WASHINGTON — A private equity-backed health care company is slashing its doctors’ benefits in response to the coronavirus pandemic, even as many of those same doctors work to treat patients infected with the virus.

Alteon Health, which employs about 1,700 emergency medicine doctors and other physicians who staff hospital emergency rooms across the country, announced it would suspend paid time off, matching contributions to employees’ 401(K) retirement accounts, and discretionary bonuses in response to the pandemic, according to an email obtained by STAT.

The company also said it would reduce some clinicians’ hours to the minimum required to maintain health insurance coverage, and that it would convert some salaried employees to hourly status for “maximum staffing flexibility.” Administrative workers’ pay will be cut 20% and executives’ pay 25%, according to the company’s announcement.

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The changes, the company said, are an effort to avoid layoffs. At many hospitals around the country, the coronavirus has forced the cancellation of nearly all non-urgent medical procedures, meaning that hospitals and private physician practices’ revenue streams have been suddenly cut off.

The benefit reductions come as part of a nationwide trend of hospitals and health systems reducing benefits and even cutting pay rates for doctors — including those on the front lines of the crisis. Over 1,100 clinicians and staff for the Massachusetts company Atrius Health are facing pay cuts, and doctors at hospitals including Beth Israel Deaconess Medical Center were told their accrued pay would be held back, according to the Boston Globe. Intermountain Healthcare, Utah’s largest health provider, also announced that its clinicians would face pay cuts, the Salt Lake Tribune reported. Hospitals have been particularly hard hit by the loss of high-margin procedures like orthopedic and cardiovascular surgeries, forcing additional pay cuts and furloughs for health workers in Kentucky, Maine, and Georgia, per a Reuters report.

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Tenet Healthcare, a Fortune 500 company that staffs hospitals as well as urgent care clinics, including clusters in Detroit and Los Angeles, confirmed in a statement to STAT that it was similarly postponing matching funds for its employees’ retirement contributions.

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Alteon, based in Maryland, provides staffing for hospital emergency departments across the country. It is listed within the portfolio of Frazier Healthcare Partners, a private equity firm with offices in Seattle and Menlo Park, Calif., outside San Jose. As of last year, Alteon said its operation included over 1,700 clinicians at 125 practice locations.

The company maintains a presence at hospitals in Queens, N.Y., and in other hard-hit states like New Jersey and Michigan, according to its website.

“We will communicate with you regularly and hope to return compensation to normal levels as soon as possible,” the company’s chief executive, Steve Holtzclaw, said in the email.

The company said it was slashing compensation, effective in mid-April, in response to low patient volumes at hospitals around the country. In light of the rush of coronavirus cases in emergency departments and intensive care units, the federal government has urged hospitals to cancel elective procedures and told the public to avoid setting foot in hospitals unless medically necessary. Those changes have taken a toll on hospital revenues across the country, leading Congress last week to include $100 billion for hospitals in an economic relief package worth well over $2 trillion — an effort to stabilize the nosediving U.S. economy.

“On average, our emergency department and hospitalist programs have seen a decline of approximately 30% across all client populations as patients avoid hospital environments, elective procedures are suspended, and general activity is reduced,” Holtzclaw said in the email.

Insurers have also struggled to quickly reimburse hospitals and companies like Alteon for medical care already provided, Holtzclaw said.

Alteon’s announcement comes in light of a wave of new scrutiny for private equity’s role in health care. On Capitol Hill, the House Energy and Commerce Committee last year announced a bipartisan investigation into three other private equity firms for their role in “surprise” out-of-network medical bills. Such charges often occur when patients visit a hospital within their insurance network, but are unknowingly treated by a doctor employed not by the hospital but by a separate firm.

The congressional investigation focused on three companies that have aroused suspicion surrounding the physician staffing practices they own, and their billing practices: KKR & Co. Inc., Blackstone Group, and Welsh, Carson, Anderson, & Stowe. Frazier Healthcare Partners was not part of the inquiry.

