Introduction
The Wellness-Legal Partnerships (WLPs) proposal was initially a response to implicit racial and ableist bias in workplace wellness programs.Footnote 1 Modeled after Medical-Legal Partnerships (MLPs), WLPs could help wellness programs to expand their focus from only on individual lifestyle and behavior choice to also address social and structural determinants of wellbeing.Footnote 2 WLPs could also address the damage that health care corporatization on to employer health benefits, which includes wellness programs, as well as on physicians and patients. This Article explores WLPs more deeply, applying frameworks of systems leadership, lawyer fiduciary duty, and health justice to flesh out how and why WLPs operate, particularly considering health care corporatization.
Every day, there seems to be headlines about the challenges patients face in accessing necessary health care – even if they have insurance.Footnote 3 When patients do finally access health care, it is often not the care that they want, need, or can afford. A U.S. survey by the Harris Poll found that nineteen percent of respondents complained about the medical system’s lack of focus on “preventative care and wellness.”Footnote 4 The Harris Poll found that the most common ways the U.S. health care system is falling short for consumers relate to getting appointments, costs, and focus on treating acute problems rather than providing preventative care and wellness.Footnote 5
Moreover, both patients and employers feel powerless when it comes to health care costs. According to a Kaiser Family Foundation poll, about half of U.S. adults say it is difficult to afford health care costs, and about forty-one percent of American adults report having debt because of medical or dental bills.Footnote 6 A recent New York Times article pointed out that most employers select health care plans without knowing what they or their employees will pay.Footnote 7 This is especially concerning for patients with high deductible health plans, a growing segment of the insurance landscape.Footnote 8 Price transparency efforts have not proven helpful in addressing this powerlessness. For example, a 2021 study found the majority of surveyed hospitals are noncompliant with price transparency regulations, which were created to promote competition and advance patient-informed decision making.Footnote 9 Furthermore, the pricing data disclosed by hospitals showing the prices hospitals negotiate with expose “numerous examples of major health insurers — some of the world’s largest companies, with billions in annual profits — negotiating surprisingly unfavorable rates for their customers.”Footnote 10 Thus, both patients and group purchasers of health care seem to have little say in the current health care market.
Physicians are not happy with the status quo either. Frontline health workers like physicians and nurses are burning out at an alarming rate, further exacerbating access and value problems. In 2022, the United States Surgeon General issued an Advisory addressing health worker burnout, stating that even before the COVID-19 pandemic, “35-54% of nurses and physicians and 45-60% of medical students and residents report[ed] symptoms of burnout.”Footnote 11 The pandemic only amplified the already-existing burnout being felt by health care workers.Footnote 12 Physicians would welcome more time to address patient wellbeing and understand the social drivers that impact their patients’ health, but the current health system does not permit it.Footnote 13 Effectively addressing health worker burnout requires “systems-oriented, organizational-level solutions,” not just individual practitioner support.Footnote 14 Systemic changes should address burdensome regulations, administrative paperwork, lack of time with patients, the need for greater physician autonomy, and an alignment of values and key health care decisions.Footnote 15
In sum, despite accounting for almost twenty percent of America’s national Gross Domestic Product,Footnote 16 the U.S. health care system is far from satisfactory for end users and practitioners in terms of equity, accessibility, affordability, efficiency and effectiveness.
Some commentators blame this disconnect between U.S. health care spending and its perceived value on physician shortages, particularly in primary care, as well as administrative burdens, physician burnout, and medical school debt that forces students to lean heavily into financial considerations when choosing how to practice medicine.Footnote 17 However, these physician challenges are mere symptoms of a larger problem. The larger problem is the corporatization and consolidation of health care, driven most recently by a frenzy of private equity investment in physician practices.Footnote 18
To reverse this corporatization trend, the health care field needs lawyers who practice law through an approach that blends thinking from systems leadership, lawyer fiduciary duty, and health justice. The primary objective of such lawyers is to champion efforts to improve patient wellbeing and make health care more holistic, affordable, and valuable for all purchasers and physicians. This Article proposes to have these lawyers practice in Wellness-Legal Partnerships (WLPs) that work collaboratively with health care purchasers and physicians, since the interests of purchasers and physicians align when it comes to the corporatization of health care.
Part I argues that health care corporatization has caused severe consequences for purchasers and physicians, highlighting the most recent efforts by private equity to acquire physician practices. This part will examine the impact of corporatization on health care purchasers, which includes both employers and patients, as well as physicians, and how the shared interests of these stakeholders make them good partners for systemic change.
Part II explores the impact of health care corporatization on traditional health law practice sites of in-house counsel departments, corporate law firms, and MLPs, and describes a new type of legal practice to take on health care corporatization. This new legal practice draws elements from legal practice frameworks of systems leadership, lawyer fiduciary duty and health justice to form a WLP practice model.
Part III introduces the WLP model, which, like its counterpart, the MLP, uses a three-fold approach to advocacy: 1) individual representation; 2) organizational change; and 3) systemic change. Yet, unlike the MLP, which partners with exclusively with medical providers, the WLP would form partnerships in the employee benefits arena, such as operating as part of a corporate wellness initiative. Potential WLP partners include existing Employee Assistance Programs (EAPs), business coalitions, wellness vendors, and Direct Primary Care (DPC) arrangements. With these potential partners, WLP lawyers could build collaborative networks of stakeholders harmed by health care corporatization to effect system change, while also addressing social and structural determinants of wellbeing through individual and organizational advocacy. Overarching this three-pronged approach is a goal for the WLP lawyer to improve patient well-being by making employee health and wellness benefits more holistic, affordable, and valuable. By working independently through solo practice or private practice law firms, lawyers can manage some of the major ethical considerations WLP work may encounter, such as confidentiality and conflict of interest concerns, while building a sustainable and satisfying career.
I. The Corporatization of Health Care
Health care corporatization is a phenomenon in which corporate investors such as publicly traded organizations, large health systems, health insurers, and private equity firms, seek to maximize revenues over what is best for patients, clinicians, and purchasers of health care overall.Footnote 19 Private equity is the most recent entrant into the corporate health care space, but it is part of a larger corporatization trend that has its roots in the U.S. policy to privately finance and deliver most health care services.Footnote 20 To this day, most people living in the United States obtain health coverage through employment.Footnote 21 In 2022, 48.7% of individuals had employer-based coverage, compared to 37.1% with publicly-financed insurance (Medicare, Medicaid, and military benefits).Footnote 22 Most hospitals are owned and operated by private entities instead of public entities.Footnote 23 In 2022, of the total 5,129 hospitals in the United States, only 923 were owned by state or local government.Footnote 24 The vast majority of hospitals were owned and operated by the private sector, either as non-profit (2,987) or for-profit (1,219).Footnote 25 These privately-owned hospitals can be religious or non-religious based.Footnote 26 Although both for-profit and non-profit hospitals provide community benefit, they also both engage in “complex joint ventures, excessive executive compensation, operating for the benefit of private interest rather than public good.”Footnote 27 Thus, both non-profit and for-profit health care stakeholders can, and do, engage in the health care corporatization trend, of which private equity investment is a part.
