Re: Support for Emergency Medicine of Blue Ridge at Valley Health
The American Academy of Emergency Medicine (AAEM) is a national professional association representing over 8,000 specialists in emergency medicine (EM). We are concerned that the physicians of Emergency Medicine of Blue Ridge have been informed that, as of October 1, they will need to be employed by SCP Health in order to continue to care for patients in the emergency departments of Valley Health system. The AAEM endorses the notion that local physician ownership of their practice is the best arrangement for physicians, the medical staff, the hospital, and, most importantly, for the patients. SCP Health is owned by the private equity firm Onex. (1)
To be clear, we do not dispute the right of Valley Health to award an exclusive contract for the provision of emergency services. However, we believe that awarding such a contract to a for-profit corporate entity having functional lay ownership or control presents significant regulatory concerns. Specifically, we do not believe employing physicians through a nominal professional corporation that is solely owned by a physician affiliated with SCP Health meets the intent of Virginia’s prohibition on the corporate practice of medicine (CPOM). Such “friendly physician” arrangements designed to circumvent these prohibitions, were central to the AAEM’s recent successful litigation against Envision in California. (2)
It is our understanding that two of the affected locations are in West Virginia where the Board of Medicine has strictly prohibited the corporate practice of medicine (CPOM) as embodied in West Virginia Code §30-3-15. (3,4) Virginia also has laws that prohibit unlicensed person or business entities from employing physicians and prohibits “fee-splitting” arrangements. Moreover, the Virginia Attorney General has issued three separate opinions regarding the application of these laws in the specific context of physician employment. (5) In these opinions, the Attorney General of Virginia has concluded that licensed hospitals in Virginia may employ physicians and further extended this reasoning to allow wholly owned subsidiaries of hospitals to employ physicians. Even in these settings, however, such employment relationships must still give the physicians exclusive control over decisions requiring professional medical judgment. Such professional judgment may not be controlled or influenced in any way by the corporations—to avoid commercial exploitation that would result in divided loyalties, motivated by profit and improper lay control over professional decisions. Importantly, no exception whatsoever has been extended to for-profit, non-professional entities generally.
The AAEM and other EM professional organizations along with the American Medical Association (AMA) hold that corporations should neither control medical decision making nor the operational or financial aspects of a physician practice. In addition to bedside care decisions the physicians must also control items such as hiring/firing, staffing decisions such as how many patients a physician needs to see, determining who will see the patient and patient charges and collection practices and negotiations with payers. (6-8) It is our experience that a private equity staffing company will not leave these decisions up to the local physicians.
Apart from the above-described regulatory concerns related to CPOM and fee-splitting, there is also a significant process concern, in that the organized Medical Staff should approve any change in the contracted services for EM, given how integral such services are to a hospital’s day-to-day operation. Medicare’s Conditions for Participation (42 CFR § 482.22) expressly require that hospitals have an organized Medical Staff that is responsible for the quality of medical care in the hospital. Det Norske Veritas (DNV) accreditation standards also point out this in the Medical Staff Standards (MS1.SR.1). Furthermore, according to DNV standards, the Medical Staff must have input regarding a contracted service for the provision of emergency medical care as this involves “high-risk patient care” services (DNV GB.4 Interpretive Guidelines). We understand that the Medical Staff was not party to this decision but merely informed of it.
Most importantly, allowing private equity to control the emergency departments (ED) at Valley Health raises questions regarding the effects on patients. Private equity seeks a healthy ROI generated by raising charges and implementing staffing cuts to decrease professional expenses. A recent study indicated that private equity ED staffing reductions resulted in increased mortality. (9) Finally, it is important to note, several large multi-state ED staffing companies (American Physician Partners, Envision, NES) have recently declared bankruptcy and left EM physicians without malpractice coverage and unpaid shifts. (10) Two of these entities were backed by private equity.
The AAEM believes that emergency physicians must remain free of corporate influence because of their difficult role as advocates for the under- and un-insured patient. This important professional role can only be faithfully discharged where physicians are unencumbered by the profit concerns of a corporation. The West Virginia Board of Medicine and the Virginia Attorney General concur.
The AAEM is willing to assist in this matter. We have an expert available, Dr. Robert McNamara, who serves as the primary contact for this topic. To ensure we coordinate appropriately, we kindly ask that you reach out through our office at 414-276-7390, and Tamara Wagester from the staff will connect you directly with Dr. McNamara.
Thank you for your time and attention to this important matter.
Sincerely,
Vicki Norton, MD FAAEM
President, AAEM
References
- https://www.onex.com/portfolio/OP-OpCo-SCPHealth
- https://www.aaem.org/envision-lawsuit/
- https://wvbom.wv.gov/practitioners/Companies/index.asp
- file:///C:/Users/rober/Downloads/Corporate_Practice_of_Medicine.pdf
- 1989 Va. Op. Atty. Gen. 283 (June 28, 1989); 1992 Va. Op. Atty. Gen. 147 (December 7, 1992); and 1995 Va. Op. Atty. Gen. 235 (May 22, 1995).
- https://www.aaem.org/statements/cpom/
- https://www.acep.org/home-page-redirects/latest-news/acep-announces-new-policy-statement-on-corporate-practice-of-medicine
- https://policysearch.ama-assn.org/policyfinder/detail/%22Corporate%20Investors%20H-160.891%22?uri=%2FAMADoc%2FHOD.xml-H-160.891.xml
- https://pubmed.ncbi.nlm.nih.gov/40982974/
- https://www.aaem.org/wp-content/uploads/2025/03/NES-Statement.pdf
CC: Members of the Board of Trustees and Medical Staff Leaders
Jason Aikens
Jeff Boehm, Vice Chair BOT
Dottie Day
Melody Eaton, PhD
Tom Gilpin
Marie Imoh
Fred Kozlowski, MD
Tom Leslie
Kip Rutherford
JJ Smith
Tom Wise, MD
Thomas “Avery” Gibbs
Chad Dansie, MD Chief Medical Officer
Terral Goode, MD VP of Medical Staff
Jorge Posadas, MD Treasurer of Medical Staff
Daniel Alexander, MD Past President of Medical Staff