Private equity-backed medical staffing company Alteon Health, which provides doctors and nurses to work in emergency rooms across the country, is cutting costs by reducing hours and slashing benefits in the middle of the coronavirus pandemic, according to a Tuesday report by ProPublica.
In a memo to employees on Monday obtained by ProPublica, Alteon CEO Steve Holtzclaw cited “economic challenges brought forth by COVID-19” as the basis for cost-cutting. The measures enacted include reduced hours for clinicians, potentially reducing their overall income, as well as switching physicians on salary basis to an hourly one subject to those possible reductions. Employees unwilling to transfer to an hourly basis were asked to meet with HR “to discuss alternatives.” Alteon has also cut pay for administrators (affecting some practicing doctors like medical directors) by 20 per cent and put a hold on 401(k) matches, bonuses, and paid time off, according to ProPublica.
Alteon is backed by private equity firms Frazier Healthcare Partners and New Mountain Capital. Holtzclaw wrote of other medical staffing firms in the memo, “You can be assured that similar measures are being contemplated within these organisations and will likely be implemented in the coming weeks.” (Per ProPublica, rival company TeamHealth said in a statement that it is not cutting pay or benefits.)
According to Stat News, cuts to medical personnel budgets are rapidly becoming a widespread phenomenon, with staff for Atrius Health and area hospitals in Boston, Utah’s Intermountain Healthcare, and hospitals in Kentucky, Maine, and Georgia all facing reduced benefits and pay or furloughs. One major contributing factor is a steep decline in elective or high-margin procedures that have been put off so staff can care for covid-19 patients. Mass delays in those surgeries can create major financial problems for hospitals.
Private equity has also been implicated in exacerbating inequities in the U.S. medical system. Three firms (KKR & Co. Inc., Blackstone Group, and Welsh, Carson, Anderson, & Stowe) are the focus of a congressional inquiry started last year into their role in “surprise” billing, according to Stat. That’s when patients at an institution covered by their insurance are treated by a health worker actually employed by an outside firm, landing them massive out-of-network costs. TeamHealth and Envision Healthcare, who are both backed by private equity firms, were found last year to be pouring money into an ad campaign to defeat legislation designed to end out-of-network billing.
Holtzclaw wrote in the email that the cuts were necessary despite the $US2 ($3) trillion relief package passed by Congress last week, ProPublica wrote. That package included deferments on payroll taxes, advance Medicare payments, and temporary suspension of Medicare reimbursement cuts.
“It’s completely demoralising,” an Alteon clinician told ProPublica. “At this time, of all times, we’re putting ourselves at risk but also putting our families at risk… A lot of sacrifices are being made on the front line that the administration is not seeing because they’re not stepping foot in a hospital. I’ve completely lost trust with this company.”