A. Private Equity Investment in Health Care
“Private equity investors spent more than $200 billion on health care acquisitions in 2021 alone, and $1 trillion in the past decade.”Footnote 28 Investing in health care is not new. What is different and troubling about the recent surge in private equity investing is twofold. First, private equity investors are typically lay people with little knowledge of health care.Footnote 29 Second, the investment tactics are aggressive and solely about turning a quick profit, often to the detriment of patients.Footnote 30 The typical private equity investor in health care is a lay person or entity that lacks “professional and institutional obligations to promote the higher ethical goals of medical care.”Footnote 31
Unlike venture capitalists (another type of private equity investor), the typical private equity health care investor seeks mature businesses whose profits can be substantially improved through the lay investor’s “active management.”Footnote 32 This focus on mature business allows the investors to liquidate valuable assets like real estate. In contrast, venture capitalists focus on early-stage investing in exchange for equity in the emerging company.Footnote 33 Some argue that private equity investment in health care is a welcome disruption given health care’s poor performance on access, quality, and cost.Footnote 34 However, such praise may more rightfully be reserved for venture capital and early stage investing and not the typical investment in mature health provider organizations.
Private equity’s active management of a mature health care entity often consists of first liquidating the health care business’s most valuable assets (usually real estate) to secure a loan or sell those assets to other investors to generate immediate returns for the new owners of the practice.Footnote 35 The investors then lease back the real estate to the practice, which does not save the practice any money in the long run. In fact, oftentimes, the health care provider must pay back the loan taken out by the investors as well as pay rent to use the facility that they once owned, often leading to bankruptcy.Footnote 36 This private equity financial playbook disproportionately affects poor and rural communities.Footnote 37 Other tactics private equity investors use to boost medical practice profits include payment arbitrage, cutting staffing costs, consolidating market power, increasing prices, and focusing on high-volume services.Footnote 38 The consolidation of market power starts with acquiring a large, established practice and then adding on smaller practices to build a larger organization that has more market power.Footnote 39 Once the private equity firm has maximized the profit-making ability of its health care company, the investors sell the company or take it public, usually within three to seven years of the initial purchase.Footnote 40
After first investing in nursing homes and hospitals, private equity firms are now swallowing up physician practices, particularly in the specialties of dermatology, gastroenterology, ophthalmology, obstetrics/gynecology, orthopedics, and primary care.Footnote 41
B. Other Health Care Corporatization Efforts
Private equity investment in health care is only one aspect of health care corporatization. The health insurance industry is vertically integrating at a disturbing rate.Footnote 42 According to the American Hospital Association (AHA), health insurance plans have spent billions in the last five years to acquire physician practices.Footnote 43 For example, UnitedHealth and its subsidiary Optum is the largest employer of physicians in the United States, with over 90,000 employed or affiliated physicians.Footnote 44 Indeed, the U.S. Department of Justice recently launched an antitrust investigation into UnitedHealth.Footnote 45 But that investigation is not necessarily slowing down UnitedHealth’s desire for growth. Recently, Optum was seeking to acquire a Massachusetts-based physician group that had recently filed for bankruptcy.Footnote 46 U.S. health insurers may have reached “too big to fail” status: six health insurance companies make up thirty percent of total U.S. health care spending in 2023, and three of the largest insurers processed eighty percent of all prescription drug claims in 2023.Footnote 47
Vertical integration of physician practices with hospitals and health systems has also increased in the last several years.Footnote 48 For example, the percentage of primary care providers in hospital-owned practices increased fifty-seven percent between 2010 to 2016, and the number of physicians who owned their practices fell from sixty to forty-seven percent between 2012 and 2022.Footnote 49 Some commentators argue that hospital acquisitions of physician practices create a loyal referral source for the hospital and allow the hospital to bill for physician services at higher prices in hospital outpatient departments than consumers would pay in physician-owned clinics.Footnote 50 Consolidation of hospitals and acquisitions of physician practices has led to large health systems whose operating revenues rival or exceed that of large corporations like Netflix or Starbucks and leave patients in many U.S. markets without competitive options.Footnote 51 Finally, large corporations like Amazon and CVS have been purchasing primary care providers.Footnote 52
The corporatization of health care is antithetical to the very nature of medical care. In 1963, economist Ken Arrow explained that medical care has a social value founded on a special trust relationship between physician and patient.Footnote 53 A large part of what medical care offers is a social obligation for best practice on behalf of the buyer, knowing that the buyer, such as a patient or group health plan, is not able to competently determine what constitutes best practice.Footnote 54 “The very word, ‘profit,’ is a signal that denies the trust relations.”Footnote 55 Yet, private equity investment in health care is all about profit maximization.Footnote 56 Profit maximization contradicts the “social contract” premise of health care, which assumes that health care is a public good that is safe, effective, and available equally to all people in the community.Footnote 57 Some legal scholars have even called for health care to be treated like a public utility by regulating prices and administrative costs.Footnote 58
Although often touted as preferable over fee-for-service payment models,Footnote 59 value-based payment models encourage market consolidation. One legal researcher recently pointed out that capitation-based financing, which pays providers a flat fee for a population of patients or a specific service and is a key part of value-based payment arrangements, supplies the capital and incentive for vertical consolidation of health care services.Footnote 60 Specifically, capitation-based financing pays providers more for caring for higher risk patients and for providing higher quality care.Footnote 61 Through consolidation, corporate owners of a continuum of health care providers such as primary and specialty care physicians, hospitals, home health, pharmacies, and other providers, can more easily control the risk scores assigned to patients (by assigning higher risk scores for higher payments) and the quality of care metrics that determine quality of care bonuses in the value-based payment models.Footnote 62 The consolidated health systems can also more easily steer patients to system-owned subsidiaries.Footnote 63 In short, large corporate interests are gaming the current value-based health care financing and delivery system to the detriment of health care purchasers and physicians.
C. Government Tools to Combat Corporatization
Federal and state governments have numerous legal tools to advance or preserve the social contract nature of health care. These tools include, as examples, antitrust laws, fraud and abuse laws, and the Corporate Practice of Medicine. Each of these tools, if enforced vigorously, could help curtail the corporatization of health care. A full description and analysis of each of these tools is beyond the scope of this article. However, a brief description of each is provided below.
