weren’t for Baptist and
our mission,” Little said, “there wouldn’t be hospitals in a number of
communities around the three-state region that we serve.”
At Baptist, insured patients
receive a partial discount for bills over $5,000 for a single visit, regardless
of income. Uninsured patients with a household income less than 200% of
the federal poverty
guidelines are eligible for a 100% discount on hospital charges. Even
patients making 400% of the federal poverty guidelines — or just over $85,000
for a family of three — would be eligible for an 80% discount.
Baptist prefers that all
doctors groups that operate in its facilities apply the hospital’s financial
assistance policy to patients, but Little said he couldn’t discuss whether the
hospital’s contract with TeamHealth requires it to do so. TeamHealth did not
respond to a request from Baptist to provide the system permission to discuss
the contract, Little said.
In an interview before
TeamHealth changed its policy, Carman said the company’s internal policy is to match
Baptist’s charity care discount if a patient submits written proof of the
financial assistance Baptist provided.
However, TeamHealth’s billing
statements haven’t mentioned charity care. And the firm is not on
Baptist’s list of
providers that participate in the hospital’s financial assistance program.
In interviews, two former
TeamHealth call center agents said they were instructed not to mention charity
care unless patients did so first.
Between 2017 and 2018, Sharon
Lovingood was one of about 100 employees fielding patients’ calls from a
single-story TeamHealth office in Knoxville. “We were the first person they
talked to for any issues,” she said. When she worked in the U.S. Department of
Education’s student loan division between 2012 and 2017, managers encouraged
her and her colleagues to find solutions for those who called in.
But not at TeamHealth.
“A lot of times, a patient
would call in and say, ‘Hey, can you give us a discount?’ But we had to say,
‘No, I can’t do that,’ because we weren’t allowed to say, ‘Well, did you apply
for charity care at the hospital?’” Lovingood said. “They didn’t want us doing
that.”
She asked her supervisors why
and said she was told that the hospitals and billing groups TeamHealth had
contracts with didn’t want call center workers bringing it up. Lovingood said
she left the job in February 2018 because she could not stomach the
restrictions that stopped her from helping people. “I was miserable working
there.”
Sherry Breitung, who worked as
a national patient service representative in Knoxville from 2014 to 2018, also
said she asked for an explanation about the policy but didn’t get one. One
thing was clear, though: “We weren’t allowed to mention charity care to the
patients.”
Since all of their calls were
monitored and reviewed by supervisors, Breitung and Lovingood, who don’t know
each other, each said they devised their own work arounds — such as asking
patients, “Did the hospital help you?” But the four minutes allotted per phone
call wasn’t enough to help patients understand their options, they said.
Carman, on the other hand,
said he thought call center agents were instructed to bring up charity care.
“We are attempting always to try to understand their circumstance, and we’re
trying to understand charity care.”
After additional questions,
TeamHealth CEO Murphy said in his letter to employees that effective Dec. 1,
the company would begin including eligibility criteria for charity care in
patients’ invoices to make it easier to find.
After a reporter asked
Kimbrough if the ER doctors had offered her charity care, she called TeamHealth
to inquire.
“I said, ‘I need to talk to
someone in your charity division,’” Kimbrough recalled, “and they said ‘What?’”
She said she was put on hold
and then transferred to another call center agent, who asked her if she wanted
to set up a payment plan.
“I said, ‘I want to know if I
can’t pay, if you have a charity division,’” Kimbrough said.
The representative then told
her that if she’d gotten a charity care discount from Baptist, she could send
proof to TeamHealth and they’d consider her for the same discount.
But Kimbrough is uneasy with
the idea of getting financial assistance. “I feel like if I pursue charity,
there’s somebody who won’t get it who needs it worse than me.”
“Some way it’ll all work out,”
Kimbrough said. “If it doesn’t, I’m lucky that if I lost everything I could go
and live with my mom.”
Hospitals are abdicating their
responsibility to protect patients from financial harm when they hide behind
firms to which they’ve outsourced services, said Michele Johnson, executive
director of the Tennessee Justice Center, which advocates for expanded health
care access.
“Particularly with hospitals
that have a mission that is aligned with treating low-income folks with
fairness … it’s unfortunate that they’re not having people who intersect with
their patients follow that same charitable mission,” Johnson said.
Health care is a necessary and
often unavoidable expense, Johnson said. “These are not designer jeans. These
are not video games. This is a whole different thing.”
Questions Remain for Hospital,
Patients
TeamHealth declined to answer
questions about its timeline for dropping existing lawsuits or whether its
decision will apply to lawsuits that have already resulted in judgments, saying
in a statement, “TeamHealth will not file additional cases naming patients as
defendants and will not appear in any pending case.”
After MLK50-ProPublica’s investigation
into Methodist Le Bonheur Healthcare’s debt collection practices, the
nonprofit hospital dropped
hundreds of lawsuits for unpaid medical bills and expanded its
financial assistance policy to cover families making up to 250% of the federal
poverty guideline, which will cover more than half of Memphis-area households.
It has not filed any lawsuits since July 3.
It’s unclear whether
TeamHealth’s change will shift the responsibility of unpaid bills from patients
to Baptist.
In his letter to employees,
TeamHealth’s CEO pointed the finger at insurance companies, noting that the
share of insured patients with deductibles of more than $1,000 has risen
sharply over the last five years. (In most cases, patients must pay deductibles
out of pocket before their insurance coverage kicks in.)
The typical contract with a
physician staffing firm calls for the hospital to guarantee enough business to
at least break even, Little said.
“If they can’t do that on
their own billing and collection, then they, generally speaking, look to the
hospital for a subsidy to make them whole,” Little said.
He said he hasn’t spoken with
TeamHealth since its statement was issued but doesn’t anticipate any changes.
“We have a contract and it’s in place.”
Little was cautiously
optimistic about the end of TeamHealth’s lawsuits for unpaid ER doctors’ bills.
“It sounds like it’s going to be a benefit for patients, so I’m anxious to
study it,” he said.
Through a spokesperson,
Blackstone said it was not involved in “these specific practices at the
company, which we understand are quite common in the broader industry. However,
we fully agreed with and support TeamHealth’s determination to discontinue it.”
TeamHealth’s decision comes
just in time for Loretta Baxter, who went to court Friday to keep Southeastern
from garnishing her paycheck.
Baxter, 33, didn’t have
insurance when she visited a Baptist ER in 2017 for stomach pain and couldn’t
afford the $1,111 doctor’s bill.
In April, Southeastern sued
her, and on Thursday, her employer told her that it had received a garnishment
attempt that could take up to 25% of her paycheck.
That would leave her with $250
less to cover her rent, car note, insurance and expenses for her three
children. She makes about $11 an hour as a caregiver at a social service organization
for people with disabilities.
Baxter left court with
paperwork to take to her employer that would postpone the garnishment until a
Dec. 2 hearing. “I try not to let things stress me out because stress can
kill,” Baxter said at court.
When a reporter asked
TeamHealth how its decision would impact patients like Baxter, TeamHealth said
that the outside collection agency “is sending a release to remove the
garnishment and will be working with the court system to process it as soon as
possible.”
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