Physician Groups Challenge Corporatization of Healthcare

Michael W. Davis, DDS


One newly established physician advocacy group, the Association of Independent Doctors (AID), is working to educate patients, the insurance industry, and government officials on why doctors must remain independent to protect the United States healthcare system.1  

“Every day hospitals are buying up medical practices turning independent doctors into hospital employees. That trend is not healthy for patients or for doctors. It hurts communities and our nation’s healthcare system,” AID says.

“When doctors give up independence to work for hospitals, studies show that healthcare costs go up, quality goes down, access to care is limited, jobs are lost, and doctors feel less satisfied. Everybody pays,” AID continues.

“Because hospitals get paid more than independent doctors—often many times more—for the same services, insurance companies pass those costs on to consumers through higher premiums. The government passes on the higher costs of Medicare to taxpayers,” AID says.

“The troubling trend of healthcare consolidation is gaining momentum, and Americans are paying a heavy price. Not only is this merger mania destroying our nation’s healthcare system, but it’s also decimating our middle class,”2 said Marni Jameson Carey, executive director of AID.  

“Regardless of what the merging parties say about streamlining care and greater efficiencies, when healthcare entities merge, costs only go one way: up, way up. Ask those trying to convince you of the benefits to point to one study that shows costs go down after a merger, or that quality goes up. They can’t,” Jameson Carey said.  

Changes in Texas

On May 31, 2018, a group of Texas physicians brought legal action against TeamHealth,3,4  which is owned by the world’s fifth largest private equity group, Blackstone Group.5 The plaintiff physicians contend the defendants violated Texas statutes against “corporate practice of medicine.”

Allegedly, TeamHealth terminated physicians for acting in their patients’ best interests. Unlicensed corporate management allegedly directed physicians to discharge hospital patients based on maximizing profits, not on their health status and stability.  

Physicians were also allegedly required to provide care to patients beyond their level of skill and training. The pleading further states that hospital shifts were routinely understaffed to drive down costs, which risked patient safety.

Physicians who acted in patient welfare but “cost (the hospital) too much money” were allegedly either terminated or threatened with termination. The pleading also makes a strong case for unlawful fee-splitting activities by corporate defendants.

The Texas Medical Association issued a landmark white paper, “The Corporate Practice of Medicine,” in September 2016.6

“The unique patient-physician relationship and the ability to use uninhibited medical judgment is foundational to effective healthcare and the ability to meet patients’ needs. For that reason, Texas and many other states have enacted laws to keep nonphysicians or corporate entities out of the practice of medicine,” the paper’s preamble states.

“This prohibition, known as the corporate practice of medicine doctrine, ensures that physicians are able to exercise professional medical judgment relating to a patient’s healthcare needs without financial or other outside pressures,” it continues. 

“Government regulators are increasing pressure on physicians to pool their practices into group or hospital-controlled corporate employment in the purported interest of saving costs and increasing efficiency. The corporate practice of medicine doctrine pushes back against that pressure to ensure that physicians have space to exercise independent judgment in the best interests of the patient instead of the corporate bottom line,” it says. 

Personnel Issues  

Legal cases also extend to attempts by corporate medicine to enforce non-compete clauses in physician employment contracts.7

“Many emergency physicians assume that contract holders (corporate healthcare employers) use restrictive covenants to prevent competition. However, preventing competition is not a legitimate business interest. Legitimate business interests supporting the use of restrictive covenants include the protection of (1) trade secrets, (2) referral sources, and (3) confidential information,” the American Academy of Emergency Medicine (AAEM) states. 

“Employers sometimes argue that since they expend considerable funds to educate or recruit physicians, the restrictive covenant protects their ‘investment.’ However, emergency physicians rarely possess trade secrets and do not disrupt referral patterns when they leave an emergency department. Confidentiality laws (HIPAA) prevent physicians from divulging personal patient information,” the AAEM continues. 

Inadequate and inappropriate physician staffing has allegedly resulted in adverse outcomes for patients, including death.8  The design of staffing for patient care is too often outside the direction and control of appropriately trained physicians in modern corporate medicine. 

Too frequently, unlicensed corporate entities make these critical decisions to maximize their company’s profits. This might take the form of physicians working outside their field of specialty, highly exaggerated and dangerous use of nurse practitioners or physician assistants, and/or gross understaffing.

Lessons for Dentistry

The lessons of corporate healthcare in medicine are very clear. Too often, money trumps patient welfare. Everyone pays a steep price except corporate beneficial ownership.

Organized dentistry positions of neutrality or “hands off” in regards to unlicensed corporate practice of dentistry seem unwise. Elements of the dental service organization (DSO) industry are already engaged in disturbing practices we see in corporate medicine. This includes but is not limited to: 

  • Direction of doctors by unlicensed entities
  • Direction of overall and specifics to patient care by unlicensed entities
  • Staffing (numbers and training) to facilitate patient care directed by unlicensed entities
  • Utilization of lesser trained auxiliaries to maximize production, often at the expense of patient welfare (possible future for dental therapists?)
  • Utilization of dental specialists, laboratories, equipment, and supplies directed by an unlicensed corporate entity
  • Restriction of employee/doctor employment and free-trade movement through dubious non-compete clauses in employment contracts

Organizations in the medical community have stepped up to counter abuses generated by the corporatization of America’s healthcare system. Unfortunately for physicians in their battle against these corporate giants, it may be too little and too late for the public interest. This struggle has not been ignored by dentistry, as exemplified by the Academy of General Dentistry.9  

Other dental organizations also are directly addressing independence in the doctor/patient relationship.10  These include the Concerned Dentists of Texas, the Massachusetts Dentists Alliance for Quality Care,  and the Concerned Dentists of Washington State.  

Dental groups that attempt to “straddle the fence” or outright ignore violations of the doctor/patient relationship inflicted by the DSO industry and corporatization of American healthcare are in peril. They risk significant declining membership.

The legacy of such organizations will be relegated to the trash heap of irrelevancy. Meanwhile, officers and directors of such groups will advance to positions within the insurance and DSO industries, from which they often originated.

“Tricks and treachery are the practice of fools, that don’t have brains enough to be honest.” Benjamin Franklin


  1. Association of Independent Doctors. Internet website 2018.
  2. Jameson-Carey M. Don’t drink the healthcare consolidation Kool-Aid. Medical Economics Jul 2, 2018;
  3. Price S. Austin hospitalists sue TeamHealth over corporate practice of medicine. Texas Medical Association Jun 19, 2018;
  4. Price S. Corporate Encroachment. Texas Medical Association Jun 19, 2018;
  5. Blackstone. Internet website 2018.
  6. Texas Medical Association- Office of General Counsel. The Corporate Practice of Medicine. White Paper Sept 2016;
  7. Emergency Physicians Monthly. AAEM does battle with TeamHealth… again. Jun 2015.
  8. Rice S. Keller family sues Texas emergency room chain for over $1 million after preschooler’s death. The Dallas Morning News Nov 10, 2017.
  9. Varadarajan S. Is this the end of general dentistry as we know it? AGD Impact Nov 2017.
  10. Davis MW. Emerging advocacy groups support small business dentistry. Dentistry Today News Apr 20, 2018.

Dr. Davis practices general dentistry in Santa Fe, NM. He assists as an expert witness in dental fraud and malpractice legal cases. He currently chairs the Santa Fe District Dental Society Peer-Review Committee and serves as a state dental association member to its house of delegates. He extensively writes and lectures on related matters. He may be reached at or

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