1. Antitrust Laws
Laws such as the Sherman ActFootnote 64, Clayton ActFootnote 65 and Federal Trade Commission Act (FTCA)Footnote 66, as well as similar state laws, aim to protect competition in the market.Footnote 67 Practices that restrain competition, such as price fixing, market allocations, or other forms of market power, can violate these state and federal laws and lead to hefty penalties.Footnote 68 For example, antitrust laws can be especially helpful as health systems and insurers consolidate and purchase other health care entities through private equity investments. Market consolidation includes both “horizontal mergers,” in which market competitors merge (such as competing hospitals or competing insurers), as well as “vertical mergers,” in which different members of the health care supply chain merge.Footnote 69
2. Fraud and Abuse Laws
Federal and state fraud and abuse laws curb the urge by corporate interests to maximize revenues by providing medically unnecessary services.Footnote 70 The three primary federal fraud and abuse laws are the False Claims ActFootnote 71, the Anti-Kickback StatuteFootnote 72, and the Stark Law.Footnote 73 These three laws generally aim to prevent health care providers who bill federal health care programs like Medicare and Medicaid from financially incentivizing care beyond what is medically necessary.Footnote 74 Thus, these laws penalize providers if they bill for more services than necessary, bill for higher cost services when lower cost services were provided, or enter into financial arrangements with other health care stakeholders that may improperly incentivize revenue generation over what is best for the patient.Footnote 75 Indeed, health care private equity investors may be surprised to learn that “many contractual relationships, investments, and marketing and recruitment practices that are perfectly legal in other businesses” are potentially illegal under these federal fraud and abuse laws.Footnote 76
3. Corporate Practice of Medicine (CPOM)
Many states restrict the corporate practice of medicine (CPOM), though enforcement of CPOM varies widely.Footnote 77 The premise behind CPOM laws is to prohibit lay owners of medical practices.Footnote 78 That is, corporations (or their lay owners) cannot be licensed to practice medicine and therefore should not own or control the clinical decision-making surrounding the delivery of medical care.Footnote 79 CPOM laws assume that lay ownership may improperly influence the clinical judgment of physicians, placing monetary concerns over what is best for the patient.Footnote 80 CPOM laws preserve the integrity of the physician-patient relationship by keeping lay ownership and control out of the clinical decision-making process.
D. Recent Government Enforcement Efforts Against Health Care Corporatization
Despite having multiple tools at its disposal, federal and state governments have been slow to use these tools, which may have contributed to the widespread proliferation of corporatized health care.Footnote 81 Nevertheless, the one tool that the government has turned to recently is antitrust law. In a 2021 Executive Order on Promoting Competition in the American Economy, President Biden promised action against corporate consolidation in health care, noting that “hospital consolidation has left many areas, particularly rural communities, with inadequate or more expensive healthcare options.”Footnote 82 The Department of Justice (DOJ) also agreed to scrutinize private equity transactions, with a senior DOJ official observing the “complexity of the commercial relationships that stand between a doctor and a patient” and that these corporate intermediaries can “influence, or in some cases even determine, the tests to be given, the drugs to be prescribed, the procedures to be offered, and the time spent trying to address a medical issue.”Footnote 83 Finally, on March 5, 2024, the FTC, DOJ and the Department of Health and Human Services (DHHS) launched a public inquiry into “corporate greed in health care” and promised greater commitment to “promoting and protecting competition in health care markets and ensuring appropriate access to quality, affordable health care items and services.”Footnote 84 Even with increasing government interest in health care corporatization, such investments are likely to continue because many of the reasons for investing in health care, such as an aging population, opportunities to scale, and labor shortages, remain.Footnote 85
E. The Impact of Health Care Corporatization on Purchasers and Physicians
The adverse impacts of corporatization in health care include higher costs, lower quality, and shrinking the availability of health care options.Footnote 86 This in turn creates lower value health care, which can potentially lead to patient dissatisfaction and breach of ERISA fiduciary duties by group health plans, as recently demonstrated by class action lawsuits against Johnson & Johnson and the Mayo Clinic.Footnote 87 For physicians, corporatization often leads to lower autonomy and more debt.Footnote 88
1. Impact on Health Care Purchasers
Health care purchasersFootnote 89 experience higher costs because of corporatization. These higher costs may be the result of higher premiums, higher out-of-pocket spending, and higher prices.Footnote 90 Purchasers also may observe decreased quality and access because of health care corporatization.
a. Costs
Research thus far concludes that health care costs increase under corporate models of health care.Footnote 91 According to a review of studies looking at the impact private equity investment in health care, private equity acquisitions of hospitals “has been associated with decreases in staffing ratios and increases in charges, markups over costs, and the proportion of privately insured patients.”Footnote 92 With regard to physician practice acquisitions, the research “shows similar risks of higher prices, increased health spending (which reflects higher utilization of unnecessary or more expensive care), and reduced staffing levels.”Footnote 93 Higher prices and more spending leads to higher costs for patients and group health plan purchasers.Footnote 94 For example, a study of 578 physician practices that were acquired by private equity firms found an increase in health care spending, utilization, and coding intensity of evaluation and management visits.Footnote 95 According to the researchers, these findings may suggest “overutilization of profitable services and/or unnecessary or low-value care, which could raise health care spending without commensurate patient benefits.”Footnote 96 Some studies have found an association between health care consolidation and premium increases.Footnote 97 Indeed, the 2023 Kaiser Family Foundation Employee Benefits Survey found that over the last ten years family premium increases have outpaced inflation (forty-seven percent versus thirty percent), with the average family premium now costing workers and their group health plans $23,968.Footnote 98 According to a recent poll, when it comes to health care, voters in the 2024 election were most concerned about high out-of-pocket costs.Footnote 99
A report by the North Carolina State Health Plan found that even during the COVID-19 pandemic, North Carolina’s seven largest hospital systems recorded $7.1 billion growth from 2019 to 2021, but charity care spending barely improved, and in some cases the hospitals billed disadvantaged patients more than before the pandemic.Footnote 100 Two hospital systems even sued patients over medical debt during the pandemic or encouraged patients to open medical credit cards with high interest rates, even while the hospital systems were making record profits.Footnote 101
A recent review of hospital price data shows that major health insurers, who as noted earlier are acquiring physician practices, negotiate “surprisingly unfavorable rates for their customers.”Footnote 102 According to the review, hospital prices for patients who are uninsured are less than for those with insurance.Footnote 103 These bad deals from insurers particularly impact patients in high deductible health plans who must pay out-of-pocket for costs until their deductible is reached.Footnote 104 Insurer bad deals also adversely affect self-funded group health plans who may rely on insurers as third party administrators to negotiate prices on the plan’s behalf.Footnote 105 A Rand Corporation study found that self-funded employers in Indiana were paying on average 358 percent of Medicare rates for outpatient services and up to three and one half times the Medicare rate for inpatient services.Footnote 106 Loss of independent providers fuels high prices, as independent providers “often charge less than hospitals and health systems because they have less leverage to negotiate prices and don’t add facility fees to outpatient charges.”Footnote 107
Most employers select health plans for their employees without knowing what they or their workers will ultimately pay for items and services.Footnote 108 And when group health plans do learn of higher prices from health care providers, they may be blocked from removing those providers from their plans because of market consolidation.Footnote 109 For example, a union benefits fund wanted to exclude a large hospital system from its plan because of the system’s high prices, but the system would not agree to the exclusion until the union paid it $25 million.Footnote 110 The hospital claimed that the union owed the hospital $25 million for previous care, but has not supported that claim with evidence.Footnote 111 Without data and evidence to back up provider costs of care, purchasers are at a disadvantage at the negotiating table. Such market imbalance makes it difficult for group health plans to save on health costs for employees and themselves.Footnote 112
Price transparency laws were intended to fix that imbalance but most hospitals are not complying with those laws, and when they do, the data is often published in hard-to-use formats.Footnote 113 The potential penalty for failing to comply is minimal and currently ranges from $109,500 to $2,007,500 per hospital.Footnote 114 For hospitals that make billions of dollars in revenue, such penalty may not offer enough incentive to be fully transparent with prices.Footnote 115 Furthermore, higher costs leads to patient medical debt,Footnote 116 as well as delaying necessary medical care.Footnote 117
