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Laws prohibiting the corporate practice of medicine are on the books in most states, but their record of enforcement is wildly mixed.
The American Medical Association has been considering a resolution to seek a federal ban on the corporate practice of medicine at its interim House of Delegates meeting that concludes on Tuesday.
The resolution, submitted by Florida emergency physician Vicki Norton, who helped compile a 70-page white paper on corporate medicine statutes recently released by the grassroots physician group Take Medicine Back, was almost shelved entirely after it mysteriously landed on a list of resolutions “not for consideration” at the meeting Saturday morning. But a physician unaffiliated with the reformers appealed the decision on behalf of an AMA subcommittee with a brief but passionate speech on the urgency of reversing the profession’s annexation by Wall Street investment firms:
“We are being picked clean by private equity,” the physician, New Jersey radiologist Christopher Gribbin, said. “There are people who don’t know where their next paycheck is even going to come from because their groups have been flipped so often … [This resolution] is protecting both physicians and patients, it is preserving physician autonomy and preventing burnout. Seventy-four percent of physicians [are] employed; just four years ago it was 50 percent. Private equity has spent $1 trillion in the last decade on acquisitions in buying medical practices. We need to have something to talk about with respect to private equity at this meeting.”
The fate of the resolution will be decided at a meeting either this evening or tomorrow. Until last weekend, the likeliest scenario was that the resolution would be referred to a committee or the AMA staff for further study. But as Dr. Norton and other opponents of corporate medicine conferred with their fellow delegates over the weekend, physicians say, they were pleasantly surprised by the emphatic support they encountered from heretofore complete strangers like Dr. Gribbin. Also, physicians thus far who have spoken out in opposition to passing the resolution have mainly voiced support for the idea of banning corporate medicine, and have opposed the resolution on procedural grounds: namely, that the corporate practice of medicine (CPOM), like most issues involving professional licensing, has traditionally been governed at a state level.
But earlier this afternoon, three health law scholars who have studied the issue issued a statement advising delegates that “there is ample authority and precedent for the federal government to regulate the issues of corporate ownership and control of medical practices in concert with state policy efforts,” and encouraging physicians to consider the resolution on its substantive merits.
The American Medical Association has a notorious history of aiding and abetting corporations, from insurance behemoths to Big Tobacco to opioid pushers, at the expense of patients. During the height of its power from the 1920s to the mid-1960s, the institution was devoted monomaniacally to defeating “socialized medicine,” a catchall term that comprised everything from federally funded rural prenatal care clinics to mass vaccination drives to the enactment of Medicare and Medicaid. The AMA’s influence, however, has been in decline since the 1970s. Today, just 11 percent of licensed physicians are members—and those members are, as The New Yorker recently detailed in a feature about an unlikely campaign by young physicians and medical students to convince the association to endorse a single-payer system, much more left-leaning than they once were. One barometer of the group’s erosion in lobbying muscle is the fact that Medicare reimbursement rates have fallen in inflation-adjusted terms 21 percent since 2001, even as health care expenditures have nearly doubled over the same period.
For opponents of financialization in health care, the AMA’s waning clout presents something of an opportunity: Behind the scenes, doctors are making the case that bolstering existing doctrines that prohibit the corporate “intrusion” into the medical profession would give the dying AMA the opportunity to prove its relevance.
LAWS PROHIBITING THE CORPORATE PRACTICE OF MEDICINE are on the books in most states, but their record of enforcement is wildly mixed. For the most part, state medical societies passed CPOM bans in the 1920s and 1930s, ostensibly to crack down on the widespread practice whereby railroad and mine bosses employed “company doctors” to conduct rudimentary health screenings of employees and treat workplace accidents, docking the costs of those services from workers’ paychecks.
A devastating 1947 report on health care standards across American coal mining regions produced by the Department of the Interior vividly illustrated the perversities of the company doctor system CPOM bans were designed to mitigate. Especially in the more remote mine camps of Appalachia, company doctors were almost universally loyal exclusively to the mine bosses who granted them contracts, contemptuous of working-class patients, and grossly negligent in treating workplace injuries and maladies like black lung. They were also nearly all active and well represented in county and state medical societies, to which the AMA slavishly deferred to police these conflicts. During the 1950s, those medical societies shamelessly conspired to undermine the formidable efforts of the United Mine Workers of America to build modern hospitals in Appalachian mining regions and recruit conscientious physicians to work in them. (Richard Carter’s bestselling 1958 exposé of the AMA, The Doctor Business, depicts these efforts in infuriating detail.) CPOM bans were one of the tools they used to blackball those efforts, arguing that the UMWA was a “corporation” whose direct employment of the miners’ physicians constituted a problematic “intrusion” on the physician-patient relationship.
The antitrust establishment appears to be revising a long-held conviction that CPOM laws are anti-competitive.
