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Doctors weigh in on bill to curb private equity in health care

Some doctors support bill, while others oppose; former governor says opponents speak for big business
Ben Bowman
State Rep. Ben Bowman, D-Tigard, and former Gov. John Kitzhaber testified in favor a bill limiting private equity and other business interests involvement in health care during a February 26, 2024 hearing of the Oregon Senate Health Committee. | JAKE THOMAS/THE LUND REPORT
February 27, 2024

On Monday some Oregon doctors told lawmakers that a bill seeking to restrict private investors’ role in health care on Monday will saddle them with administrative burdens. 

But a former governor and a lawmaker defended the need for the bill, accusing the opponents of ties with out-of-state companies.

The Senate Health Care Committee decided 3-2 on a party-line vote Monday to advance House Bill 4130 following a sometimes testy hearing over one of the most far-reaching health care bills of the session. 

Concerns that deep-pocketed corporations are putting investors before patients helped the bill overwhelmingly pass the Oregon House with bipartisan support earlier this month, after a mostly supportive hearing

Written testimony on the bill has been overwhelmingly in favor of the measure. However, most of the people attending the hearing in Salem appeared eager to testify against it. Those that did argued that concerns over corporate influence in medicine are overblown and the bill could dump medical practices with administrative burdens they currently outsource. 

Dr. Scott Rushing, a radiation oncologist at one of Compass Oncology’s four offices in the Portland area, told lawmakers the bill would disrupt his clinic’s relationship with The US Oncology Network, a management service organization that handles business-related chores.

“They have never gotten in my business of taking care of my patients,” he said. “They are not practicing corporate medicine. They don’t tell me how many patients to see a week. They don't tell him what drugs I can give.”

Former Gov. John Kitzhaber, a backer of the bill and prominent health care reformer, told lawmakers that Compass is “in a sense, a hostage” of US Oncology, which he said employs its staff and buys their drugs in addition to owning their building and equipment.

US Oncology is owned by pharmaceutical distribution giant McKesson, which in turn is part-owned by global investment companies BlackRock and the Vanguard Group, Kitzhaber noted.n. 

“Now, where do you suppose an Oregonian seeking low-cost, quality care is going to fall in this financial hierarchy that’s driven by the mandate to maximize shareholder value?” he said.

State Sen. Daniel Bonham, a Republican from The Dalles and member of the committee, complained that the bill was being rushed with only one hearing when so many people had taken the day off work and drove sometimes hours to have their voices heard. 

Forty-seven people registered to testify on the bill, including about a dozen from out of state. 

But State Sen. Deb Patterson, a Salem Democrat who chairs the committee, cut off testimony after about 40 minutes, saying the committee lacked time. In all seven people testified, including lawmakers and current and former physicians.

State Sen. Chris Gorsek, a Gresham Democrat and member of the committee, said he didn’t like that not everyone who signed up to testify was able to speak. He said he would vote to advance the bill, but he would have to give more thought to how he would vote when it came to the Senate floor. 

Patterson said she agreed the process had been rushed and she wished the committee had more time but noted the Legislature faces upcoming deadlines as the March 10 adjournment approaches. She pointed out that the committee postponed two hearings scheduled on different legislation so it could spend more time on the bill. 

Roughly 250 people submitted written testimony on the bill Monday, the vast majority of them in support. 

“I have read through all the testimony,” she said. “I urge you all to do so as well before we vote on the floor. But given the timeline, we do need to take action on this bill.”

Local doctors, large corporations

Sponsored by state Rep. Ben Bowman, D-Tigard, the legislation comes as private equity investors and other companies like health care giant UnitedHealth Group have rapidly purchased medical practices and are seeking to expand in Oregon

Backers of the bill cite research indicating that patient care declines when business interests, not doctors, are in charge of medical practices and that private equity’s expansion threatens Oregonians health care. 

