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Bill to curb private equity in health care draws heavyweight backing

Top health care reformers including former Gov. John Kitzhaber back legislation, but telemedicine provider says it will deter investment
Flanked by former Oregon Health Authority Director Bruce Goldberg and former Gov. John Kitzhaber, Rep. Ben Bowman on Wednesday addressed members of the House Committee on Behavioral Health and Health Care. | JAKE THOMAS/THE LUND REPORT
February 7, 2024

Oregon could be poised to protect patients from out-of-state corporations that put profits over care — or drive out future investments in the state’s health care infrastructure. 

These opposing views were on display during a hearing Wednesday on a bill intended to stop what critics call the “corporatization of medicine” in Oregon by keeping physicians in control of companies that provide health care. House Bill 4130 seeks to shield Oregon from the rapid expansion of private equity and other large corporations into health care. 

State Rep. Ben Bowman, D-Tigard, said he sponsored the bill to close legal loopholes that have allowed large corporations, such as Optum Health and others, to skirt Oregon’s requirement that licensed doctors be in charge of medical offices. He told members of the Oregon House Behavioral Health and Health Care Committee that his bill comes down to who will be in charge of Oregonians’ health care. 

Backers of the bill told the committee that while private equity and large corporations’ presence in the state is unclear, Oregon’s unique health care system could be at risk if lawmakers don’t act now. One of those backers is former Gov. John Kitzhaber. 

“If we don’t move this bill forward, we will in effect be deciding by not deciding,” Kitzhaber told the committee.

He added, “We will be deciding that it’s okay for resources to flow out of our community and into the coffers of distant enormous publicly traded corporations. And most seriously, we will be deciding that the health of Oregonians is just another economic commodity to be bought and sold on the stock exchange.”

The bill drew a handful of opponents who said that it goes too far and would deter investment in the state’s health care system. 

“This bill is implementing wholly untested mandates that will provide investors no safeguards for their investment in medical practice,” Kyle Zebley, vice president of the American Telemedicine Association. 

Established voices support the bill

A study based on 2019 data indicated private equity hadn’t at that point gained a foothold in Oregon compared to other states. But lots has changed since then, and Kitzhaber, who gained national prominence as a health care reformer, noted that  large corporations are increasingly buying local practices in Oregon. 

Two years ago, Amazon paid $3.9 billion to purchase the primary care provider One Medical that has five offices in Oregon. Optum, a subsidiary of United Healthcare, purchased Oregon Medical Group in Eugene and GreenField Health in Portland. Currently the company is trying to purchase the Corvallis Clinic, an independent 11-clinic physician-owned system in the mid-Willamette Valley. The move has sparked opposition locally and by Oregon House Speaker Dan Rayfield

Kitzhaber pointed out that United HealthCare saw $20 million in profit, which he said amounts to 80% of Oregon’s two-year general fund budget. 

“When it comes to health care, Oregon is a pretty unique state,” Dr. Bruce Goldberg, a former long-time director of the Oregon Health Authority, told the committee. “Colleagues from around the country often ask why Oregon has such an enviable record of health reforms, and why we have a really strong healthcare system? And the answer is simple: The vast majority of our healthcare interests are local, and they’re nonprofit.”

Goldberg framed a hypothetical scenario in which outside investors buy a string of rural clinics, promising better efficiency — only to close those not making enough profit, leaving communities without access. 

Felisa Hagins, executive director of the SEIU Oregon State Council, told the committee that health care is best delivered by workers with stable wages and benefits, including some of the union’s 85,000 members. 

She said that takes long-term investments, an approach that’s at odds with profit-oriented private equity. Hagins also pointed to a recent study led by researchers at Harvard Medical School indicating patients at hospitals owned by private equity were at greater risk of falls or infections. 

Bowman said the bill doesn’t completely banish private equity from health care in Oregon. He said that private companies can own up to 49% of a physician practice but the rest has to be owned by doctors. 

The bill also targets management service organizations, companies that handle billing, scheduling and human resources for medical practices. These companies have been criticized for being used as a backdoor to take control of medical practices. The bill limits the control these companies can have on practices. 

Hospitals, health systems, long-term care facilities, including skilled nursing facilities and behavioral health services will be exempt, Bowman said. 

The bill specifies that no enforcement action will be taken for seven years to give companies time to conform to it. 

“I think that’s a very generous amount of time to come into compliance with the bill,” said Bowman. 

Maureen McGee, a lobbyist for private equity owned Rayus Radiology, told the committee that the bill would limit “the potential for innovation and progressive management strategies” that would end up driving up costs for consumers. 

Zebley, of the American Telemedicine Association, said that despite working with Bowman on the bill, his group opposes it “because it will result in significant unintended consequences such as reduced access to care, less innovation and less choice for Oregon patients and providers.” 

Zebley said that his group’s members offer mental health, substance use disorder treatment, gender affirming care, women's health, sexual health and reproductive health to low-income and stigmatized populations at convenient hours. Had this bill been in place earlier, he argued, telemedicine companies wouldn’t have set up shop in Oregon because of the uncertainty it would create with investors. 

Jessica Rigsby, vice president of telemedicine addictions treatment provider Ophelia, took particular issues with how the bill limits the role of management service organizations, adding that her company doesn't have a presence in Oregon. The bill would require companies’ operations and contracts in Oregon to be so different from other states it would no longer be a viable place to do business, she said. 

Bowman said that he’s working on an amendment to the bill that would exempt telemedicine from his bill’s requirements. 

State Rep. Rob Nosse, a Portland Democrat who chairs the committee, shot back at concerns by telemedicine companies. He said lawmakers have previously passed bills to make telemedicine viable in the state. 

“If you’re so afraid of this bill, why do I want you to come and invest in my state?” he said. “I mean, we have other people and other entities that would come and make investments.”

 You can reach Jake Thomas at [email protected] or via X @jakethomas2009.


Submitted by Megan Robinson on Sat, 02/10/2024 - 10:11 Permalink

Respectfully disagree with the choice to refer to the proposal as a bill to "curb private equity in healthcare" in the headline. That seems misleading to me, regardless of what the sponsors claim their intentions were. 

The actual language of the bill significantly restricts the ownership structures medical practices are allowed to use. The fact that there is a window for businesses to "come into compliance" is an admission that this law would force some companies to either change their structure or leave. Regulations around "local control" tend to function like protective tariffs for businesses that currently dominate a market, by weakening competitors and preventing future ones.  

Submitted by Judith Bays on Sat, 02/17/2024 - 18:37 Permalink

Healthcare professionals are struggling and leaving the profession they love. This is because corporations have taken over healthcare, including pharmacies, labs, and specialty clinics. And one place they can squeeze out more profits is by loading doctors and nurses with patients (= quotas). 

Healthcare professionals care about the health of their patients and you cannot connect with your patients and give good care when you have ten minutes to see a person who has a long list of medical problems. So-called non-profits pay their CEO's 1.5 million a year or (much) more, plus bonuses, for a 40 hour work week, and Board members $30,000 a year for 4 hours of work a week.  

We need to provide good healthcare, including vision and dental care, for all of our citizens (as European countries have all been doing since WW 2.) Otherwise the promise of "life, liberty and the pursuit of happiness" is an empty promise.  (I'm a physician.)