Ballad Health will outsource some hospitalist contracts to a private-equity backed firm effective Nov. 3. The move prompts concerns from physicians who worry how a for-profit model could change staffing and payment.
Regional providers are not alone in this concern. As private equity has become an emerging player in health care over the last decade, top medical associations and government agencies have issued warnings and launched investigations about the effect corporate interests have on quality care.
SCP Health, the company that will take over the contracts, has worked with Ballad for more than a decade before the outsourcing.
Private equity acquisitions are still being studied, but they have been associated with poorer quality of care, increased focus on financial incentives and higher costs.
Ballad outsourcing prompts concern
A little after noon last Thursday, Ballad officials sent a meeting invite to more than 100 employees across its system. The meeting, which informed hospitalists about the outsourcing, was set to take place less than two hours later.
During the discussion, SCP Health presented the move as a “win-win situation,” said Dr. David Mitchell, a hospitalist who works primarily at Johnston Memorial Hospital, Russell County Hospital and Norton Community Hospital in Southwest Virginia.
As physicians discuss what the switch means, many are still unsure of the implications.
“There [are] enough red flags to say, ‘Yeah, we need to think about this more than just 100% trust the decision that has been made.’”
- Dr. David Mitchell, Ballad hospitalist
“[There’s] also some concern that they won’t have much voice in what’s happening,” Mitchell added. “I think a lot of doctors are trying to decide: ‘Is this something that I want to jump into or not?’”
Prior experience in for-profit health care has made the physician wary of the model.
“Every increment of patient load that they can support is frosting on the cake as far as profitability,” Mitchell said. “So the tendency is to push for more patients to be seen and delay increasing staffing.”
A recent edition of the American Medical Association (AMA) Journal of Ethics states that private equity in health care deserves close attention, especially in rural communities, because the firms are generally “not interested” in streamlining care for patients.
According to the same AMA report, private-equity investment in health care has increased more than 20-fold since 2000. Mitchell added that for medical health professionals, “there may be decreasing opportunities to go places that don’t have a for-profit model.”
It’s a sentiment that Ballad reflects — in an emailed statement, the system wrote that “with the growth in the number of acquisitions of physician groups by private equity, insurance companies and other financial entities, it is almost impossible to avoid collaborating with some of these entities.”
Many hospital systems in both Tennessee and Virginia work with private equity groups in some manner.
Mitchell added that all health systems now face a difficult financial environment, and the for-profit model is not necessarily bad. With potential for profit on the line, companies could be more innovative in making patient care efficient and effective, he said.
In its presentation to Ballad employees, SCP Health said that its model improves outcomes; according to its metrics, the company has lower rates than the national average on patients’ average length of stay, readmission rates and people who leave without treatment or against medical advice.
“This coverage model reflects national best practices,” Ballad wrote about the acquisition.
A spokesperson emphasized that the expanded partnership does not change its collaboration with other partners, and that it expects few changes in physicians.
To get a better perspective of the situation and improve transparency, Mitchell said he would like to talk to doctors already under SCP Health. He wants providers to have a chance to understand what SCP’s services are, how contracts have worked with other health care systems and what the contract with Ballad actually says.
“The fundamental question is, with this change, is our ability to provide that best possible care going to change or not?” He said. “Are the demands on us going to change so that we do have to cut corners to get things done?”
SCP Health, private equity under federal microscope
Ballad’s outsourcing is not the first time an SCP Health contract has raised eyebrows.
Last year, Ascension Health’s Illinois outsource to the company prompted Sen. Chuck Grassley, R-Iowa, to pen a letter expressing his worries that the new contract would increase patient load and affect quality of care, information protection and billing accuracy.
The incident came on the heels of a cross-government inquiry into the “impact of corporate greed in health care” in March 2024. The inquiry by the Federal Trade Commission, the Department of Justice and the Department of Health and Human Services was an attempt to understand how health care market transactions could generate profit while “threatening” quality of care.
Contracts between Ballad hospitalists and SCP Health haven’t yet been signed. But in Mitchell’s experience, physician concerns haven’t always been taken seriously at Ballad. As the system moves to outsource its hospitalists, he finds it sad that other providers are afraid of retaliation if they speak up.
“They don’t want to stand out as a dissenter,” he said. “I don’t think it’s an issue of dissension, it’s an issue of due diligence. That’s normal in businesses, to do your due diligence. There [are] enough red flags to say, ‘Yeah, we need to think about this more than just 100% trust the decision that has been made.’”