Another Emergency Medicine Staffing Firm Goes Under

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Doctors still not paid, now on the hook for malpractice tail coverage

by
Kristina Fiore, Director of Enterprise & Investigative Reporting, MedPage Today
November 26, 2024

Last Updated
November 27, 2024

NES Health, the staffing firm that drew attention recently for not paying its doctors, says it will “wind down its operations and cease doing business,” according to a company email shared on social media.

Doctors who worked for the company may be out several months of pay, and NES said it won’t provide malpractice tail coverage either, according to the email.

The company’s CEO and chief medical officer resigned earlier this month; however, the company hasn’t yet filed for bankruptcy.

“They are unlikely to go bankrupt until they have collected the next few months of patient care bills,” Leon Adelman, MD, co-founder and CEO of Ivy Clinicians, an emergency medicine jobs marketplace that has been tracking the troubles at NES Health, told MedPage Today. “The revenue will be sheltered from bankruptcy in the meantime — all while the physicians get nothing.”

NES Health is the third physician staffing firm in recent years to flounder. In 2023, American Physician Partners (APP) and Envision Healthcare both went bankrupt.

While both of those companies had substantial involvement from private equity, NES Health appears to be run by a single physician, Allan Rappaport, MD, JD, Adelman said.

“NES isn’t a private equity story,” Adelman told MedPage Today. “This is [someone] who presumably got himself into debt and then is trying to get out of it by not paying doctors.”

NES did not return a request for comment from MedPage Today.

Some hospitals have exited their contracts with NES Health, and have hired new companies to run their emergency departments (EDs). These changes are being tracked by Ivy Clinicians.

Seton Medical Center in Daly City, California, has migrated its contracts to Vituity, a physician-owned and operated group where all physicians are considered owners. While it’s a large company, with 246 EDs under management in the U.S., “it’s like a traditional medical practice at scale,” Adelman said.

“They all have visibility into the finances of their site and their region,” he said. “Their board of directors is doctors who work clinically in Vituity.”

Pete Hillan, a spokesperson for Seton Medical Center, said the hospital continued to pay NES Health, even though NES was no longer paying the doctors.

“Where did the money that Seton paid to NES to pay the physicians go?” he said in a phone interview.

Hillan emphasized that the ED at the facility remained open and functional even as it broke with NES and negotiated with Vituity, hiring locums tenens physicians to cover shifts.

“We’re dismayed by NES’s actions and are taking legal measures because NES left Seton in a lurch and because Seton paid funds to NES intended for its emergency physicians, but NES failed to pay them,” Sarkis Vartanian, administrator of Seton Medical Center, said in a statement provided by Hillan.

Three hospitals in Pennsylvania, including Roxborough Memorial Hospital in Philadelphia, have signed new contracts with Small Hospital Innovations, or SHI, which is privately owned and has physician leadership, but for which additional details are not publicly available. It has 11 EDs under management, according to Ivy Clinicians.

Frederick Poage, DO, an emergency physician who works at two freestanding EDs in the Northwest Texas Healthcare System in Amarillo, Texas, said physicians and other clinicians at those facilities have walked out over not being paid.

They were told they would be paid on November 20 for work done in October, but when they were not, they walked and have not yet been back to work, he said. While Northwest has established a new contract with a new provider, at issue is the amount of back pay Poage and others will receive.

Poage said the clinicians at the freestanding EDs were offered 57% of the money they were owed for their October work, while clinicians at the main hospital were offered 100% of their pay.

He said the hospital has chosen to keep the freestanding EDs shut down “rather than treating doctors, nurse practitioners, and physician assistants equitably. They’re the ones who live here and have been committed to Northwest for years.”

“We just want to be treated the same as the other people in our group,” he said. “We want to work with the new hospital group and get back to what’s important, treating patients.”

In a statement provided to MedPage Today, Northwest said in part that the ED at its main hospital remains open and fully operational, and it continues to “work diligently … to engage a new third-party provider to employ the ED professionals.”

Adelman noted that NES Health “appears to be following the APP model” of “keeping operations going as long as you can and then ceasing operations.”

Since the billing cycle usually takes 6 or 7 weeks to go through, declaring bankruptcy before then means “all of those collections go to the creditors,” he said. “By declaring bankruptcy, revenue is no longer under your control.”

Correction: Envision Healthcare did not shutter; it has emerged from bankruptcy.