In Brief:
- The majority of physicians now work for practices owned by corporations.
- This has brought new attention to long-standing concerns that financial priorities take precedence in decisions about care.
- A new law in Oregon preserves physician autonomy in clinics and hospitals they don't own, potentially providing a model for other states to consider.
Oregon has crafted a new law meant to ensure physicians working in practices owned by corporations retain control of decisions about treatment. After the bill passed with strong bipartisan support, Democratic Gov. Tina Kotek signed it on June 9.
The number of physicians working in practices that are not physician-owned has increased significantly in the years since the start of the pandemic. Nearly 6 in 10 medical practices are now owned by corporations. Research commissioned by the Physicians Advocacy Institute found that almost 4 out of 5 physicians now work for health systems and other corporate entities.
This has added heat to long-standing concerns that corporate owners can overrule decisions by doctors about such matters as diagnostic tests, treatment plans or length of appointments to cut costs.
The ethical dilemma was summed up in a 1983 book published by the Institute of Medicine: "Physicians and other health care professionals are expected to act primarily or exclusively for the welfare of the patient, whereas it is perfectly acceptable for an ordinary business person to pursue self-interest even at the expense of the welfare of others.”
States are struggling with the right response to this emerging trend, says Oregon House Majority Leader Ben Bowman, who sponsored SB 951. “We're the first people to confront the fact that private equity firms and corporations are controlling physician behavior in this country,” he says.
Corporate ownership can also mean practices accept fewer Medicaid patients, Bowman says, because the payments and therefore profit margins are smaller.
Physicians' Decisions
A 2024 survey by the American Medical Association asked physicians about their motivations for selling private practices. The biggest reasons included negotiating better payment rates, access to expensive resources and administrative help.
But, as became evident in Oregon, what they don’t want is for corporate owners to tell them how to do their jobs.
More than 30 states have regulations regarding the “corporate practice of medicine,” intended to ensure that only licensed professionals provide medical services — and that doctors and patients aren’t caught in conflicts between financial and medical priorities.
These laws aren’t the same in every state. Lawyers who advise on compliance have found that even when laws do exist, the amount of attention paid to enforcement varies.
Losing Care in Eugene
Corporate management of physicians became a public controversy in Oregon when Optum, one of the nation’s largest health services companies, purchased a physician-owned medical group in Eugene. Physicians complained that support staff were being let go, their pay was being cut and their patient loads increased, undermining their ability to provide adequate care.
Doctors began to leave in protest, but noncompete agreements meant they couldn’t see patients in a community where some had practiced for decades. Thousands of residents lost access to their doctors.
At a citywide health-care forum in Eugene held after the physician exodus from Optum, its Oregon medical director, Philip Cap, remarked that the “experiment of physician-directed health care” didn’t work. “We have to try a new way,” he said.
Corporations do have a role, says state Rep. Cyrus Javadi, a Republican who co-sponsored SB 951, but that role is in providing support, not in dictating care. The new law is intended to restore physician control over questions ranging from diagnostic tests and treatment plans to the length of appointments. It also reins in noncompete restrictions.
Javadi echoes this sentiment. “We’re not banning investment, we’re banning interference.”
Arguments Pro and Con
Robert Frolichstein, president of the American Academy of Emergency Medicine, testified during hearings on SB 951 that the bill was particularly important for emergency medicine practitioners. “In emergency medicine, the need for these controls is heightened as we encounter vulnerable patients who may not have adequate health-care coverage,” he said.
Ellie Booth, a public policy manager for One Medical, a health-care management services organization owned by Amazon, countered that the bill would result in higher costs to patients, increase administrative burdens and have a negative impact on patient-centered decision-making.
(AMA)
The law isn’t meant to discourage investment, Bowman says. “We were intentional about designing a solution that preserves the ability of clinicians to accept outside financial support to fund innovation, expansion or other things,” he says. “What we are regulating is the ‘how’ of the clinic, the decision-making within the clinical setting.”
