Your hospital is a nonprofit, but your ER doctor works for Wall Street

At a time when Maryland hospitals are under pressure to reduce wait times and control costs, more of them are turning to a rapidly expanding firm backed by private equity to operate their emergency departments.

An Ohio-based company called U.S. Acute Care Solutions, or USACS, will soon expand from operating one emergency department for the University of Maryland Medical System to 10, increasing its already sizable footprint in the state. By June, USACS will operate emergency and other services in 26 health care facilities in Maryland, including those in nearly a third of the state’s full-service hospitals.

This kind of outsourcing isn’t new to Maryland hospitals, and nationally, it’s a growing trend. But the decisions have flown mostly under the radar until recently, when U.S. lawmakers raised concerns about how a push for efficiency impacts patient care. USACS raised eyebrows because of a large investment from the private equity firm Apollo Global Management.

The University of Maryland Medical System’s deal with USACS to operate emergency rooms came to light through a warning to the state about layoffs of 190 workers. System officials said all of the workers, currently employed by a different physicians group established to operate those emergency departments, were offered positions in the departments USACS is expected to take over June 1.

One of those workers, a doctor who requested anonymity because they feared losing their job, said many of their colleagues were “blindsided” by the decision to contract with USACS. Some staff previously worked at USACS, the doctor said, and fear the company’s emphasis on metrics and efficiency will force doctors to spend less time with patients.

While most of the affected UMMS staff will agree to work for USACS in the short term, the doctor said, they expect that there will be significant turnover at those emergency departments in the coming months.

The affected emergency departments are on the Eastern Shore, in the Washington, D.C., suburbs and in Harford County, where USACS will employ doctors, physician assistants and advanced practice nurses. At the University of Maryland Medical Center in Baltimore, doctors will remain employed by the affiliated University of Maryland School of Medicine.

USACS already was operating in a system hospital in Charles County, where it improved financial performance of the emergency department, said Dr. Andrew Pollak, the University of Maryland Medical System’s senior vice president and chief clinical officer.

Specifically, he said, the company has extensive relationships with insurers and did a better job of getting them to pay their bills.

“They’ve got this large national firm that does this for a living,” Pollak said. “The important thing is the financial sustainability they bring.”

USACS also has data from hundreds of hospitals across the country that help the company to better predict staffing needs. On its website, USACS claims it has increased efficiencies, outperformed other facilities and reduced wait times at emergency departments.

Some Maryland emergency departments that USACS operates have longer wait times than the state median, according to data collected by Maryland’s Health Services Cost Review Commission, a state agency with oversight of hospital rates and budgets. Wait times, though, are a complex problem influenced by a number of factors within and beyond the hospital.

USACS said officials will be working on improvements.

Can efficiency and quality coexist?

A third of emergency departments across the country, and more than a quarter of rural hospitals, are owned by companies with private equity ownership or ties, according to U.S. Sen. Gary Peters, a Michigan Democrat and chair of the Homeland Security and Governmental Affairs Committee. This month, his office sent letters to several companies, including USACS and Apollo.

“I am concerned that our nation’s largest emergency medicine staffing companies may be engaging in cost-saving measures at the expense of patient safety and care, which could put our nation’s emergency preparedness at risk,” he said in a statement on his website.

Private equity typically refers to firms that purchase companies, make them more profitable and sell them at an increased value. That’s not what happened at USACS.

The company was founded in 2015, when a New York-based private equity group called Welsh, Carson, Anderson & Stowe partnered with a physicians’ group in Ohio. The company grew aggressively, acquiring other physicians’ groups in emergency departments across the country. That private equity firm sold its minority stake and exited the partnership in 2021.

That’s when Apollo stepped in.

According to Moody’s, Apollo loaned USACS $711 million and put two representatives on the nine-member board. This allowed USACS to remain physician-owned, while giving it fuel to acquire more physicians’ groups.

Today, USACS operates more than 400 programs in 26 states, a size and scale that helps improve emergency departments, said Dr. Drew White, a regional vice president for USACS who studied medicine in Baltimore and remains based here.

The doctors at USACS retain their autonomy and run the emergency departments, White said, but they can tap into the data and expertise of a national company.

“These are your local community physicians that are caring for you,” White said. “They just have a lot of resources behind them.”

According to Marty Richmond, the company’s vice president of marketing and corporate communications, USACS remains 98% owned by about 1,800 physicians spread across the country.

But Dr. Mitchell Li, a California physician and the founder of Take Medicine Back, a group that opposes private equity investments in hospitals, called the physician-ownership model at USACS “incredibly misleading.” According to Li, a doctor at USACS has as much influence on the company’s decision making as the average stockholder of Boeing has on making planes.

Alarmed by the rise of private equity in medicine, Li said he and other doctors are organizing against the “financialization” of medicine. He pointed to another company founded by Welsh, Carson, Anderson & Stowe called U.S. Anesthesia Partners, or USAP. The Federal Trade Commission sued USAP last year for allegedly consolidating anesthesia practices in Texas, monopolizing the market and raising prices.

As for USACS, staffers for Sen. Peters interviewed doctors at emergency departments in Colorado. USACS doctors said low staffing levels forced them to oversee care for 20 patients at once and left nurse practitioners and physician assistants to take care of patients.

At least one Maryland hospital was notified by USACS about the Senate panel’s private equity inquiry.

Hospitals with longer ties to USACS said they have seen benefits to the arrangement, including hiring in a time when they can have trouble filling positions.

Sharon Boston, a spokeswoman for LifeBridge Health, said four facilities, including Sinai Hospital in Baltimore, switched from another contractor to USACS in 2017.

“As is the practice with many emergency departments across the country,” she said, “partnering with an outside contractor gives our hospitals access to a larger pool of highly qualified and experienced emergency care providers who also align with our mission and values.”

A matter of life and death

Anna Palmisano, director of Marylanders for Patient Rights, said though private equity firms aren’t buying hospitals in the state, their involvement raises red flags. She said nursing homes are a cautionary tale about what happens when private equity firms take over. This year, the General Assembly passed legislation requiring proposed acquisitions to undergo review by a state health department commission.

“I worked on the task force on developing guidelines for nursing home acquisitions by private equity ... so I know the negative effect on nursing home residents. Assets were sold off, caregivers’ salaries and benefits were cut, and care standards for patients declined,” Palmisano said.

Emergency departments controlled by private equity obsess over metrics, said Eileen Applebaum, co-director of the Center for Economic and Policy Research. That includes the number of patients seen, the time doctors spend with patients and fees charged to insurance companies.

This pushes companies to increase the workload on doctors, decrease time with patients and find more ways to bill insurance companies — ultimately raising insurance premiums for everyone, Applebaum said. Most troubling is that these firms push physician assistants and other medical workers to do more work traditionally handled by doctors.

“If you have a major trauma, you want an emergency room doctor there,” she said.

Del. Joseline Peña-Melnyk, chair of the state Health and Government Operations Committee, said this type of outsourcing by hospitals is not regulated in Maryland.

“However, we need to keep an eye on quality and UMMS’s role — it is important,” she said. “Will they be supervising? Have oversight?”

Sen. James Rosapepe, a Democrat who represents Prince George’s and Anne Arundel counties, has long been an advocate for health care services and agreed that this is something to watch.

“Everybody knows we’ve got a lot of problems with our emergency rooms in Maryland, and so if there are ways to improve them we ought to be all ears,” he said. “But we also ought to be vigilant because of the life and death decisions that are made in emergency rooms.”

Clarification: This article has been updated to note that the University of Maryland Medical System staff who will transition to USACS are currently employed by a different physicians group that was established to operate those emergency departments.

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