Overwhelmed Hospitals Face a New Crisis: Staffing Firms Are Cutting Their Doctors’ Hours and Pay

3 Apr

by Isaac Arnsdorf

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The country’s top employers of emergency room doctors are cutting their hours — leaving clinicians with lower earnings and hospitals with less staff in the middle of a pandemic.

TeamHealth, a major medical staffing company owned by the private-equity giant Blackstone, is reducing hours for ER staff in some places and asking for voluntary furloughs from anesthesiologists, the company confirmed to ProPublica. Multiple ER providers working for a main competitor, KKR-owned Envision Healthcare, said their hours also are being cut.

Even as some hospitals risk running out of room to care for COVID-19 patients, demand for other kinds of health care is collapsing. This irony is straining the business models of hospitals and the companies that staff them with doctors and other medical professionals.

Most ER doctors aren’t direct employees of the hospitals where they work. Historically, the doctors belonged to practice groups that contracted with the hospitals. In recent years, private-equity investors started buying up and consolidating those practice groups into massive staffing companies.

Reduced hours are also hitting doctors employed by SCP Health, another medical staffing company backed by the investment firm Onex Corporation, according to internal memos obtained by ProPublica. US Acute Care Solutions, backed by the private-equity firm Welsh, Carson, Anderson & Stowe, said it’s cutting hours in some places while increasing staffing elsewhere.

The staffing companies said they’re responding to dropping revenue as non-coronavirus patients avoid the ER and hospitals cancel elective procedures. The companies also emphasize that they’re not cutting physicians’ hourly rates.

But by assigning fewer hours to doctors and other providers such as physician’s assistants and nurse practitioners, the companies are effectively paying them less. It also means that some hospitals have fewer clinicians working in the ER at a time.

“These actions are unacceptable and unnecessary,” Scott Hickey, president of the Virginia College of Emergency Physicians, said in a statement. “This is very likely the ‘calm before the storm’ of critically ill patients entering hospitals with COVID-19 symptoms. Who will be there waiting to save those lives?”

The steepest cuts so far have occurred at Alteon Health, whose private-equity backers are New Mountain Capital and Frazier Healthcare Partners. The company says ER visits are down as much as 40% nationwide. In addition to the benefits cuts that ProPublica first reported on Tuesday, Alteon is furloughing some clinicians for 30 days to six months and won’t guarantee any hours for part-time employees, according to company memos obtained by ProPublica.

“Anyone not willing or unable to share the burden will need to be terminated to preserve employment for those who really feel part of our team and care about their coworkers,” one manager wrote.

Alteon said its ER doctors and clinicians in places that are inundated with COVID-19 patients are working longer hours and being paid more. “We are doing all we can to provide the support to the people who are on the front lines of this fight right now and ensure we have resources for those who may be called on to do even more when surges come to their areas in the future,” the company said in a statement to ProPublica.

In an earlier statement posted on Alteon’s website, CEO Steve Holtzclaw said ProPublica’s earlier article “mischaracterized” Alteon’s actions, saying, “We have not cut clinical rates for providers in the field.” In fact, ProPublica reported that Alteon wasn’t cutting rates but was cutting hours, and fewer hours at the same rate amounts to lower earnings.

“It was worded in a way to make it sound like we weren’t affected by this, but by cutting our hours we are,” said an ER clinician who works for Alteon and has had hours reduced in a hospital with coronavirus patients. (The clinician, like others interviewed by ProPublica, spoke on the condition of anonymity because company policy prohibits their speaking publicly.) “When they’re saying clinician pay is not affected, it certainly is. That was a straight lie.”

The clinician added: “Health care workers are being applauded in the streets, and we are being stepped on by them.”

TeamHealth initially told ProPublica that it was “not instituting any reduction in pay or benefits.” However, the company is in fact paying some clinicians less in the form of reducing their hours. The company provided a new statement saying “we are not instituting any reduction in rate of pay or benefits as our emergency physicians face current challenges.”

An ER clinician who works for TeamHealth said, “I probably wouldn’t have complained as this situation is unprecedented, but to see TeamHealth blatantly lying is infuriating.”

TeamHealth said it has reduced hours in some markets but is maintaining staffing above current demand in anticipation of a future surge of COVID-19 patients. While the company is asking anesthesiologists to take furloughs that may be mandatory if there aren’t enough volunteers, TeamHealth said it’s also looking for ways for anesthesiologists to use their skills to help out in emergency rooms or intensive care units. Blackstone declined to comment.

While some ERs in New York are overflowing with coronavirus patients, in many places people are staying home instead of going to the hospital. Studies have repeatedly shown that much of the care provided in the emergency room is for non-life-threatening issues.

“We always try to match our clinician coverage to our patient flow and we have done our best to do the same in this unpredictable time,” Amer Aldeen, US Acute Care Solutions’ chief medical officer, said in a statement. The company has not laid off, furloughed, reduced pay rates or cut benefits for any employees, Aldeen said.

Two clinicians working for Envision Healthcare said they were experiencing reduced hours. The company and its owner KKR did not respond to repeated requests for comment.

At SCP, salaries for nurse practitioners and physician’s assistants will decrease in line with reduced hours, the company said in a memo on Thursday. Employees who don’t accept the change will be terminated, the memo said.

“We know that this time is also difficult and uncertain for each of you, and we want all employees to be able to focus on getting through this time with as little worry as possible about their pay and benefits while avoiding unnecessary exposure to COVID-19,” SCP executives said in the memo. “SCP Health is using its reasonable best efforts to retain all team members at this time in light of this unforeseeable pandemic.”

SCP spokeswoman Maura Nelson said the company is dealing with a 30% drop in patients nationwide while the patients its providers are treating are more seriously ill. “We are calibrating our clinical coverage accordingly, so that we can address more flexibly the needs of our client hospitals,” Nelson said. “This was a necessary adjustment as we weather this crisis, together.”