b. Quality and Access
A recent study of fifty-one private equity-acquired hospitals across the United States found increases in hospital-acquired infections, even with a healthier patient pool compared to non-private equity-acquired hospitals.Footnote 118 Nevertheless, studies regarding the impact of health care corporatization on quality of care have not been as conclusive as studies regarding the impact on price.Footnote 119 Such inconclusiveness may be the result of“[s]tudies show[ing] mixed findings depending on the quality measures studied, setting, and degree of integration.”Footnote 120 Some studies show no change in quality measures after horizontal or vertical integration of health care entities, while others show a decline in quality, and still others show an improvement.Footnote 121
Mixed results from studies evaluating quality after private equity health care acquisitions suggest that private equity investment can improve health care organization operations.Footnote 122 However, as noted by one group of researchers,“[t]he fact that no consistently positive effects of [private equity] in healthcare were identified also provides an evidentiary basis to remain cautious about claims that [private equity] ownership is a self-evident benefit to healthcare provision.”Footnote 123
Interestingly, the Rand Corporation found no studies that directly assessed the effects of insurer or physician practice consolidation on access to care.Footnote 124 The Rand Corporation did find two studies that examined the effect on patient access following hospital consolidation in rural settings.Footnote 125 Those studies found that hospitals that merged with larger systems were more likely to reduce maternal, neonatal, surgical care, and mental health and substance use disorder services.Footnote 126 Other anecdotal evidence of adverse impacts on patient access to care because of private equity investments in health care include the bankruptcies of Steward Health Care in Massachusetts,Footnote 127 Envision Healthcare, and the Center for Autism and Related Disorders.Footnote 128 Steward Health Care is a community hospital system that touted itself as an “accessible low-cost alternative to Boston’s medical goliaths.”Footnote 129 In 2010, a private equity firm acquired and converted the Steward Hospitals to for-profit entities, which were previously operated by the Boston Archdiocese.Footnote 130 Implementing the typical private equity playbook, the private equity firm sold the hospital buildings in 2016 for $1.2 billion and paid out a $111 million dividend to private equity owners in 2021, leaving the hospitals with multi-million dollar rent obligations.Footnote 131 Steward’s bankruptcy will likely disrupt care for numerous patients.Footnote 132
In total, there were about eighty health care bankruptcies in 2023 and at least seventeen of those involved private equity firms.Footnote 133 Envision Healthcare is an emergency room staffing company with 70,000 employees across the United States that filed for Chapter 11 bankruptcy on May 15, 2023.Footnote 134 The private equity firm KKR acquired Envision Healthcare in 2018 for $9.9 billion, seventy percent of which was debt that was subsequently offloaded onto Envision.Footnote 135 Envision blamed the implementation of the No Surprises Act in its bankruptcy filing because it impacted its business model, which was to surprise patients with higher-than-average rates when using out-of-network emergency services.Footnote 136 Envision also spent “millions of dollars on a dark money campaign against surprise billing legislation.”Footnote 137 Envision is now being sued by the American Academy of Emergency Medicine Physician Group for engaging in unfair business practices, such as California’s corporate practice of medicine, fee splitting and restrictive covenant law.Footnote 138
Another example of how private equity acquisitions of health centers results in lower quality is revealed in the bankruptcy filings of the Center for Autism and Related Disorders. The Center is an autism treatment provider with 130 centers across the United States that filed for bankruptcy on June 12, 2023.Footnote 139 The private equity firm Blackstone acquired the Center for Autism and Related Disorders in 2018 for $600 million and started to close centers soon thereafter, creating access problems for patients who were often given less than six weeks advance notice of a clinic closure.Footnote 140 Waitlists at remaining providers were up to one year long.Footnote 141 Interviews of staff after the Blackstone takeover revealed cuts to training requirements, deterioration of standards, and poor working conditions such as an increase in patient-to-clinician ratios that increased patient loads from ten to twelve patients per clinician to up to twenty-five.Footnote 142 The bankruptcies just described are only a sample of the total number of health organization bankruptcies that have occurred. The number of private equity bankruptcies in health care increased by 112.5 percent over the last five years and more are predicted to occur.Footnote 143 Because studies have found that private equity hospitals are on average located in lower-income, rural areas,Footnote 144 these areas are likely to be more adversely impacted by health organization bankruptcies than more affluent areas.
In addition to bankruptcy and access problems, another quality issue arising from health care corporatization is data privacy breaches. In February 2024, Change Healthcare, a subsidiary of UnitedHealthcare, experienced a ransomware attack that involved six terabytes worth of patient medical records, social security numbers, and active military personnel information.Footnote 145 In response to the ransomware attack, U.S. lawmakers questioned whether massive consolidation in health care leaves the U.S. health system more vulnerable to such attacks.Footnote 146 Another cyberattack happened three months later to a large health system, Ascension, blocking access to “many electronic patient records, communication systems, and online ordering and prescribing systems,” which adversely impacted patient care.Footnote 147 Although Ascension is not owned by private equity (it is a Catholic nonprofit hospital system), it is a large, consolidated system with 140 hospitals and thousands of affiliates across the United States.Footnote 148 Ascension is now facing two proposed class-action lawsuits in Illinois and Texas alleging that Ascension acted negligently by failing to encrypt patient data leaving patients at risk of identity theft for years to come.Footnote 149
Each of the above examples of corporatization affirm that it is not benefiting health care purchasers in critical ways. Corporatization is leading to higher costs for purchasers, and at least questionable, if not lower quality. As a result, health care purchasers may be very open to collaborate with other aligned stakeholders who are not satisfied with the status quo and want to improve health care costs and quality.
2. Impact of Corporatization on Physicians
Health care purchasers are not the only stakeholders adversely impacted by the corporatization of health care movement. Many physicians also find themselves in losing positions because of corporatization efforts. Almost sixty-one percent of surveyed physicians have a negative view of private equity involvement in health care.Footnote 150 Indeed, over half of the respondents viewed private equity ownership as worse or much worse than independent ownership of physician practices, and 49.3 percent viewed private equity ownership worse or much worse than not-for-profit health system ownership of physician practices.Footnote 151 The surveyed physicians viewed private equity ownership in health care as adversely impacting: 1) physician wellbeing; 2) health care prices or spending; and 3) health equity.Footnote 152 A survey of a small group of physicians currently employed by private equity-owned practices reported “lower satisfaction, autonomy, and likelihood of staying with their employer.”Footnote 153
Other studies reveal that private equity-owned practices pressure clinicians to increase revenue by performing more procedures and ancillary services, as well as to use more expensive drugs, which can lead to higher spending by health care purchasers.Footnote 154 These practices may also replace physicians with nonphysician practitioners without adequate physician supervision.Footnote 155
Some physicians have sued private equity firms for unfair business practices and for violating state laws like the corporate practice of medicine. One such lawsuit is American Academy of Emergency Medicine Physicians Group, Inc. v. Envision Healthcare Corporation. Footnote 156 As noted earlier, Envision Healthcare is owned by the private equity firm KKR and has currently filed for bankruptcy.Footnote 157 In the lawsuit, the physician plaintiffs allege, among other things, that:
Envision exercises profound and pervasive direct and indirect control and/or influence over the medical practice, making decisions which bear directly and indirectly on the practice of medicine, rendering physicians as mere employees, and diminishing physician independence and freedom from commercial interests, in violation of California’s corporate practice of medicine ban.Footnote 158
Despite these downsides to corporatization of health care, many physicians are willing participants. According to a recent physician survey by the American Medical Association (AMA), physicians are selling their practices to larger health systems and private equity firms because without the help of these larger conglomerates, they cannot survive financially.Footnote 159 Indeed, the number of physicians who own their medical practice has decreased in the last ten years, from 53.2 percent in 2012 to forty-four percent in 2022, and new physicians are much less likely to own their medical practice than retiring physicians.Footnote 160
Why Are Physicians Selling?
