When American Physician Partners (APP) of Brentwood, Tenn., one of the country’s  largest physician staffing firms, announced on July 17 through an email to its employees its intention to cease operations July 31, the chilling effects were felt across a workforce of 2,500 APP-employed physicians and advanced practice clinicians working at the 153 hospital emergency departments it managed in 18 states.

Would they be paid for work already performed? Would they continue to have jobs and essential malpractice tail coverage for claims filed after their policies expired? Would the entities rushing in to replace APP treat them fairly? The closure has also raised questions about the model of large, distant corporations—particularly those backed by private equity investors—employing and managing doctors who provide lifesaving emergency medicine in local hospitals across the country.

Matthew Bombard, DO, FACEP, FAAEM, medical director for emergency medicine at Ascension Borgess-Pitt Hospital in Plainwell, Mich., was working the 4:30 p.m. to 1 a.m. shift on July 31 when the hospital’s emergency coverage transitioned from APP to Vituity. “At midnight, I crossed over to my new medical group. And you know, we were one of the fortunate places, able to maintain 24-7 emergency medicine coverage without skipping a beat,” he said.

Dr. Bombard

“But we were scrambling to get new docs signed up with our new group so we would not be in a situation where a different doc would have to come in at midnight and take over for a doc that did not sign. It was a real concern, as not all our docs signed on to our new group. That, fortunately, did not happen, and we had no lapses in care,” he said. “But we were all so focused on getting the transition done and completing the onboarding that it was a distraction.”

What Were the Issues?

It’s fair to call what happened to APP multifactorial, said Diana Nordlund, DO, JD, FACEP, Compliance Officer and ED physician with Emergency Care Specialists, a Grand Rapids, Mich.,-based independent, equal-ownership, physician-led and -governed practice staffing more than 15 emergency departments. She is also a practicing attorney. “I think it’s not just a reflection of one particular business’ practices, since it’s not the first situation we’ve seen this year of a large contract management group that staffs emergency departments making financial restructuring decisions because of budgetary issues,” she said. A similar company, Envision Healthcare, filed for Chapter 11 bankruptcy in May. APP was facing inflationary pressures and declining physician reimbursement, with a significant debt burden amassed from its acquisitions of medical practices. Added to the mix were the effects of the COVID pandemic and unintended consequences from the 2022 No Surprises Act on physician revenues. APP had previously, unsuccessfully, tried to obtain refinancing and, more recently, a deal with the physician staffing firm SCP Health with a loan payment looming. Its email to employees cited the lack of liquidity to continue operations.