The Business of Emergency Medicine – From Bullish Beginnings to Current Controversies

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Starting in 1961, with the original contract for full-time emergency medical services that was negotiated by James Mills, Jr., MD and Alexandria Hospital in Virginia, the business of emergency medicine (EM) has been promoted, analyzed, praised and decried – but has been in a bull cycle for the past 55 years. Because of this successful business model, emergency medicine has been able to support over 31,000 Board-certified physicians, who see over 140 million patients per year in the US. The business of EM has also contributed in a major way to the explosion in the number of EM residencies in the past 40 years, and has generated millions of dollars to develop academics and research. Along the way, an enduring tension has existed between those who have profited mightily from EM physician practice management (PPM) and those who have been concerned about emergency physician compensation, employment opportunities, and the potential for exploitation.

In the 1960’s the Hill-Burton legislation caused a boom in building new hospitals and ED volumes were exponentially increasing. These factors created a great demand for around-the-clock staffing of emergency departments (EDs). Congressional passage of Medicare and Medicaid in 1965 created a new revenue stream for emergency care, and many patients, who had not had health insurance coverage before, presented to EDs with “deferred pathology”. This enhanced the profitability of emergency care.

Before EM residencies were established, a few entrepreneurial emergency medicine practitioners who worked in EDs took on the task of staffing EDs through contracts with hospitals. One of the most notable of these was Karl Mangold, MD, who even from his medical school days at Cornell was interested in “how things work” in medicine from the staffing, systems, and business side of medicine. Mangold started out moonlighting in EDs in Northern California while he was stationed there as a flight surgeon for the Coast Guard. The hospital he worked for soon asked him to take over the staffing of the ED, and he recruited fellows, residents, and other physicians for this hospital. As Mangold noted the demand for ED staffing, and positive feedback from internists and other physicians who now did not need to come to the ED in the middle of the night, he saw a huge opportunity. He noted, “Then, I figured this cannot miss. This is going to sweep the country.” Mangold partnered with another physician, Herschel Fischer in 1966, and they secured a number of contracts with hospitals in California, and beyond, to become the first multi-hospital ED contract management group.  Their business model was a huge success for them, and their full-time physicians.

Over time, as Fischer Mangold became a dominant ED contract management group, they came under fire for profiting off of their contracts without having full partnership opportunities for their employed physicians. Mangold countered this criticism by pointing out the longevity of physicians who worked for him, and noting that the exploitation of emergency physicians can occur in any practice setting. He said, “The biggest exploitation I’ve ever seen, it was where one doctor had one hospital….They just wanted to rotate residents and military and fellows through forever because they could make a big amount of money.”

As emergency medicine residency graduates came in to the workforce in the early 1970’s the new field was wide open. The new experts were in such high demand, that many went from residency directly into ED directorships, with the responsibility of staffing and managing their EDs. They learned on the fly, using the business-oriented components of American College of Emergency Physicians meetings to expand their business knowledge.  Mangold remembered being criticized for not hiring residency trained emergency physicians in the 1970’s, and noted: “There must have been 100 emergency residency-trained in the country, and all these medical staffs are saying we want…residency trained emergency physicians. I said we want them too. That’s what I’ve been working for all my life!”

Serving as ACEP President in 1978, Karl Mangold was instrumental in pushing for the establishment of the American Board of Emergency Medicine (ABEM).  He spoke passionately about the need for improved emergency care and quality training and certification for emergency physicians. Meanwhile, large PPM’s in EM were now functioning coast to coast in the US and were sometimes lax about the qualifications or Board status of emergency providers as they desperately sought to fill ED positions, especially in less desirable hospital settings.

As the lucrative business of emergency medicine grew in the late 1970’s and 1980’s, PPM’s were increasingly criticized for hiring unqualified emergency care providers, limiting partnership opportunities, and using restrictive covenants to prevent local competition. The CEOs and senior partners of these PPMs were among the wealthiest physicians in the US. Increasingly, lay and academic emergency physicians began to criticize the corporate growth of EM.  Robert Simon, MD, who was in the residency program leadership at UCLA summarized the concerns well in a 1983 article, writing: “The entrepreneurism of large corporations and some multihospital groups and even many single hospital groups with one or two individuals  receiving a large portion of the ‘pie’ has resulted in very few being able to maintain the same group of physicians in the same hospital for more than a few years…I believe this practice is truly destructive to the future of emergency medicine….” (Simon, Annals EM, 12:722, 1983)

The backlash from profiteering in EM led to accusations of ACEP complicity with unethical business practices. This spawned the American Academy of Emergency Medicine in 1993 which argued strongly for reform in PPM business practices and the formation of democratic EM groups, with partnership for all members, and an end to restrictions on practice if physicians changed jobs. The complex tensions between those who support the independent practice of emergency medicine in democratic groups and the large, corporations that staff multiple hospitals continue to the present.

As the first major entrepreneur in emergency medicine, Karl Mangold exemplified the yin and yang of business in the growing field. On the one hand, Mangold was a key player in the early organization of EM as a leader in ACEP. He was on the original ABEM Board of Directors, and strongly supported the development of residencies in EM. On the other hand, he personally greatly profited from running his PPM business, and was viewed by others as not always promoting fair and equitable practice in his contracts. Above all, Mangold believed he should be able to function and compete as a physician and businessman. He had this to say to those who questioned his approach:  “…the best I can answer is that it’s a free country. This is America. We are a competitive based, free enterprise society. If you want to beat me at what I’m doing you have to get out there and do the same thing and do it better and take my business away. That’s the way it works for soap, or for cars, or everything else. You are not going to change the American economic system.”


This article was derived from Dr. Zink’s book, “Anyone, Anything, Anytime – A History of Emergency Medicine” (Elsevier-Mosby, 2006). Quotes from Karl Mangold, MD are from a 2002 interview with Dr. Zink.

ABOUT THE AUTHOR

Brian J. Zink, MD is a Professor and Chair in the Department of Emergency Medicine at Alpert Medical School of Brown University. Dr. Zink is also the author of Anyone, Anything, Anytime- a History of Emergency Medicine (Mosby Elsevier, 2006)

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