Copyright © 2023 Albuquerque Journal
Come Feb. 1, Presbyterian Healthcare Services, New Mexico’s largest health system, plans to turn over its emergency department and hospitalist staffing at its Santa Fe Medical Center to a national private equity-backed staffing company.
More than a dozen physicians at the 4-year-old hospital’s emergency room and inpatient medical unit received termination notices several months ago. They are being offered positions with the Tacoma, Washington-based Sound Physicians firm, which will furnish physicians to the hospital and be responsible for billing patients.
Outsourcing of medical care is already happening elsewhere in the country and at Presbyterian’s Rust Medical Center in Rio Rancho, but the decision to contract with the for-profit Sound Physicians for Presbyterian’s hospital in Santa Fe is significant, said Jerry Harrison, executive director of New Mexico Health Resources, a private nonprofit devoted to recruiting and retaining health care providers in New Mexico.
“It’s a reflection of the introduction of Wall Street into health care,” said Harrison, a former New Mexico hospital administrator.
The national staffing firm has been in operation for two decades, but in 2013, Sound Physicians agreed to pay a $14.5 million settlement amid allegations of Medicare fraud. More recently, the Better Business Bureau reported numerous complaints of aggressive and exploitative billing practices.
A spokeswoman for Sound Physicians told the Journal in an email last week that the company has improved its consumer communications since then and is “committed to providing the best care to patients and their families in the communities we serve.”
Presbyterian officials wouldn’t agree to be interviewed by the Journal but issued a statement in response to written questions.
In a statement, Tim Johnsen, senior vice president and chief operating officer of Presbyterian Delivery System, told the Journal, “At Presbyterian, like many hospitals across our state and nation, we use staffing agencies and external partners in our facilities to ensure that the community has access to care when they need it most.
“With this in mind, we’re partnering with Sound Physicians, a physician staffing firm with a 20-year track record in recruiting, developing and retaining clinicians for health systems across the country, so that we can continue to consistently provide physician coverage in our Presbyterian Santa Fe Medical Center Emergency Department and hospitalist services.”
Johnsen said the company has been providing “hospital-based services” at Presbyterian Rust Medical Center in Rio Rancho and at Plains Regional Medical Center in Clovis.
Since calendar year 2018, Sound Physicians has been paid about $10.4 million each year for “physician services,” according to Presbyterian’s 990 tax forms for the years 2018 to 2020.
“This new partnership will allow SFMC’s recruitment efforts to focus on adding more specialists to our team to meet the unique needs of the community,” Johnsen’s statement said. “We anticipate that this partnership will not result in increased costs for our patients.”
Harrison, who helps recruit physicians, dentists and other medical professionals to New Mexico, said such outsourcing can be attractive to hospitals because it lowers costs and spreads out liability.
“Just as a longtime observer and a former hospital administrator, these kind of decisions are made on finance; they’re not made on quality of service. It could be in Presbyterian’s interest if they have a lot of long-term expensive physicians to contract that service out.”
The 36-bed Santa Fe hospital, one of nine Presbyterian hospitals in New Mexico, was mentioned in a Moody’s Investors Service financial rating less than a year ago as having “continued weak performance.”
Moody’s gave a favorable rating outlook to the health system, assuming health care operations statewide will continue to grow and “operations at Santa Fe will reach breakeven.”
Its emergency room volume was rated “low” by the Medicare.gov website, which defined “low” as up to 19,999 patients a year. The website reported an average of 4% of patients left the ER before being served in the most recent year examined, compared to an average of 2% nationally and in New Mexico.
Staffing changes, buyout
Presbyterian officials wouldn’t say how many physicians or other medical providers at its Santa Fe hospital received termination notices, or how many have quit rather than go to work for the private staffing firm.
But a spokeswoman for the staffing company told the Journal in an email, “Sound Physicians, in close collaboration with Presbyterian Santa Fe Medical Center leadership, is well on its way to initiating emergency department and hospital medicine and advance practice provider services. With few exceptions, the current, outstanding Presbyterian Santa Fe emergency physicians, hospital medicine physicians, and associated advance practice providers plan to join Sound and continue their careers at the hospital.”
The Better Business Bureau website gives Sound Physicians a rating of “F,” after receiving 194 complaints within the prior three years.
“On February 16, 2021, BBB recognized a pattern of complaints from consumers regarding billing, collections, and customer service issues. Consumers allege that the business is sending unpaid balances to collections without prior notification to consumers, as billing statements are not received. Consumers further allege that charges being sent to collections are for services not provided, balances that were not billed to insurance companies, and for balances that were previously paid. Consumers allege that the business does not answer multiple phone call attempts and/or voicemails, resulting in consumers unable to inquire about charges being sent to collections incorrectly.”
Anni Lange, vice president of marketing and communications for Sound Physicians, told the Journal last week in an email that the company updated its patient billing communications in February 2021.
“Sound Physicians takes customer complaints very seriously and we’re committed to providing the best care to patients and their families in the communities we serve. Since implementing updates … we’ve seen far fewer patient complaints.”
Back in 2013, the Tacoma-based company, then named Sound Inpatient Physicians Inc., agreed to pay $14.5 million to settle allegations that it overbilled Medicare and other federal health care programs. The allegations covered the time period between 2004 and 2012, according to a press release by the U.S. Justice Department.
Five years after the settlement, Sound Physicians was purchased by Summit Partners, a global alternative investment firm.
Profits vs patients
A study by researchers at Texas A&M University in 2021 found that two-thirds of emergency departments in the U.S. use some sort of outsourcing through contracts with separate companies called “contract management groups.”
Some of those groups are owned by private equity firms “that claim to streamline the recruiting and credentialing of emergency department staff to relieve hospitals of these tasks, and, hopefully, lower costs.
“But the elephant in the room for emergency medicine and other medical specialties is that a profit-maximizing goal can conflict with prioritizing the well-being of patients and medical staff,” the study’s authors reported.
Such contracting groups often have aggressive patient-per-hour quotas and provide incentives for medical staff to order more procedures and tests – even if they’re not warranted.
In one study, “more than a third of emergency physicians employed by these groups said they had concerns about losing their job if they raised questions about overtesting, quality of care, or patient treatment – roughly double the rate for doctors employed by hospitals.”
Such outside groups, according to the study, have also “contributed to surprise billing and excessive collections.”
Presbyterian officials have said that Presbyterian will monitor contract performance, including billing practices.
New Mexico Health Resources’ Harrison told the Journal that Sound Physicians might require more productivity from its providers than what Presbyterian demanded, in terms of the number of patients seen, and the procedures performed.
But the bottom line for patients is whether Sound Physicians can provide the number of physicians that are needed at the hospitals, he said.
“If they are, I’m all for them.”