In a statement, a spokeswoman for Tenet said its decision to postpone retirement benefits was an effort to provide “the best possible support for our hospitals and other care facilities so they can continue to deliver life-saving treatment to fight COVID-19.” Employees would begin to receive matching funds for their retirement later in the year, she said.

Alteon did not respond to STAT’s requests for comment.

  • The perfect case for National Health Care has just been made. Lots of civilized countries have national health care systems that prevent the above described utterly unacceptable, counter-productive, capitalism / money / profit driven ZOO. Good luck America – and all its professional / health care workers. You all deserve MUCH better. Now that it will be felt how bad the current system is : vote wiser !!!!

  • How much do you want to bet that they bring in doctor-substitutes (nurse practitioners,etc) instead of paying doctors?

  • I think there’s way to many CEO’s, CFO’s, and others that don’t earn a third of what they are paid. Take out the bonuses and cut salaries of Administration overhead instead!

  • They left out that the executives are getting a 25% pay cut too. Everybody’s taking a hit, people are losing their businesses and jobs . Physicians’ salary will not be impacted only their “fringe” benefits like 401k matching. ED volume has dropped drastically, 30-40%, which means less revenue. Under any other circumstances they should cut hours or rates; they have not done either

  • So these doctors are risking their life for the greater good to the people of our country and these private equity firms are financially punishing them for doing it. So why do these private equity firms continue to benefit from the “carried interest” tax loophole? Maybe they should share the financial grief this pandemic is causing to our great country.

  • I am not surprised. It seems, an opportunity for selfish CEO’s to boost their bonus. In fact this happened in the past as well. In 2008 economic down turn, so many companies employed this tactics by cutting the benefit to save the job.
    It is not that crazy though, but this is “The Trump administration’s decision to not open a special enrollment period for the health care marketplace because of the coronavirus pandemic has garnered strong criticism”. How a poor family, who just lost the job due to this pandemic, will sign up for an insurance? THAT IS CRAZY and need to be calling the Congressmen and the President.

  • This is horrible. These companies have been doing this for many years. They go to hospital administrators make financial deals and leave ER anesthesia radiology and other departments less than ideal by cutting staffing and paying less. But them doing this in middle of pandemic where doctors are getting infected is absolutely wrong thing to do. These companies are in this only to make money and they have no interest in actual healthcare or taking care of people. They use various tactics to over bill including by not credentialing many of the docs to private insurance companies so that they can bill out of network charges. They shouldn’t be in healthcare business . Hopefully congress and whitehouse looks in to this quickly. In the long term they should be on a tight leash.

  • This is crazy . We here Cuomo and others pleading to have Drs come out of retirement and here we have skilled Drs who have the training and also have a mountain of debt being asked to lower their salaries??? The relief bill for Hospitals will not go to Drs. Most Drs defer their earning potential for 5 to 7 yrs until after they finish residency totaling about 7 yrs . These are some of the most valued resources in a health crisis. The President should intervene and actually pay more and stop these private equity firms from making crass economic decisions. The Congress should step in and provide incentives to these skilled Drs by canceling student loans and giving them hazard pay . Can I believe .. we are in a war and the most well trained soldirrs( Drs) are being told .. Sorry less pay !! These big firms can re-deploy Drs to hot spots and pay them more instead of sending them home . What a paradox ! Where’s the brains? Where is the esprit de corps ?
    The President and Congress must act NOW!! Furloughing trained board verified Drs in Emergency medicine should be the last thing any sane citizen should support !!! We need them !! They need to be saluted and any relief bill must include Drs be paid Directly and not thru Hospitals and equity firms !!!

  • Clickbait title. This company slashed benefits to save jobs and you make it sound like it’s a terrible, selfish capitalist move because it’s a PE company. Fake news

    • It almost seems like a system that needs to cut jobs during an actual pandemic isn’t optimized to save lives if it depends on high margin procedures that can’t occur when a health care facility gets overrun with infectious patients. You are assuming a lot about motivations, but a critique of the system is not necessarily a critique of the tough choices that people need to make in a bad system.

    • What do you think they’ve done to the board members and executives…. they are probably deemed more essential….

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