AAEM Sends Open Letter to West Coast Emergency Physicians

As reported in the last issue of Common Sense, AAEM is very concerned about the plans of Catholic Healthcare West to purchase EPMG. We have lent our support to a group of California emergency physicians who have filed a complaint with the California State Supreme Court seeking protection under the California Corporate Practice of Medicine Doctrine.

This suit has national implications for both Emergency Medicine and medicine in general. In this case a large number of currently independent emergency physicians are under the threat of being forced into the position of becoming employees of a corporation that is a wholly-owned subsidiary of a hospital system. If this is allowed to occur, the arrangement will create a corporate level of control that can influence a physician’s practice at a level much greater than managed care, Unlike a physician’s contracting with an HMO, it will not be just a select panel of patients affected, but the physician’s entire practice.

In an attempt to raise awareness on this important issue, AAEM recently sent the following open letter to emergency physicians practicing in California, Oregon, Washington, Arizona, and Hawaii. 

An Open Letter to Emergency Physicians:

You are probably aware of an issue regarding Catholic Healthcare West (CHW) and EPMG of California. However, you may not realize that you can have an impact in this matter by expressing your opinion to the leaders of EM or the principals in this matter.

Briefly, CHW plans to purchase EPMG, creating a hospital-owned physician practice management (PPM) firm. This new entity will control the EPs and take a percentage of the revenue for operations and profit. Disturbingly, as a hospital-owned entity, they will be negotiating the physician fees with managed care directly, thereby eroding physician autonomy. AAEM has been contacted by a number of currently independent EP groups working in the CHW system who fear that this deal will spell an end to their autonomy and force them to work for the new PPM. AAEM would extend this concern to current EPMG physicians and future acquisitions of the expanding CHW network.

AAEM believes this loss of control is dangerous for the future of EM practice. We have also pointed out serious regulatory and other concerns in this matter that we believe may invalidate this scheme. In brief they include:

  1. A violation of both state and federal anti-kickback statutes when the EPs are forced to give up a portion of their fee for the right to work in a hospital’s ED.
  2. A violation of the California ban on the Corporate Practice of Medicine.

We are not blowing smoke. The Office of the Inspector General (OIG) has stated that hospitals cannot take a portion of the physician fee beyond fair market value for what is returned. The recently released “Model Compliance Program for Hospitals” developed by the OIG to help hospitals avoid fraud and abuse issues (available at www.aha.org) specifically warns hospitals to “not enter into financial arrangements with hospital-based physicians that are designed to provide inappropriate remuneration to the hospital in return for the physicians ability to provide services to federal healthcare beneficiaries at that hospital.” Advisory opinion 98-4 of the OIG released in April states that a PPM contract requiring the physician to give up a percentage of net revenues may “be subject to sanction under the anti-kickback statute.”

So what? Is this important to me? If you have followed the news and witnessed the collapse of FPA/Sterling and heard from EM colleagues who were not being paid, you would understand our efforts. The physicians need to draw a line in the sand or accept being bought and sold as any other revenue producing commodity. AAEM has staked its claim in this battle, we are fighting for your future. California ACEP passed up on this matter once, but I believe they can be influenced to reconsider.

You can contact the principals in this deal by writing to or calling: Richard Kramer, CEO, CHW, 1700 Montgomery Street, Suite 300, San Francisco, CA 94111, Tel: (415) 438-5500.

Express your concern to your EM leaders. Ask them what they intend to do about this and other corporate matters. Passively allowing such arrangements to occur paves the way for future erosion of our professional autonomy.


Robert McNamara, MD FAAEM

President, AAEM

     AAEM here reiterates its call to emergency physicians to express concern to the leaders of the specialty over the continuing corporate practice of Emergency Medicine. We have taken our stand against it. Where do they stand? Where do you?

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