One legal scholar pointed out that the ability for physicians to sustain an independent practice has become financially “daunting” given that physician practices are now expected to have sophisticated and expensive information technology.Footnote 161 What private equity offers physicians is a chance to reduce their personal risk of meeting all these administrative and regulatory burdens, which lead to burnout, while still being able to practice medicine, and perhaps receive an influx of cash from the sale of their practice.Footnote 162
3. How the Interests of Purchasers and Physicians Align
In the march toward greater health care consolidation, the losing stakeholders are health care purchasers and physicians. The interests of these two stakeholders do not often align. In fact, many state and federal fraud and abuse laws exist to ensure that physicians do not take advantage of their position to bill purchasers for medical services that are not needed or provided.Footnote 163 But in the case of health care corporatization, both purchasers and physician stakeholders are losing the ability to negotiate more favorable prices and higher value care. Group health plan purchasers and physicians also both have a fiduciary responsibility to ensure high value care to beneficiaries.Footnote 164
a. Loss of Negotiating Power
As noted above, physicians disapprove of private equity investment in health care, and most surveyed physicians experience less autonomy and satisfaction working in corporate environments.Footnote 165 Corporatization is also leading patient purchasers to experience higher costs and less access to health care, especially health care that they want (such as preventive, holistic health care).Footnote 166
Studies have shown that self-insured group health plans are paying higher prices as a result of health care market consolidation than insured health plans.Footnote 167 Self-insured group health plans have an incentive “to lower costs, given their responsibility for the medical costs of enrollees.”Footnote 168 Yet, self-insured health plans have “limited ability to negotiate with highly consolidated hospitals and other providers.”Footnote 169 Relying on third party administrators (TPAs) to negotiate a better price has not worked.Footnote 170 This is because TPAs are often health insurance companies, which as noted earlier, are a huge part of the health care consolidation phenomenon.Footnote 171 TPAs often hinder self-insured group health plans’ “awareness of the prices they are paying, limit their ability to lower spending, and potentially introduce additional costs.”Footnote 172
The additional costs to which TPAs may expose self-insured group health plans include processing fees for making payments to health care providers.Footnote 173 These processing fees may be shared with companies supplying private equity-backed repricing tools that end up shortchanging the self-insured group health plan, patient, and health care provider.Footnote 174 The lack of market power in the face of large, consolidated health systems has led some purchasers and physician groups to file lawsuits against the systems. For example, the Kraft Heinz Company group health plan sued its TPA, Aetna, for breaching its ERISA fiduciary duty when, among other things, it repriced claims and failed to pass any savings to the self-insured group health plan.Footnote 175 Another case brought by emergency room physician groups against UnitedHealthcare similarly alleges that UnitedHealthcare conspired with Multiplan (the private equity-backed owner of the repricing tool) to underpay physicians and then UnitedHealthcare and Multiplan share in the “savings.”Footnote 176
b. Fiduciary Duty to Plan Beneficiaries
ERISA requires group health plan fiduciaries to discharge their duties with respect to a plan solely in the interest of the participants and beneficiaries and with the care, skill, prudence and diligence that a prudent person acting in like capacity would use.Footnote 177 According to the U.S. Department of Labor, a fiduciary is a “person using discretion in administering and managing a plan or controlling the plan’s assets.”Footnote 178 ERISA fiduciary duty is not about one’s title. Rather, the duty applies when a person has discretion and control over plan administration or assets.Footnote 179 Thus, a plan fiduciary could be an employer sponsor of a plan, but could also be a vendor, such as a third-party administrator or pharmacy benefit manager, depending on how much discretion or control they have over plan decisions or assets. ERISA fiduciary duty does not include whether an employer or union should offer a health plan – that is a business decision.Footnote 180 However, when the employer or union does decide to offer such a plan, it is then obligated under the ERISA fiduciary obligations to do the followingFootnote 181:
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• Act solely in the interest of plan participants and beneficiaries and with the exclusive purpose of providing benefits to them;
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• Carry out plan administration and asset management prudently;
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• Follow plan documents (unless inconsistent with ERISA);
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• Hold plan assets (if any) in trust; and
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• Pay only reasonable plan expenses.
If there are any plan losses or improper uses of plan assets because of fiduciary action or inaction, such fiduciaries may be personally liable for those misdeeds.Footnote 182
Indeed, self-insured group health plans are at risk of being sued by plan participants if they do not comply with their ERISA fiduciary duties of loyalty and prudence. Group health plan participants brought breach of fiduciary duty lawsuits recently against Johnson & Johnson’s health plan and Mayo Clinic’s health plan.Footnote 183 In the Johnson & Johnson lawsuit, a class of plaintiffs alleged that Johnson & Johnson mismanaged its prescription drug benefits program, through its Pharmacy Benefits Manager (PBM), “costing employees millions of dollars in the form of higher payments for prescription drugs, higher premiums, higher deductibles, higher coinsurance, higher copays, and lower wages or limited wage growth.”Footnote 184 Specifically, plaintiffs alleged that Johnson & Johnson contracted with Express Scripts, a PBM, and Aon, an insurance broker, who all benefited financially from marking up drugs 498% above what it costs pharmacies to acquire the same generic-specialty drugs.Footnote 185 The markups represent profit for the PBM and no corresponding benefit to the group health plan or beneficiaries.Footnote 186 The plaintiffs alleged that Johnson & Johnson “squandered their bargaining power” and instead agreed to make the group health plan and its beneficiaries “pay more than someone would pay if they just walked into a retail pharmacy and filled the same prescription without using insurance.”Footnote 187 Because Johnson & Johnson, as the group health plan sponsor, did not ensure that the plan paid only reasonable amounts for prescription drugs and instead followed the “conflicted advice” of their broker or PBM, the plaintiff class alleged Johnson & Johnson breached its fiduciary duty of prudence under ERISA.Footnote 188
In another class action lawsuit against Mayo Clinic’s group health plan and its TPA, plaintiffs allege that the defendants overcharged them for seeing out-of-network providers, saddling the plaintiffs with “enormous balance bills all while reaping large profits from these supposedly premier insurance plans.”Footnote 189 As a result of this overcharging scheme, the plaintiffs claim defendants violated RICO as well as their fiduciary duty under ERISA.Footnote 190
Lawsuits are not the only legal mechanism drawing attention to employer health plan obligations. The Consolidated Appropriations Act of 2021 (CAA) requires employer-based health plans to submit information about prescription drugs and health care spending as well as submitting an attestation of compliance regarding gag clauses.Footnote 191 The prescription drug and health care spending disclosure includes disclosure of spending on health care services and premiums paid by members and employers.Footnote 192 Although these obligations under the CAA may seem onerous to group health plans, as pointed out by a group health plan coalition, the goal of the CAA is to ensure employers’ access to data about their health plans.Footnote 193 Thus, the CAA can be a tool that group health plans use to access data to win back some negotiating power with corporate health care conglomerates. Nevertheless, a recent employer survey shows that rising health care costs and complying with fiduciary duties, particularly in light of the Johnson & Johnson lawsuit described earlier, are issues that keep employers “up at night.”Footnote 194
Group health plans are not the only stakeholders with fiduciary obligations. Some legal scholars argue that physicians should have, if not, do have, fiduciary obligations to their patients.Footnote 195 Principle VIII of the AMA ethical principles for physicians states that “a physician shall, while caring for a patient, regard responsibility to the patient as paramount.”Footnote 196 The law recognizes a fiduciary duty in two types of persons: 1) those who have power over property rights of others (which would encompass the group health plans discussed above); and 2) those who are professionals.Footnote 197 Physicians are professionals who could take advantage of the party to whom they provide services and the services provided are essential to both the other party and to society.Footnote 198 That is the essence of a fiduciary relationship.Footnote 199 Applying a fiduciary standard to the physician-patient relationship could arm physicians with a legal tool to fight against the corporatization of health care.Footnote 200 But physicians need to know that the tool is available and how best to wield it. Legal advocates could help teach physicians about that tool through a WLP model described in Part III.
