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Opinion: Oregon should battle the hostile takeover of its health care system

Legislation would curb the trend in which private equity investors, insurance conglomerates and retail chains are swallowing clinics and transferring power away from patients and their doctors, writes former Gov. John Kitzhaber
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SHUTTERSTOCK
February 20, 2024

The late western novelist, Edward Abbey, once observed that, “Growth for the sake of growth is the ideology of the cancer cell.” This also seems to be the philosophy of the corporate raiders seeking to enrich themselves at the expense of the health of Oregonians. The hostile takeover of health care in Oregon is well under way, with Corporate America trying to get between patients and their doctors by directly acquiring medical practices and controlling clinical care. Certainly, corporate ownership of physicians is nothing new. For decades, hospital systems have been buying up physician practices, controlling more of the health care system and, in some cases, behaving exactly like expansionist, for-profit entities.

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But now, new players, with no connection to care delivery, have been quietly entering the arena. Private equity investors, insurance company conglomerates and retail chains may now employ your doctor—or they are trying to. These trends represent an alarming acceleration of health care “corporatization”— the transfer of power away from patients and their doctors to Wall Street and other financial investors.

The evidence on these acquisitions is bleak. Patient care declines, premature death increases, and costs go up. Because these acquisitions are concealed behind a maze of shell companies, subsidiaries and paper owners, we don’t know the full extent of the corporate takeover in Oregon. But we know enough to be worried. The accelerating corporate acquisition of medical clinics and other parts of the health care system is like a malignancy, with its metastases spreading across our state. 

  • Private Equity (PE): Recently, Tillamook Dialysis Center, which is owned by PE-backed US Renal Care, announced that it was closing its doors, leaving eleven residents with end-stage renal failure twisting in the wind, without a nearby option for dialysis. The stated reason for the closure: Medicare does not pay enough. Summit Partners, one of the PE owners of the dialysis center, has over $30 billion of assets under management. Another private equity owner, Bain Capital, boasts of a $180-billion portfolio. Do the math.

    In Portland, Providence has been slashing scheduled surgeries since it terminated its contract with the local Oregon Anesthesiology Group and instead contracted with national, PE-backed Sound Physicians. Private equity not only threatens surgery in Portland, and vulnerable dialysis patients on the coast, at least five surgery centers across the state are owned by Envision, which recently went bankrupt after Congress prohibited their practice of “surprise” billing patients. Finally, there is RAYUS radiology, backed by the private equity firm Wellspring Capital Management; it’s an imaging chain that operates in 15 states, including centers all across the Portland metro area.

  • Insurance conglomerates: In 2020, UnitedHealthcare, the largest insurance company in the country, bought the Oregon Medical Group through its subsidiary, Optum. In 2021, Optum bought Greenfield Health in Portland, and is now attempting to purchase the Corvallis Clinic, another independent multi-specialty practice. But it’s not just primary and multi-specialty care. UnitedHealth owns 10 home care and hospice sites across the state, and through its pending acquisition of Amedisys, it is attempting to acquire another 4 facilities.

    Last year, UnitedHealthcare showed a profit of $22 billion—that is 80% of Oregon’s General Fund budget for the current biennium—and a large and growing percent of that profit comes from Optum. These resources are leaving our communities and our state to enrich Wall Street interests at a time when 250,000 Oregonians still lack health insurance coverage. There is something dreadfully wrong with this picture.

  • Retailers: The final corporate investors to descend on Oregon are national retailers—they, too, may now employ your doctor. In 2022, Amazon purchased the primary care provider One Medical for $3.9 billion. One Medical is a form of “concierge medicine” which has clinics in 29 markets, including in Oregon. Furthermore, Walgreens now has a growing presence in the state--not only as a pharmacy. In 2021, Walgreens became the majority owner of VillageMD, a primary care provider. Last year, VillageMD purchased Summit Health for $9 billion, which operates 680 provider locations across the country, including the former Bend Memorial Clinic, here in Oregon.

This is happening at an accelerating pace, with no cogent policy framework to guide what we want our health care system to be in the future. Oregon has a long, proud tradition of shaping our own health care future—from the Oregon Health Plan to Coordinated Care Organizations. These programs were rooted in the belief that Oregon should not passively remain at the mercy of federal inaction–or unregulated corporate interests.

HB 4130, a bipartisan bill now under consideration by the Oregon Legislature seeks to address this problem. It closes the complex loopholes that are being flagrantly exploited by these multi-billion-dollar corporations. The bill will ensure that physicians, not corporations, are in charge of patient care decisions. It will also strengthen physician independence by banning non-competes and regulating gag clauses—and it will finally bring transparency to the opaque labyrinth of clinic ownership.

HB 4130 is not the complete answer, but it is a critical step forward. Certainly, we need to explore and address the reasons why primary care practices are vulnerable to acquisition by private equity in the first place. Meanwhile, the wholesale purchase of Oregon’s health care infrastructure is already well underway—and we need to stop it, or at least slow it down long enough to put in place an intentional policy framework to guide what role, if any, we want private equity to play in Oregon’s health care ecosystem. 

A swarm of well-paid corporate lobbyists have descended on Salem with one intent: to kill HB 4130 in order to protect their profits. They’ve been hired by some of the largest companies in America, like UnitedHealthcare and Amazon, and private equity-backed companies you’ve likely never heard of. None of these would-be corporate overlords went to medical school. None of them took the Hippocratic oath. And none of them care about Oregon.

