Nonprofit health system Ascension Medical Group has stirred up concerns around patient safety, working conditions, and quality of care with its decision to outsource more than 110 physicians at all ten of its Chicago-area hospitals to private equity-backed staffing firm SCP Health.

Based in St. Louis, Ascension has over 250 locations in Illinois. According to records filed with the Municipal Securities Rulemaking Board, the health system had a $238 million shortfall on $15 billion in revenue in the last six months of 2023. SCP Health provides staffing models for emergency, critical, and virtual healthcare as well as billing and revenue cycle services, and is backed by global private equity firm Onex Partners.

As of June 1, the Atlanta-based firm will manage all medical directors, doctors, physician assistants, and nurse practitioners at these facilities, which include St. Mary and Alexian Brothers hospitals. Ascension plans to terminate the employees and expects them to reapply for their jobs at SCP Health. It says the transition will allow it to cut down on costs, and that it chose SCP Health as a partner because of its “patient-centered culture” and expertise in “revenue cycle services,” according to Crain’s Chicago Business News.

“We expect most if not all of our clinicians will continue to work with Ascension through the SCP relationship,” wrote Ascension Medical Group’s Illinois chief operating officer Drew Palumbo in a February internal memo obtained by Crain’s.

What concerns providers the most is SCP Health’s staffing models, which call for increasing the number of patients that they see from 18 to 30. The physicians say this aligns with the profit-driven nature of PE-owned companies and puts patient safety at risk. SCP Health will also allow non-physician providers to care for patients without direct supervision while still holding doctors responsible for care, and most physicians under it will take a pay cut of between $15,000 and $25,000.

Employees were notified of the transition on January 29. Some have refused to sign new labor agreements with SCP Health and hired attorneys to negotiate better contractual terms, said three Ascension doctors who spoke to Crain’s on the condition of anonymity, out of fear of retaliation.

Carey Kalmowitz, an attorney for Health Law Partners, told the news outlet that about 90% have hired his firm to address these issues, while the other 10% are seeking employment elsewhere.

“They all believe that this will clearly engender risks for the patients they've served, and there's an almost universal sense of unease in moving forward with that,” he said.

Saves on expenditures but at a cost
Founded in 1994 as Schumacher Clinical Partners, SCP Health today has more than $1.4 billion in net revenue and provides staffing in more than half of the U.S. In 2015, Onex Partners invested an undisclosed sum in the company, giving it a majority stake.

Evidence shows that PE firms or companies backed by these entities do reduce spending but do so by eliminating staff and rolling back. It also shows that they increase pricing for patients and insurers.

In 2022, the No Surprise Act took effect, creating a government arbitration process for negotiating expensive out-of-network bills between these companies and patients and insurers. But the number of disputes has soared, according to CMS' 2022 Initial Report on the Independent Dispute Resolution (IDR) Process, which showed that SCP Health had the highest number of any staffing firm between April and September of that year.

These concerns line up with the criticisms that most healthcare providers have about the influence of private equity ownership in hospitals and have rolled over into Washington, D.C., with both the White House and the Senate Budget Committee investigating how private equity firms affect patient outcomes, affordability, quality of care, and access.

“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 that it’s going to come at the expense of the patient.”