Oh So Close to Tackling the Corporatization of Medical Care

Oregon went after Big Medicine, and Big Medicine was not happy.

Photo credit: Jimmy Emerson

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33 states in the U.S. have what are known as “corporate practice of medicine” laws, or CPOM laws for short. In theory, these laws are meant to ensure that doctors and other medical professionals ultimately control medical facilities, and therefore the decisions regarding the care those facilities provide.

CPOM laws are motivated by the understanding that corporate control of medical practices would put, as many a protest sign has stated, “profits over patients,” because there is a fundamental conflict between providing needed medical services and corporate profit motives. As the physician-led advocacy organization Take Back Medicine put it, “Prohibitions against the corporate practice of medicine are intended to prevent commercialization of the practice of medicine and lay interference with physicians’ independent medical judgment, ultimately protecting patients.”

In practice, though, state corporate practice of medicine laws are riddled with loopholes that have allowed corporate entities, including many private equity firms, to hoover up medical practices and cause a range of harms, including higher prices, worse care, and deteriorating conditions for workers.

Even where the laws are strong, they’re often under-enforced, if they’re enforced at all. And this is important because investor money is flowing into the medical sector: Between 2010 and 2021, the amount raised for private equity and corporate investment in primary medical care rose from $15 million to $16 billion, with a b.

In Oregon recently, the state legislature came agonizingly close to approving a bill that would close several loopholes in that state’s CPOM law that allow corporate entities to directly or indirectly control medical practices. It passed the House there with an overwhelmingly positive vote, before running aground in the state Senate, where Democratic leadership caved to Republican intransigence and refused to move it to a full vote, despite some feelings that it would have passed if actually put on the floor.

The bill didn’t cover the whole waterfront of the issue of corporatization of medical care, but would have been a positive step — and so, of course, was the target of intense lobbying by some of the health care sector’s worst actors. Big Medicine was not happy and it showed.

But it’s still encouraging the bill got as far as it did, and hopefully its defeat now sets the stage for some wins not just in Oregon, but across the country, in the future.

First, my colleague Erik Peinert explained here how loopholes in CPOM laws allow their very intent to be undermined:

Corporate investors use layers of shell corporations such as “management services corporations” or “physician management companies” to maintain that a medical practice is owned by a licensed medical professional on paper, all while in practice the corporate investor holds all of the effective power to decide how much money is spent on care, what staffing levels should be, how many hours should be spent with each patient, and what prices for different medical services or procedures should be.

Under the Oregon bill, those sort of loopholes would have been closed, and corporate entities would be explicitly barred, by law, from setting work or staffing schedules, clinical standards, or billing practices, among other items, at medical practices. “Regardless of how you organize your company, you have to follow the corporate practice of medicine law, simple and easy,” said Oregon State Rep. Ben Bowman, who authored the bill.

The bill would have also banned noncompete agreements in the health care industry, under the correct theory that those restrictive contracts are one of the most effective ways in which corporations control both the movement and public testimony of medical professionals: Being unable to move to a new job renders one far less likely to complain about their current employer, not surprisingly.

Large, dominant health care players such as Amazon and United Health and a slew of private equity players testified against the bill, and were clearly throwing their lobbying weight around behind the scenes as well. Republicans in the legislature, after initially seeming like they would be content to at least sit the debate out, threw a fit after the bill passed out of committee in the Senate and gummed up the works. Ultimately, Democratic leadership in the Senate, as I said, decided against moving the bill to a full vote, so it missed the end of session deadline.

The encouraging thing, though, is that while the usual corporate entities were fighting the bill, public testimony was overwhelmingly in favor of it; less than 10 percent of testifiers opposed the bill.

As one doctor testified, “I’ve seen a lot of changes, and the involvement of private equity and venture capital is amongst the most concerning changes that I’ve seen during my career … They purchase equity with the sole intent of increasing profits, controlling hiring practices, substituting non-physicians for physicians, implementing performance metrics that are impossible to meet and increasing burnout in physicians.”

Now, we all know public favor does not mean a popular idea becomes law in the face of entrenched corporate opposition. But a ratio like this does set the stage for future organizing that can be effective, both on the legislative or political front — i.e., telling legislators they need to move the bill or face a primary or general election challenger in the future who’d like to get on the right side of a 90-10 issue. Again, there’s no guarantee, but many pols would rather be on the right side of those numbers than not.

It’s also encouraging to see state lawmakers interested in doing something about the corporatization of health care, generally. For too many years, health care reform has focused almost exclusively on cost containment and expanding insurance access — which are good goals, to be sure, but don’t do anything to fix the increasing corruption of the very plumbing of the health care system or what that corruption is doing to the workforce that actually administers care. Access and insurance aren’t worth much if you can’t get an appointment to see a medical professional who is worth seeing, or if the care you receive is substandard because some corporate bean-counter on the other side of the country is demanding higher dividends.

So I’m sad this bill died, for sure, but for now I’m going to try to view it as the potential start of something positive. And if you’re interested in getting involved, you can check here to see if your state has a corporate practice of medicine law your state lawmakers might want to think about reforming.

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— Pat Garofalo