The policy questions here are unambiguous. Do we, as Oregonians, believe that out-of-state equity investors are better suited to control the practice of medicine in Oregon, then our own local physicians? Do we believe that health care resources should flow from our communities and into the coffers of huge publicly traded corporations? And, most importantly, do we believe that the health of Oregonians is no more than an economic commodity to be bought and sold on the stock market?

I know Oregon and Oregonians—and I know that the vast majority of us would answer NO to all of these questions. It is time to reclaim our health care future, and that starts with passing HB 4130.

John Kitzhaber practiced emergency medicine in Roseburg, Oregon from 1974-1989. He served 14 years in the Oregon legislature, eight as Senate President, before being elected governor in 1994. He is Oregon’s longest-serving governor, holding that office from 1995-2003 and 2011-2015.

Kitzhaber is the author of the Oregon Health Plan and the chief architect of subsequent reforms establishing Coordinated Care Organizations, through which more than 1 million Oregonians receive care. He currently serves on the board of Families USA, and holds the Chair of Health Policy at the Foundation for Medical Excellence. He works as a writer, speaker and private consultant.

Comments

Submitted by David Coogan on Mon, 02/26/2024 - 17:18 Permalink

I sure hope that anyone reading this article can see though the scare tactics behind it.  NONE of these clinics being purchased by the corporate entities are undergoing a hostile takeover.  They are clinics that can no longer survive in the existing healthcare environment, and are either selling, or closing their doors.  This law HB 4130 will only exacerbate the latter, and do nothing more than decimate the healthcare options in Oregon.  Which in my honest opinion, is exactly what the purpose behind this law -  decimate the healthcare options in the state, so the residents are in such dire straits, that they overwhelmingly pass a measure for a state run universal healthcare system, where the state employs and controls the physicians and providers.  Stating that forming this law keeps the physician and patient in control of their healthcare is all smoke and mirrors, because ultimately, the insurance company continues to remain in sole control of whether or not they approve your desired care choices.

Unfortunately for the mid-Willamette valley, The Corvallis Clinic will be the first casualty, eliminating 100 providers in all types of specialties, as well as putting 500-600 people out of a job.  The OHA imposed unimaginable restrictions on the approval of their sale to Optum Health, which would have kept the Clinic open, business as usual.  Instead Optum has declined the restrictions, which included a 10 year mandate on the business not to make any changes to any service line, along with requiring approval by OHA on any business decisions that would be made for a period of 10 years.  A mandate that Optum would have board members from the community sit on the board (of a private company), restrictions on the acceptance of United Healthcare insurance, and the list goes on and on.  There is NO business, even down to the smallest mom and pop shop, that would have accepted purchasing a business that would have any of the restrictions they were given.  The OHA and the legislature know that the result of their actions will be the closure of the Corvallis Clinic, and several others that will follow. 

Submitted by Richard Roseta on Sat, 03/16/2024 - 08:09 Permalink

I agree with Mr. Coogan about these not being hostile takeovers. So what?  For OHA to approve the purchase of providers by health insurers is tantamount to allowing the selling the chicken coop to the foxes.  Cluck, cluck…

Submitted by Richard Roseta on Sat, 03/16/2024 - 17:54 Permalink

The State of Oregon, the OHA, or any other bureaucracy in Oregon that relies on IT of any kind simply falls apart prior to inception.  Please recall the $300 million wasted by them on Obamacare, and all of the other failures that have occurred since. If indeed the takeover of healthcare occurs by OHA, it will be worse than any takeover by Optum, United Health or other private entity.

Submitted by Terry Sedgewick on Wed, 03/20/2024 - 07:36 Permalink

Former Gov. Kitzhaber is correct in asking why physicians are being bought out , personally just retired after 31 years of Orthopedic surgery . Had seen my income go to a  third of what it was over an 8 year period. With electronic medical records and of costs incured to be in private practice, a buy out and decreased hassels to run a practice, looks pretty inviting.

   Always have concerns when goverment wants  to interceed with medical practice, for example Medicare showed improved efficency with private insurance companies modulating patient care, so why not the private sector.     

     So suggest actual talk to physicians before legislating rules on their financial options  to practice in Oregon

 

Submitted by Diana B-W on Thu, 04/04/2024 - 15:35 Permalink

Mr. Rosetta, 

Do tell that to the people who have been unceremoniously dropped without warning from OMG and are being told they cannot be seen. What now?

Submitted by Michael Ralph … on Mon, 04/08/2024 - 06:57 Permalink

The best chance at a decent health care bill came out of when both sides of the issue had to be discussed because there was a tie in the Oregon House. I remember when Mitch Greenlich and Tim Freeman co-chaired the House Health committee and how it went back and forth before a compromise was reached everyone could agree on. My point being, I do not trust a government only run by one party. America and Oregon are a  place where all ideas have a place in the market place, not just one. Oregon is currently dominated by a party that has a lot of ideology that a lot of us do not agree with ala the response to this article. Having had experience with selling out to a large out of state company run by business guys, I have some experience of what that is like. I enjoy spending their money, but I do not like what they have done to the company I used to be affiliated with. With Medicaid limited on profit and overhead to 15% it is hard to get enough profit to satisfy Wall Street's 20-25% profit needs. It seems to me and has been my experience when times get tough busy types double down on money, when times get tough providers double down on patient care.