Rich investors buy up MD practices and seek to strip patient safeguards

Patrick Malone & Associates P.C. | DC Injury Lawyers
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Patrick Malone & Associates P.C. | DC Injury Lawyers

Wealthy investors want to enrich themselves yet more, partly by pushing doctors to oust patients from their practices unless they sign away invaluable constitutional rights. These rights can protect them if they are harmed while receiving medical services.

Patients’ safeguards, however, too often vanish when businesses compel customers to sign on to “forced arbitration,” Bloomberg Businessweek reported, noting that this consumer menace is rising in medicine as hedge funds buy up physician groups. Rich investors see lucrative profits in these practices, particularly in specialties like dermatology, gastroenterology, and obstetrics.

It seems that doctors like practicing medicine and dislike the billing, managing, paper shuffling, and other bureaucratic aspects of their profession, the story reported. Some aren’t good at it. Many are struggling, especially as the coronavirus pandemic has slashed patient demand for all kinds of medical procedures, sending doctors’ revenues plummeting. As Bloomberg reported:

“The average medical office’s revenue has dropped 32% this year, according to a survey released in November by the American Medical Association ….  Private equity firms, on the other hand, raised billions from investors this year and have been buying up struggling practices on the cheap.”

The incursion of private equity into as key an area as health care will be an issue that patients and their advocates need to keep close watch on, Bloomberg reported, noting of obstetrics and gynecology alone:

“Over the past decade, almost 4,000 independent clinicians in women’s health have come under private equity ownership, according to a study published in August in the Journal of the American Medical Association. The figure is likely much higher, according to the study’s authors, but the deals aren’t uniformly disclosed.”

Further, when the suit-wearing MBAs from the funds descend on doctors, they persuade them of the purported financial benefits to them of shoving patients into compulsory arbitration. They do so by requiring busy, stressed patients to cope with copious paperwork, with doctors and their staff telling them they must sign the documents, or they can’t be treated at the hedge fund-owned practice.

Here is what they sign up for, though: Forced arbitration is a booming part of the legal system that rips important constitutional protections away from ordinary individuals who have disputes with big businesses, compelling them to have their cases considered in private systems with huge ties to the very corporate interests that appear in them as parties in legal controversies.

Consumers too often fail to scrutinize long, wordy documents they may be asked to review and then sign — including when they may need urgent medical services (with doctors and hospitals) or if they have an elderly and vulnerable loved one needing nursing home care. They unwittingly may give up their right to seek redresses later in the civil justice system, getting their disputes heard, instead, by purportedly independent arbitrators.

Those individuals often may work for large organizations that make their bread and butter by handling many claims from corporations. The complaints are not heard in public and decisions often may be kept private. Forced arbitration has become corporate compulsory in sweeping fashion, intruding in Americans’ lives — not just in health care but also with: child sexual assault, credit cards, banks, debt collectors, data breaches, video gaming, home and car buying, vehicle rentals, concerns about colleges’ quality, student loans, ticket brokers, travel websites, wage theft, and workplace discrimination (claims both of racial and gender bias).

Bloomberg’s news article has an intriguing twist to it, however. Its protagonist turns out to be a savvy attorney who recently handled a medical malpractice case in which Florida courts rejected a hedge fund’s forced arbitration and the patient document requiring it. The court found that the patient could not be deprived of her right to pursue claims in the civil justice system, especially if the alternative involved a system so stacked against her.

But, surprise, surprise: the attorney discovered that a specialist she likes had his practice bought by the very investment group she had battled in court. She knows the documents the practice wants to sign are not legally enforceable and that she has another important option — she can find another doctor.

The article is worth reading. It also may not debunk enough myths that doctors, hospitals, insurers, and politicians embraced long before private equity began to delve into medicine. These counter factual contentions zero in on malpractice lawsuits and insurance coverage against them.

In my practice, I see not only the harms that patients suffer while seeking medical services, but also the fortitude they display when they seek justice and sue doctors, nurses, hospitals, and others in medicine in cases involving negligence and abuse. Despite what audiences may see on the television, the civil and criminal systems are unfamiliar to most people and court can be an anxiety-producing place. Malpractice cases can take time. Still, to seek redress and the financial support that patients and their loved ones may need for long periods, these actions can be a vital path — and one that should not be closed to them by a hastily signed piece of paper.

Indeed, as a growing body of research has found, malpractice cases that go to trial and verdict are relatively rare, and they too often involve not a talented but once unlucky clinician, but doctors with two, three, or more successful claims against them. Malpractice cases can be a critical way to get licensing authorities, hospitals, and others in the medical community to reckon with bad doctors. They also can unearth systemic problems that require urgent remedy.

The studies also show that — contrary to what institutions, insurers, and now the hedge funders may assert — malpractice insurance rates do not become ruinous for good doctors due to runaway verdicts in malpractice cases. Nope. Doctors, the research finds, suffer just as ordinary folks do: Insurers charge them sky-high prices because they can, not necessarily because judges or juries award excessive sums.

Bloomberg, by the way, reported that doctors are not always happy to steer their patients, as their hedge fund bosses wish, into forced arbitration. Fine MDs hate to lose good patients bickering over paperwork. The good doctors know that sound, careful treatment that they offer is not likely to get them on the wrong side of a malpractice case.

The attorney-patient in the magazine article, by the way, reluctantly finds another specialist who does not push forced arbitration and is not part of a hedge fund-owned practice. She has a telling kicker, too, saying to the reporter:

“There’s nothing inherently wrong with investors buying medical firms, as long as doctors can practice the way they always had,” she says. But she continues, “what seems like a business decision can affect patient care if it’s using this position of trust that doctors have to mislead patients to do something that’s not in their best interest.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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