As the previous studies, laws, and lawsuits demonstrate, corporatization of health care is harming patients, group health plans, and physicians. Each of these stakeholders lose negotiating power as health care market consolidation and corporate takeover marches forward, leaving these stakeholders to opt for litigation to reclaim some of the power they have lost. Corporatization also threatens the fiduciary duties owed to plan beneficiaries by group health plans and physicians.Footnote 201 But litigation should not be the only avenue that purchasers and physicians should try to fulfill their duties to health care beneficiaries. By seeing their shared interest in health care as a socially-valued good, and not a profit-making machine, these three stakeholders could work collaboratively to resist the changes brought by corporatization.
c. Purchaser-Physician Collaboration Precedents
There is precedent for such collaboration. In the 1990s, when managed care changed the health care landscape through privatization and decentralization of critical coverage decisions, the Center for Public Representation (CPR), a public interest law firm, helped lead a consumer, physician, and “progressive insurer” collaboration to help pass a Patients’ Bill of Rights that “included quality assurance, strengthened grievance procedures, and an external review system for patients [with insurance claim denials].”Footnote 202 With the expansion of managed care, physicians felt “demeaned, losing both their autonomy as professionals and, in many cases, income.”Footnote 203 Consumers feared that managed care was mostly “interested in controlling costs” and increasing profit “rather than delivering services.”Footnote 204 The health insurer added valuable perspective to the health plan grievance process.Footnote 205 This collaborative group was called the Collaboration for Healthcare Consumer Protection (CHCP) and met with representatives from private insurance, administrative agencies, employer coalitions, and the state legislature in Wisconsin.Footnote 206 Together, CHCP advocated to enact more patient protections in Wisconsin, which helped each group “influence health care policy in a more effective way.”Footnote 207 Critical players in this collaborative group were the lawyers, albeit in a non-traditional public interest lawyer role. Instead of engaging in impact litigation or testifying before regulatory agencies, the lawyers “provide[d] the knowledge of how public and private institution’s [sic] function,” helped analyze data, “reassure[d] the consumers that their voices will be heard, and sp[oke] out when there [were] malfunctions [in the advocacy process].”Footnote 208
A more current example of purchaser and physician collaboration is the partnership between the National Alliance of Healthcare Purchaser Coalitions (NAHPC) and the Council of Accountable Physician Practices (CAPP).Footnote 209 This partnership issued a report that identified opportunities for “Employer-Physician” collaboration.Footnote 210 These opportunities include “determin[ing] the value of vendor add-ons, such as care navigators and telehealth,” “evaluat[ing] incentive strategies for employees to choose high-value providers,” “determin[ing] strategy to reduce or remove financial barriers that hinder access to high-quality care,” “evaluat[ing] the impacts on affordability [of care],” and “generat[ing] more employee engagement with preventive services and wellness.”Footnote 211 Glaring absences from this partnership, in contrast to CHCP, are lawyers and patient group representatives.Footnote 212
Another way purchasers and physicians collaborate is through direct contracting relationships, which as discussed in more detail later, removes third party insurers from the health care delivery and financing scheme.Footnote 213 Instead, purchasers negotiate directly with physicians who agree to provide medical services to employee populations for a set fee.Footnote 214
The interests of health care purchasers and physicians align around having health care that is affordable, accessible and provides value. This stakeholder arrangement presents a unique opportunity to harness that alignment and create WLPs. The lawyers leading WLPs would be trained to address employee wellbeing and leverage collaborations of these stakeholders.
Corporatization of health care and fiduciary expectations of employers and physicians demand health lawyer involvement, but there is currently a gap in that kind of health law practice.
II. Current Gaps in Health Law Practice
An article (“Transformations article”) from ten years ago declared that the practice of health law was undergoing a transformation due in part to the Affordable Care Act (ACA) reshaping the health care industry into a more patient-centered, collaborative care model that is also value-based.Footnote 215 The article identified three primary worksites for health lawyers: 1) inside private organizations such as health systems and insurers (“in-house counsel”); 2) corporate law firms; and 3) medical-legal partnerships.Footnote 216 The Transformations article also noted that “[h]ealth law is a significant field of specialization.”Footnote 217 However, it did not foresee how the corporatization of health care, which has grown exponentially since the article’s publication, would impact the practice of health law in each of these practice sites and undermine patient wellbeing.
The rapid corporatization of health care requires another transformation of health law practice. This new practice should adopt legal practice frameworks involving systems leadership, lawyer fiduciary duty and health justice to address societal needs that current health lawyers do not meet. The result of this new health law practice is one that aims to rectify the lack of power faced by purchasers and physicians by forming collaborations to improve group health plan patient wellbeing. As explained below, the current environments in which health lawyers practice are poorly suited for this task.
A. The Impact of Corporatization on In-House Law Practice
As noted in the Transformations article, health care organizations hire in-house lawyers for strategic advice on both business and legal issues.Footnote 218 Health organizations value in-house lawyers’ understanding of the organization’s goals and the legal advice that can help the organization achieve those goals. However, because in-house lawyers are so “absorbed” by their client, they sometimes seek outside counsel advice to get a more independent analysis of the issue.Footnote 219
Thus, in-house counsel faces an ethical dilemma when working as an employee for a corporate client. Indeed, the Model Rules of Professional Conduct inform in-house counsel that their client is the organization that employs them.Footnote 220 In-house lawyers owe their professional duty to the organization and not the directors, officers and other constituents of the organization.Footnote 221 In the health care corporatization era, exercising one’s professional duty in service to a profit-maximizing health care organization will likely not be what is best for health care purchasers or physicians.