The bill would require licensed physicians to have majority control of professional corporations set up to practice medicine. It would also restrict the role of management service organizations, which critics say are used by corporations to control medical practices. Management service organizations would be banned from owning shares in a medical practice, setting the employment terms of a physician or influencing clinical decisions.

Much of the testimony submitted online against the bill was from physicians who said management service organizations helped greatly with the business side of their practices and that they didn’t interfere in medical care. 

In written testimony, Dr. William Delgado, of the Bend Dermatology Clinic, told lawmakers that a management service organization helped his practice expand into rural areas.

“HB 4130 would have severe and negative consequences on many independent physician practices around the state,” he wrote. “Any physician who enters into an administrative services agreement would face the risk of losing their physician practice through administrative dissolution, while the private equity firms and MSOs this bill supposedly targets would face no legal consequences.”

Kitzhaber said that Bend Dermatology Clinic’s management service organization is Tennessee-based United Derm Partners, which is owned by venture capital company Frazier Healthcare Partners. Kitzhaber suggested that management service organizations were trying to create the appearance of a “groundswell of opposition” to the bill by goading doctors into submitting testimony. 

“I think what the MSOs are doing is lighting up the doctors under their management,” he said. “I don't think these are the voices of Oregon.”

Delgado did not immediately respond to an email seeking comment from The Lund Report. 

Patterson said her staff determined every single medical practice opposing the bill was associated with a venture capital or private equity firm. 

Bonham said it was unfair of Kitzhaber to question the motives of physicians opposing the bill. He said he hadn’t been “heavily lobbied by large multinational corporations.” Instead, he said most of the input he has heard on the bill has been one-sided and critical of private equity and corporate investments in healthcare. 

“I’ve not heard from a large corporation saying, ‘Hey, we need to keep this,’” he said. “But I've heard from local providers that say, ‘Part of my exit strategy is to use this vehicle to retire and to sell to this type of entity. And you want to take that away from me.’”

He also said that there are situations where capital investments from large companies help medical providers do a better job of caring for patients. 

Both Bonham and state Sen. Cedric Hayden, R-Fall Creek, said passing such a consequential bill in the short session felt rushed considering its main provisions wouldn’t go into effect for seven years.

State Rep. Ben Bowman, a Tigard Democrat spearheading the legislation, responded that the bill was written to give companies and providers time to make changes. He said the landscape is changing rapidly, citing figures showing there has been a 100,000% increase in private investment in primary care from $15 million to about $16 billion in the last decade. 

“This bill prevents things from getting worse between now and then,” he said. 

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


Submitted by David Coogan on Wed, 02/28/2024 - 23:47 Permalink

The former governor has an agenda here to have a bill that is devastating to smaller medical practices rushed through the system to become law.  Kitzhaber ended his career as a physician in 1989, a whole world away from what a physician has to endure today, where the administrative components of the profession have increased tenfold, along with the scrutiny that doctors undergo.  His defense of the bill by attempting to undermine any physician who opposes it, as just being dangled like a puppet under pressure from the corporate monsters, is ludicrous.  The reality of today’s healthcare practice is that 40% of your time as a physician can now be taken up doing administrative tasks, which pulls the doctor away from the number of patients they can help, so by partnering with a management company to handle much of the administrative tasks, frees up the doctor to see and treat more patients.  The layman doesn’t understand this, and possibly the former Governor doesn’t either, since he is so far removed from what is required of the current physician on a day to day basis.  The result of this law will devastate the independent practitioners and smaller groups, rendering them unable to survive in today’s environment of increasing costs and reduced reimbursements.  Ask yourself this, how many new physicians will want to come to Oregon to practice if they know they will have to work three times as hard as if they started a practice in another state, just to keep the doors open.  And then, after they’ve worked so hard to build up a practice of value, that upon their retirement they can’t even sell their practice to finally earn the payoff that they worked for years to achieve.  There won’t be many willing to come.  The future of healthcare in Oregon looks bleak.