By June 1, Atlanta-based healthcare staffing firm SCP Health will take over all Ascension Illinois “hospitalist” employees — medical directors, doctors, physicians assistants, nurse practitioners and other providers who care for patients during a hospital stay. Terminated Ascension hospitalists are expected to reapply for their jobs at SCP Health.
Ascension declined to comment, and SCP Health did not respond to multiple requests for comment from Crain’s, but their partnership is detailed in a Feb. 1 internal memo written by Ascension Medical Group’s Illinois chief operating officer, Drew Palumbo, and obtained by Crain’s.
“The goal of this partnership is to continue to deliver high-quality, cost-effective patient care and an exceptional patient experience while leveraging the expertise SCP Health brings to help advance our strategic goals,” Palumbo wrote. “We have spent many months evaluating potential partners and feel that our culture and goals are well aligned with SCP Health.”
Palumbo noted in the memo that SCP Health’s “patient-centered culture” and expertise in “revenue cycle services” were among the reasons Ascension chose it. “We expect most if not all of our clinicians will continue to work with Ascension through the SCP relationship,” he wrote.
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Chicago-area hospitalists at the Catholic health system were first notified of the labor transition in a Jan. 29 meeting, which began with a prayer but ended with news that they would no longer work for Ascension, according to three Ascension Illinois doctors, who spoke to Crain’s on the condition of anonymity out of fear of retaliation.
Since then, they and other affected employees have put up a fight, with some refusing to sign new labor agreements with SCP Health and hiring attorneys to negotiate better contractual terms.
Hospitalists are overwhelmingly concerned about SCP Health’s private-equity influence and how its profit-motivated owners may look to grow hospital revenues by increasing patient caseloads for clinicians, a move they argue would put patient safety at risk, according to the three doctors who spoke to Crain’s. In 2015, SCP Health took an undisclosed investment from global private-equity firm Onex Partners, giving it a majority stake in the company. Onex did not respond to a request for comment.
Under the composition of SCP Health contracts, most hospitalists would also effectively take a pay cut of anywhere from $15,000 to $25,000, the doctors said, adding that they are each considering leaving Ascension for other healthcare systems that still directly employ hospitalists.
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The labor dispute at Ascension Illinois is another flashpoint in the contentious debate over the growing role of private-equity firms in healthcare. Earlier this month, the U.S. Department of Justice and other federal agencies launched a probe to examine if private-equity interests are hurting healthcare workers, quality of care and affordability.
“When you're in the direct patient care business, that’s just a no margin business. There’s just not a lot to go around,” said one of the doctors who spoke to Crain’s. “To have private equity come in and take 20% to 30% off the top . . . there's no other thing that can happen, other than it’s going to come at the expense of the patient.”
Care concerns
Hospitalists’ primary concern about working for SCP Health is the firm’s proposed staffing models, says Carey Kalmowitz, an attorney for New York- and Detroit-based Health Law Partners, which is representing about 90% of the Ascension hospitalists to address their concerns with SCP Health's contracts. The other 10% of hospitalists have already decided to pursue employment opportunities outside of Ascension and SCP Health, Kalmowitz said.
SCP Health's care model calls for hospitalists to see more patients — as many as 30 per day, up from about 18 now. The staffing firm also proposes more admitted patients at Ascension Illinois hospitals be cared for by non-physician providers, like nurse practitioners and physician assistants, without direct supervision from a doctor, Kalmowitz said. The approach, however, would mandate doctors still sign off on patients’ charts and be responsible for their care, even if they haven’t directly interacted with them.
“They all believe that this will clearly engender risks for the patients they've served, and there's almost universal sense of unease in moving forward with that,” Kalmowitz said.
As Ascension and SCP Health try to convince hospitalists to enter contracts with the staffing firm, SCP Health representatives have visited Ascension hospitals to talk to workers directly, said Kalmowitz and the doctors who spoke to Crain’s.
“The clear reason for the visit is to try to elicit their signatures,” Kalmowitz said.
Why hospitals turn to staffing firms
SCP Health, founded in 1994 and formerly known as Schumacher Clinical Partners, offers health systems a wide range of staffing across care specialties, touching patients in more than half of the U.S., according to its website. The firm also offers billing and revenue cycle services to its hospital clients. According to a January Moody’s Investors Service report, SCP Health reports $1.4 billion in net revenue.
Many U.S. hospitals rely on staffing firms like SCP health, Blackstone-backed TeamHealth and others to operate facilities, especially emergency departments, says Loren Adler, a fellow and associate director at the Center on Health Policy at the Brookings Institution. But for-profit health systems are more likely to use staffing firms, he noted.
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“Fundamentally, (hospitals) are doing it because they think it costs less money to do it this way than to pay (workers) themselves,” Adler said. “They probably wouldn't do it otherwise.”
Financial figures for Ascension's Illinois operations are unavailable, but across the entire health system spanning 19 states, Ascension reported a budget shortfall of more than $238 million on $15 billion in revenue in the six months ended Dec. 31, according to records filed with the Municipal Securities Rulemaking Board.
Healthcare staffing firms may trim expenditures for hospitals, but there’s growing evidence they drive up healthcare costs for patients and insurers by using aggressive billing practices, Adler said. The No Surprises Act, which went into effect in 2022, is intended to cut down on this practice by regulating expensive medical bills sent to patients when they unknowingly see an out-of-network doctor at an in-network facility.
Under the new law, providers and insurers negotiate billing disputes through a government arbitration process, but the number of disputes is skyrocketing, and a January Healthcare Dive report showed SCP Health was the top firm filing billing disputes for out-of-network services.
“The prices that consumers and insurers end up paying tends to go up when these companies get hired,” Adler said, noting that those higher fees can in turn grow revenue for the hospitals — a key sales pitch to health systems like Ascension.
Other Ascension hospitals that outsource staff to third-party firms have seen labor strife in recent months. Last year, emergency department workers at Ascension St. John Hospital in Detroit and employed by Knoxville, Tenn.-based TeamHealth voted to form a union following complaints of chronic understaffing that was hurting patient care. Earlier this month, the same workers threatened to strike over understaffing.
“The biggest way for private equity-owned hospitals or for the staffing firms to make money is to cut down on staffing (and) increase patient loads,” says Eileen O’Grady, healthcare director at the Private Equity Stakeholder Project, a Chicago-based nonprofit that's critical of private-equity activity in essential industries. “It was shown to be hugely profitable.”
This story first appeared in Crain's Chicago Business.