To the extent in-house counsel does consider patient, physician, or purchaser impact from their organization’s strategy, those lawyers may face Organizational-Professional Conflict (OPC).Footnote 222 OPC is a phenomenon in which the ethical demands of the external profession (i.e., law) and the employer conflict.Footnote 223 Part of a health lawyer’s ethical duty in the era of corporatization is to address the adverse impacts of corporatization of health care on patients.Footnote 224 This duty to third parties stems from American Bar Association (ABA) Model Rule 1.6(b), which allows lawyers to reveal otherwise confidential client information when the lawyer reasonably believes a substantial physical or financial harm exists.Footnote 225 It has been argued that this rule of professional conduct obligates lawyers to consider the harm a client’s actions will have on third parties and act accordingly, accounting for the possible accusation of aiding and abetting commercial fraud if the lawyer only focuses on pleasing the corporate client by structuring the most profitable deals.Footnote 226 When the sole focus of in-house health lawyers is on getting the best deal for their corporate client, patients suffer because their employers and physicians lose bargaining power with corporate health care conglomerates. As noted earlier, all three of these stakeholders have lost bargaining power with corporate health care organizations.Footnote 227
Current in-house lawyers may not be ideally situated to solve the problem of unequal bargaining power by purchasers and physicians in the new corporatized health care landscape. One recent study demonstrates organizational “capture” of in-house counsel.Footnote 228 The study looked at behavior from a variety of in-house counsels in Canada when faced with a hypothetical ethical dilemma.Footnote 229 Based on a vignette, researchers asked in-house counsel to decide between talking to management off the record about management making racist comments (i.e., an “organizational response”) versus a formal report about the incident to management explaining that if the situation does not change it will be reported to the board (i.e., the “professional response”).Footnote 230 The researchers found that the more involved the in-house counsel was in the operations and strategic thinking of the company, the more likely the lawyer would choose the organizational response.Footnote 231 But as legal scholars have pointed out, in-house counsel who opt for the professional response isolate themselves from the organization’s management and may be seen as “not earning [their] keep.”Footnote 232 Because in-house counsel likely do not want to lose their jobs, it can be argued that in-house health care counsel are not well-positioned to tackle the adverse impact of their corporate employers’ corporatization efforts on health care purchasers and physicians.
B. The Impact of Corporatization on Corporate Law Firm Lawyers
Health lawyers who work in corporate law firms may not be in a much better position to address the unequal bargaining power of health care purchasers and physicians either. Health lawyers working in “Big Law” have become “legal engineers,” facilitating private equity ownership of health care organizations like nursing homes in the name of three “magic words”: innovation, efficiency, and markets.Footnote 233 Lawyers who work for big law firms often feel pressured to find legally creative ways to please high-paying clients at the cost of possibly harming other system stakeholders. “The lure of high salaries and the pressures of big firm values can corrupt lawyers’ judgment, rationalizing harms to third parties as little more than ‘collateral damage’ of an efficient market mechanism.”Footnote 234
Indeed, in-house counsel will “go to outside law firms to get a ‘yes’ regarding a plan or strategy desired by management.”Footnote 235 If in-house counsel plays a critical role in the business strategies of their client and in-house lawyers lean on outside lawyers to approve of that strategy, then it is in the outside lawyer’s financial interest to legally engineer a way to move that strategy forward. In the case of private equity investment in health care, outside lawyers find ways to circumvent state and federal barriers to corporate ownership of health care providers. For example, a common legal engineering tactic to “out-maneuver” state corporate practice of medicine laws is to create a management services organization (MSO), whereby the corporate entity contracts with a physician-owned professional organization to provide administrative services.Footnote 236 In reality, the MSO controls most aspects, if not all, of the medical practice, such as patient scheduling, staffing levels, payor contracts, and quality and performance metrics.Footnote 237 Although MSOs may be a permissible legal tool to permit corporate involvement in health care, they undermine health care’s social contract and the spirit of CPOM laws. Until outside health lawyers shift their view of their role in the health care marketplace and the need to protect third parties from profit-maximizing abuses, they will not be reliable advocates for health care purchasers and physicians.
C. The Impact of Corporatization on Medical-Legal Partnerships
MLPs, as currently structured, are also not equipped to advocate for better conditions for health care purchasers and physicians. MLPs integrate legal assistance into the health care delivery model.Footnote 238 MLP lawyers, who are often employed by legal aid nonprofits, law school clinics or work pro bono, provide “legal advocacy in a medical setting for clients referred by medical professionals.”Footnote 239 But MLPs also, theoretically, exist to help change the way health care organizations operate as well as to advocate for broader policy change.Footnote 240 Thus, the MLP mission is trifold: 1) to offer direct legal assistance to patients that aims to address social determinants of health (such as access to public benefits, substandard housing conditions, unlawful barriers to education or employment, guardianship matters, or immigration issues); 2) to advocate for change within health care organizations to better identify and address social determinants of health; and 3) to advocate for broader policy change at the local, state and national levels that will lead to greater health equity.Footnote 241
The MLP model of practice is rooted in traditional poverty law services and links those services to the provision of health care services.Footnote 242 The MLP model depends on health care organizations for support and funding while offering a means for those organizations to meet their community benefit obligations.Footnote 243 A large proportion of MLPs are integrated into hospitals and health systems,Footnote 244 which play a significant role in the corporatization of health care.Footnote 245 Because the current MLP model embeds health lawyers into corporatized health care organizations and because MLP lawyers are focused on helping patients from a poverty law lens, MLP lawyers likely do not have the capacity or interest in helping health care purchaser or physician stakeholders.Footnote 246 In the wake of corporatization, however, health care purchasers and physician stakeholders could benefit from advocacy assistance by competent WLP lawyers.
D. Legal Practice Frameworks for WLP Lawyers
Missing from existing collaborations between employers and physicians described earlier are legal advocates. Health care purchasers and physician groups should consider adding lawyers trained in promoting patient wellbeing as a coalition member. These lawyers could help purchasers and physicians uphold their fiduciary duties by working with WLPs. I offer three legal practice frameworks to inform WLP creation. These three frameworks are: 1) systems leadership, 2) lawyer fiduciary duty, and 3) health justice. These frameworks can guide lawyers who wish to create WLPs to better understand their role in the health care corporatization environment and when working with health care purchasers and physicians.
