Physicians and investors skirmish over control

Some states have laws that prohibit medical practices from being owned by corporations that are not themselves owned by licensed doctors. Kaiser Health News reported on a controversy where some private equity groups (not owned by licensed doctors) effectively own medical practices or staffing groups through the use of physicians who technically own such groups, but who have no direct control. Other physicians (or groups of physicians) have sued to stop that practice.

A shallow analysis of the situation might suggest that preventing non-medical corporate owners of physician practices would be a good thing. After all, non-medical corporate owners of physician practices might unduly pressure medical staff to hurry patient visits or to overbill. Physicians who are replaceable employees might feel enormous pressure to comply and perhaps compromise quality of care. The theory is that physicians are professionals and if they owned the corporations that owned the practices, they would not let the financial picture distort medical care.

Thinking about this situation further, however, reveals a naivety with the shallow analysis: physicians are corruptible people too. Some physicians have overbilled and some physicians have been found to have committed malpractice. Perhaps even that there are enough physicians to participate in these ownership schemes without direct control suggests that full compliance with the spirit of the legislation could still lead to other loopholes being exploited. Interestingly, the Texas Medical Board declined to intervene against doctors who were accused of participating in these schemes.

There might not be an easy answer for what the policy here should be. Restricting ownership to licensed doctors seems like it would be an inadequate measure. Ideally, there would be some way for employee doctors to voice complaints about interference with medical care, and it would be easy for doctors to change employers. The consolidation of the medical industry can make both of those conditions more difficult to realize.