Both antitrust authorities and public health policy experts have until recently looked upon CPOM restrictions as protectionist restraints of trade. In 1938, the Federal Trade Commission successfully sued the AMA, its longtime chief Morris Fishbein, and a slew of other powerful accomplices for exploiting CPOM policy to sabotage a small health care cooperative that treated lower-income government employees in Washington, in violation of the Sherman Act. When health care costs began exploding following the 1965 passage of Medicare, experts converged around the idea of health maintenance organizations, of the sort the AMA had repeatedly smeared as “socialist,” as a potential solution to the crisis, and wrote into the 1973 HMO Act provisions that enabled licensed HMOs to override state CPOM restrictions.
But in recent years, some of the same health care policy experts who dismissed CPOM laws as barriers to vital innovation have revised their views. Most prominently, earlier this year Wake Forest University law professor Mark A. Hall, who wrote an influential law review article in 1988 arguing that CPOM policies constituted a “puzzling doctrine” that was “clouded with confused reasoning” and “founded on an astounding series of logical fallacies,” published a mea culpa of sorts for a Harvard corporate governance symposium crediting the proliferation of private equity and financialization throughout health care for prompting a change of heart. Hall is now one of the three legal scholars backing Dr. Norton’s resolution, along with Erin Fuse Brown and Hayden Rooke-Ley, two co-authors of a recent New England Journal of Medicine exploration of CPOM laws who are currently working with the National Academy for State Health Policy to draft model legislation strengthening the statutes to combat the loopholes private equity firms have typically used to feign compliance.
Rooke-Ley, a lawyer who has provided guidance to state legislators considering updating their statutes, says that skeptics of CPOM reform have well-founded fears about the protectionist history of the doctrine and the ability of corporations to contract around it by using “straw doctors.” But if drafted correctly, he believes that these laws could be repurposed to channel the public mission of the medical profession and to address the rapid corporatization of medicine—which began with hospitals and is now being accelerated, “at warp speed,” by insurance companies, national retailers and private equity.
The antitrust establishment, too, appears to be revising a long-held conviction that CPOM laws are anti-competitive. Just over a decade ago, the North Carolina Board of Dental Examiners tried to strengthen its Corporate Practice of Dentistry regulations amid a flurry of investigations into and regulator shutdowns of private equity–owned dental clinics. The proposed law passed the state Senate 46-2, but was shelved after private equity firms like Leonard Green & Partners pumped more than $1 million into an unprecedented lobbying blitz of the state House. Notably, Leonard Green had no apparent dental investments at the time, but it had a massive portfolio of medical ones, including stakes in a physician staffing firm; the hospital chain and Medicaid HMO Prospect Medical Holdings; and specialty rollups in dermatology, anesthesiology, psychiatry, wound care, and dialysis.
The private equity firms successfully got the bill shelved thanks to an unusual assist from the Barack Obama’s FTC, which sent a 13-page letter to Stephen LaRoque, then co-chair of the state legislature’s rules committee, warning the proposed bill would “deny consumers of dental services the benefits of competition spurred by the efficiencies that [corporate-owned dental clinics] can offer.” (LaRoque was indicted on corruption charges two months later and pled guilty to one count, serving nearly two years in prison.) As recently as 2021, an influential American Antitrust Institute white paper on private equity investment in health care dismissed CPOM laws as having a “mixed, at best” impact on competition, observing that “it does not appear that these laws are particularly effective.”
But Mitch Li, a North Carolina emergency physician who founded the advocacy organization Take Medicine Back in 2020 to organize doctors to fight private equity’s influence on medical care, says he believes the FTC is revising its stance. At a panel last month, FTC commissioner Alvaro Bedoya said the agency was concerned that the widespread flouting of state CPOM bans—whether in letter or “spirit”—had spawned its own anti-competitive outcomes. “Increasingly you have doctors saying, ‘I feel like a cog in a machine;’ ‘I feel like there's someone...giving me advice on medical decisions who may not be qualified,’ ‘I don't control my hours,’ ‘I don't see the upside if the business does well...And that to me jumps out as in itself significant,’” Bedoya said, in terms of assessing “the quality of options in the labor market.” Last year, after the agency invited members of the public to comment on their personal experiences with mergers and acquisitions, Li helped organize physicians to flood the commission’s docket with letters about how their jobs and patient relationships had changed after their practices had been acquired by private equity vehicles.
Li has since organized groups of physicians to speak with agency officials on multiple occasions, and says TMB-allied doctors were elated earlier this fall when the agency sued Welsh, Carson, Anderson & Stowe, the godfather of medical specialty rollups, for conspiring to corner the market for hospital anesthesiology services in Texas. Last week, Li and a delegation of physicians met with Rep. Lou Correa (D-CA), the ranking member of the House Antitrust Subcommittee, to discuss the ways corporatization had caused unprecedented levels of physician burnout and turnover. The congressman was highly sympathetic, Li said: Correa’s wife Esther is an ob/gyn with Kaiser Permanente, where understaffing has begotten widespread burnout in California. The group also met with Sens. Elizabeth Warren (D-MA), Josh Hawley (R-MO), J.D. Vance (R-OH), and Gary Peters (D-MI).