Hickey of the Virginia physicians group called on staffing companies to take advantage of relief in the recent stimulus packages such as the Paycheck Protection Program and Medicare Accelerated and Advance Payment Program. But Alteon said it had already taken into account those relief measures before cutting compensation and benefits. “We have factored these actions into our plan,” Holtzclaw said in his message to employees on Monday.

The pandemic’s strain on the economics of the health care industry is not limited to private-equity-backed staffing companies. Hospital operators are also announcing layoffs and pay cuts. Dallas-based Tenet Healthcare said it would furlough 500 staff members and borrow money.

“We have this crisis going on where hospitals need as many people as possible, and at the same time hospitals have to cut their budgets,” said Brandon Jones, a nurse anesthetist and part-owner of a practice group called Greater Anesthesia Solutions in the Phoenix area. “Doctors are being sidelined or they’re being let go completely.”

While Jones’ colleagues are out of work for elective surgeries, he said they’re redeploying their skills to help treat COVID-19 patients — in particular by intubating them for breathing machines, which puts providers at a high risk to catch the virus. They’re wearing hazmat suits donated by a nearby nuclear power plant, Jones said, and they’re helping out even when they can’t bill for it or stand to make much less than normal.

“We’re going to do it because it’s right,” he said.

Maryam Jameel contributed reporting.


A Major Medical Staffing Company Just Slashed Benefits for Doctors and Nurses Fighting Coronavirus

31 Mar

by Isaac Arnsdorf

ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published.

Emergency room doctors and nurses many of whom are dealing with an onslaught of coronavirus patients and shortages of protective equipment — are now finding out that their compensation is getting cut.

Most ER providers in the U.S. work for staffing companies that have contracts with hospitals. Those staffing companies are losing revenue as hospitals postpone elective procedures and non-coronavirus patients avoid emergency rooms. Health insurers are processing claims more slowly as they adapt to a remote workforce.

“Despite the risks our providers are facing, and the great work being done by our teams, the economic challenges brought forth by COVID-19 have not spared our industry,” Steve Holtzclaw, the CEO of Alteon Health, one of the largest staffing companies, wrote in a memo to employees on Monday.

The memo announced that the company would be reducing hours for clinicians, cutting pay for administrative employees by 20%, and suspending 401(k) matches, bonuses and paid time off. Holtzclaw indicated that the measures were temporary but didn’t know how long they would last.

“It’s completely demoralizing,” said an Alteon clinician who spoke on the condition of anonymity. “At this time, of all times, we’re putting ourselves at risk but also putting our families at risk.”

Some co-workers are already taking on extra burdens such as living apart from their families to avoid the risk of infecting them, the clinician said. “A lot of sacrifices are being made on the front line that the administration is not seeing because they’re not stepping foot in a hospital,” she said. “I’ve completely lost trust with this company.”

Other employers will soon follow suit, Holtzclaw said, citing conversations with his counterparts across the industry. “You can be assured that similar measures are being contemplated within these organizations and will likely be implemented in the coming weeks,” he wrote.

However, another major staffing company for emergency rooms, TeamHealth, said its employees would not be affected. “We are not instituting any reduction in pay or benefits,” TeamHealth said in a statement to ProPublica. “This is despite incurring significant cost for staffing in anticipation of surging volumes, costs related to quarantined and sick physicians, and costs for PPE as we work hard to protect our clinicians from the virus.”

Alteon and its private-equity backer, Frazier Healthcare Partners, didn’t immediately respond to requests for comment.

Private equity investors have increasingly acquired doctors’ practices in recent years, according to a study published in February in JAMA. TeamHealth was bought by Blackstone Group in 2016; another top staffing firm, Envision Healthcare, is owned by KKR. (The staffing companies have also been implicated in the controversy over “surprise billing.”)

Hospital operators have also announced cuts. Tenet Healthcare, a Dallas-based publicly traded company that runs 65 hospitals, said it would postpone 401(k) matches and tighten spending on contractors and vendors. Emergency room doctors at Boston’s Beth Israel Deaconess Medical Center have been told some of their accrued pay is being held back, according to The Boston Globe. More than 1,100 staffers at Atrius Health in Massachusetts are facing reduced paychecks or unpaid furloughs, and raises for medical staff at South Shore Health, another health system in Massachusetts, are being delayed. Several other hospitals have also announced furloughs.

“We all feel pretty crestfallen,” another ER doctor employed by Alteon said in a text message. “I did expect support from our administrators, and this certainly doesn’t feel like that.”

At Alteon, Holtzclaw wrote that the measures were necessary despite relief available from the $2 trillion stimulus that Congress passed last week. Those provisions include deferring payroll taxes, suspending reimbursement cuts and receiving advance Medicare payments.

Alteon’s pay cut doesn’t affect hourly rates for clinicians, but some of the people characterized as administrative employees are practicing doctors such as medical directors, according to one who spoke on the condition of anonymity. In his case, he said the cut amounts to about $20,000 a year.

“Every day I’m in county and federal emergency meetings. This is besides seeing patients. I’m doing more hands-on work right now than ever before,” he said. “I’m getting calls 24/7 from the hospital administration, the county management team. I have not had a day off in over two weeks. And I’m working all this for 20% less.”

The medical director said he understood the company has to cope with lost income, but he wished the leadership had let employees choose among a range of sacrifices that would best suit their individual circumstances.

“This decision is being made not by physicians but by people who are not on the front lines, who do not have to worry about whether I’m infecting my family or myself,” he said. “If a company cannot support physicians during the toughest times, to me there’s a significant question of integrity.”

Claire Perlman and Maryam Jameel contributed reporting.