Late last year, the emergency department (ED) physician practice management company NES Health ceased operations, leaving hundreds of physicians and advanced practitioners at 35 hospitals nationwide scrambling.¹ This “difficult decision to wind down and cease operations” left these health care professionals uncertain if they will ever get paid for up to 2.5 months of work already performed, wondering who they would be working for next, and whether they would still have essential malpractice liability “tail” coverage.

In 2023 there were bankruptcies of two private equity-based ED companies, Envision Healthcare, which has since emerged from bankruptcy protection and continues to operate, and American Physician Partners, which closed that same year. In this new case, NES Health, based in Tiburon, Calif., was founded and owned by radiation oncologist Allan Rappaport, MD, JD. A September 2, 2024, blog post at the Emergency Medicine Workforce Newsletter listed NES Health as the country’s 14th largest emergency department employer.²

The Timing

In September 2024, NES Health informed its contract physicians by email that their regular monthly payment would be delayed. Another delay in October was attributed to a transition to a new billing company. Then, in a November 22 email shared with ACEP Now, NES Health announced its intention to cease operations.

At press time, the NES Health website noted that the company “has experienced significant financial difficulties,” leaving it with no funding or available cash to pay venders or contractors, or the premiums for its physicians’ medical malpractice coverage.¹ ACEP Now was unable to reach anyone at NES Health for comment.

A December 13 “Dear Colleague” letter from ACEP President Alison Haddock, MD, FACEP, emphasized the College’s commitment to help physicians affected by the NES closure to “find a way forward that works for them.” She stated that “the expectation that emergency physicians would continue to treat patients absent contracted benefits and protections is unreasonable.”³

ACEP has supported its members in a variety of ways, including a November Town Hall webinar discussion for affected physicians to share legal strategies for navigating the disruption.³ ACEP also offered a hardship membership program for clinicians to join the College for free and thereby access resources, including tips for contract signing and a job board, among other tools and resources.⁴

But bigger questions remain: What legal recourse is there for doctors to pursue? How can the specialty prevent this from happening to other physicians at other hospitals?

Promises Made

Affected hospitals, now in need of a way to staff their EDs, have been making arrangements with other staffing entities to replace NES Health. Physicians contacted for this article said their hospitals have not been very supportive of the critical resource that their ED clinical staff represents.

An emergency physician who practices in hospitals in Pennsylvania, who asked not to be named for this article out of concern about how it might affect his relationship with his employers, said he didn’t feel comfortable just walking away from scheduled shifts during the turmoil over NES Health’s shutdown.

“Maybe I would have been better off, but like a lot of people, we’re basically trying to decide what is our moral, ethical responsibility to keep working at this hospital when we know we’re probably never going to get paid for all the work we’ve done,” he said.

He and his fellow clinicians convened quickly after the troubles at NES Health were revealed, scrambling to find a lawyer who could answer, for example, “if we are allowed to walk out on a shift, and under what scenario?” The doctors are back at work now, employed by a Florida-based management firm. “But all of us have lost at least two months of pay. The hospital is not saying: ‘We’re going to make you whole,’” he said.

“We definitely, as a group, plan to file a lawsuit,” he said. But most of the physicians he knows are planning to leave, cut hours, or otherwise hedge their bets regarding where they work. Experts encourage ACEP members to have working relationships with more than one hospital or employer, which would give them more flexibility and options in a crisis such as this.

Another emergency physician who asked not to be named, practicing at PeaceHealth Ketchikan Medical Center in a remote part of Southeast Alaska, described the experience of getting a last paycheck from NES Health on September 26, for work performed in August, and then finding out that his October check would not be forthcoming.

“Very quickly, our hospital rallied us together for a meeting, reassuring us that ‘We’ll make you whole. Your back pay and malpractice will be taken care of. Don’t worry, just keep showing up. We deeply value the care you provide to our community,’” the doctor recalled.

A temporary relief contract agreement for ED staff to become hospital employees was offered by the hospital. Once that contract was signed, the idea of restoring lost back pay was dismissed as a “compliance issue,” he said.

What has it been like to live through this work disruption? “It’s been nonstop—communicating with the hospital, coordinating with my colleagues, consulting lawyers, engaging with ACEP, having meetings, researching and brainstorming solutions,” he said.

“How do I feel? Gutted and overwhelmed. I feel like the hospital system and corporate greed have reduced me to a commodity rather than treating me as a human. They tell me I’m valued, but their actions say otherwise. And amidst this unnerving experience, I’m still showing up to care for patients—many at the most vulnerable moments of their lives.”

Possible Responses

ACEP Board Member Diana Nordlund, DO, JD, FACEP, a corporate compliance lawyer and attending physician with Emergency Care Specialists in Grand Rapids, Mich., said the troubles with NES Health “are a very difficult position for physicians to find themselves in, where they have bound themselves to a contract and they’ve delivered what they promised to deliver pursuant to that contract.”

There are several kinds of suits that physicians could pursue against companies that leave them high and dry, including a class action lawsuit for breach of contract. Affected physicians could file a claim in bankruptcy court for money owed to them by the corporation declaring bankruptcy, Dr. Nordlund said; although, that may not offer much chance of recovery if the defendant, like NES Health, truly has no resources.

“This has been an excellent argument for making sure that you have an air-tight employment contract the next time you sign one, and that you understand your contract clauses and termination clauses,” Dr. Nordlund said. Start by developing a relationship with an attorney who practices in your state and does health care contracts.

ACEP is also trying to promote best models for employers and offers a master class for physicians looking to form their own physician-owned group. “We are also seeing some physicians move to a hospital system-employed model. There are pluses and minuses to all of these models,” she said.

The NES Health closure “is another sign of how challenging our jobs are getting at all levels,” ACEP President Dr. Haddock told ACEP Now. “We need more control in the hands of frontline physicians. Part of that is demanding more transparency from our employers, so we can understand what’s happening to the money,” Dr. Haddock said.

“Hospitals had a chance to be an advocate for their frontline employers. They have an important role here. Talk to your doctors. Find solutions. Make sure patients keep getting care,” she added. “In the meantime, physicians need to look out for themselves. As a start, have a deep knowledge of your contract. That is important, now more than ever. Knowledge is power.”

Mr. Beresford is an Oakland, Calif.-based freelance medical journalist.

References

1. NES Health. NES Health Wind Down FAQ. Accessed on January 7, 2025.
2. Adelman L. State of the Emergency Medicine Employer Market – September 2024. Emergency Medicine Workforce Newsletter. Published September 2, 2024. Accessed January 7, 2025.
3. ACEP. ACEP Calls for Stronger Physician Protections When Employers Break Contracts. Published December 14, 2024. Accessed January 7, 2025.
4. ACEP. ACEP Offers Support for EM Physicians During NES Health Career Transitions. Published November 12, 2024. Accessed January 7, 2025.