1. Systems Leadership
Legal scholars have recently promoted the need for lawyers to engage in systems leadership in the context of the climate crisis.Footnote 247 “Systems leadership” is defined as “a set of skills and capacities that any individual or organization can use to catalyze, enable, and support the process of systems-level change. It combines collaborative leadership, coalition-building, and systems insight to mobilize innovation and action across a large, decentralized network.”Footnote 248 In the climate context, proponents of systems leadership argue that lawyers have the opportunity, skills and responsibility to confront the climate crisis by serving individual clients and the public good.Footnote 249
Lawyers can combat larger societal problems through finding a balance between advancing client interests while advocating results that will not exacerbate the larger problem.Footnote 250 The achievement of this balance can occur by the lawyer fulfilling their duty of competence under ABA Model Rule 1.1, which requires lawyers to provide competent representation to clients.Footnote 251 Competent representation requires lawyers to understand the facts, science, and other aspects of the particular representation.Footnote 252 To successfully achieve competent representation, lawyers must immerse themselves in their clients’ world. Only with knowledge of the client’s issues and the impacts that the client’s actions have on the larger society can the lawyer find creative solutions that achieve the balance between helpful advice and achieving social good.Footnote 253 Because lawyers are in positions of influence in their communities, they are also key stakeholders in solving any complex problem.Footnote 254
Health care corporatization is a complex societal problem that lawyers must also solve for health care purchasers and physicians. Lawyers should take a step back from legal engineering corporate deals and understand how these corporate buyouts hurt patient health and wellbeing. Lawyers must also understand that receipt and access to health care is only one aspect of overall wellbeing; other behavioral, social and structural barriers play a significant role in one’s wellbeing.Footnote 255 By employing systems leadership concepts, lawyers incorporate the environment, such as the physical or socioeconomic environment, into decision-making instead of treating those environments as an afterthought.Footnote 256 Under a systems leadership approach, rather than just finding a way to say “yes” to corporate health care strategies, lawyers would be cognizant of and explain the risks of the strategies on patient and provider wellbeing, and try to find a solution that minimizes those risks. Even better would be a cadre of WLP lawyers who were dedicated to seeing the bigger picture of corporatization and finding solutions to improve patient wellbeing.
2. Lawyer Fiduciary Duty
Another helpful concept to guide WLP lawyers is fiduciary duty. As noted earlier, group health plans and physicians have fiduciary duties to plan beneficiaries.Footnote 257 Lawyers do, too, because “[l]awyers are not simply agents of clients – they are also licensed fiduciaries of the legal system and have obligations to third parties.”Footnote 258 These obligations stem in part from ABA Model Rule of Professional Conduct 1.6(b), which allows lawyers to reveal information relating to the representation of a client to the extent the lawyer believes it is necessary to prevent substantial bodily injury or substantial financial injury because of a client’s crime or fraud.Footnote 259 This rule arguably establishes a fiduciary duty owed by lawyers to third parties, such as patients.Footnote 260
This fiduciary concept applies to lawyers who engineer corporate investments in health care without considering the impact these for-profit enterprises may have on patients and families. More broadly, it applies to any corporate venture in health care where the voices and needs of important stakeholders are drowned out by powerful corporate interests. At a minimum, health lawyers should consider how their corporate deals may cause serious harm to patients, those who help patients pay for care, and those who provide care. Unfortunately, many health lawyers who work at corporate law firms do not consider avoidance of harm to third parties as part of their client duties. Instead, the private practice of law has “become big business rather than a ‘noble profession.’”Footnote 261 Private equity investment in health care brings large sums of money to corporate law firms, and lawyers justify their work for these clients, and disregard any third-party harms, in the name of market innovation and efficiency.Footnote 262 Ideally, corporate health lawyers should aim to minimize patient harms while still creating value for their corporate clients. But this may be a challenge for both in-house and outside health lawyers. As noted earlier, in-house lawyers are absorbed by their client’s business, and their legal expertise and insight about that business’s strategy is what makes them valuable. In-house lawyers depend on outside lawyers to get to a “yes” on strategy, which promotes the legal engineering disapproved by some in the health law field.Footnote 263
If these lawyers do not create value for those who pay them, they risk losing their job or client. This reality should not detract from the importance of educating health lawyers about the impact of legal engineering on third parties. But it is not practical to expect them to be dedicated advocates for the third parties most harmed by health care corporatization. Instead, a new kind of health lawyer needs to surface to take on that role.
3. Health Justice
A third legal practice framework that can guide WLP lawyers is the health justice framework, described as a “distinct alternative to the ‘patient rights’ and ‘market competition’ paradigms that currently dominate health law scholarship, advocacy, and reform.”Footnote 264 These paradigms focus narrowly on improving quality of care and access to health care providers and facilities.Footnote 265 Health justice derives from the social justice framework which emphasizes collective problems and collective problem-solving.Footnote 266 Applying the social justice framework to the practice of health law leads to looking further upstream at the social and structural influences on health and wellbeing.Footnote 267 The practice of health justice incorporates health care financing and delivery law, public health, and interventions that address social and structural determinants of health and wellbeing, such as socioeconomic status, race and ethnicity, disability, gender expression, and geographic location.Footnote 268
Rather than a “blame the victim” approach to disease and disadvantage, or a laser focus on patient rights in health care financing and delivery, the social justice framework offers an ecological approach to individual health behavior and status.Footnote 269 It places health and wellbeing into a social context, emphasizing structural explanations for health behaviors and outcomes.Footnote 270 It allows for exploration of class, racial, and other forms of bias as well as legal and structural barriers beyond those in health care that contribute to poor health and wellbeing.Footnote 271
Social justice interventions require a different way of lawyering. First, lawyers must “probe proposed [laws and policies] more deeply for evidence of social, cultural, and structural bias.”Footnote 272 Second, lawyers need to approach solutions to complex problems through community engagement and empowerment.Footnote 273 Social justice lawyering is democratic, participatory, and collaborative.Footnote 274
4. Tying together the systems leadership, lawyer fiduciary duty, and health justice frameworks
The common thread connecting these three frameworks is an obligation for lawyers to look beyond their client relationship and consider the broader consequences of their own and their client’s actions. Whether that obligation is defined in terms of systems leadership, a fiduciary duty, or health justice objectives, they each envision a lawyer who sees the bigger purpose of health care and not just the immediate legal issue at hand. This lawyer, the “WLP lawyer,” has as their core mission to improve overall wellbeing of all patients and to do that, they must look beyond the health care system to other social and structural contributors to health. Looking beyond the health care system demands collaboration with other actors. WLP lawyers are comfortable with not being seen as the heroic, independent figure.Footnote 275 WLP lawyers also recognize the unique opportunity that health care corporatization creates by aligning the interests of health care purchaser and physicians, many of whom are already looking to improve patient wellbeing through high value, holistic care. Seizing on this opportunity, WLP lawyers seek to create partnerships with these stakeholders to drive meaningful change.
III. Mapping out the WLP Model
The systems leadership, lawyer fiduciary duty, and health justice frameworks outline the core WLP mission, which is to improve the wellbeing of the health plan beneficiary. In the health care context, the MLP serves as an excellent example of how these frameworks can be applied.Footnote 276
A. Borrowing from the MLP Model
Lawyers working in MLPs already recognize that medical care accounts for only a fraction of overall health and wellbeing and that collaboration is necessary.Footnote 277 MLPs employ a three-fold approach to improve patient wellbeing through direct legal representation, institutional policy change, and systemic policy change.Footnote 278 To be successful at systemic policy change, lawyers must know how to collaborate with others and learn from them.Footnote 279 MLP lawyers can leverage data and expertise they acquire through the partnership to add value to community stakeholders when advocating for change.
However, as currently structured, MLPs are not equipped to address health care purchaser and physician harms from health care corporatization. Because the MLP has roots in poverty law, its priority is to help underserved, marginalized, and impoverished patients who are not typically covered by group health insurance.Footnote 280 Yet, because about 153 million people in the United States obtain health insurance through their employer,Footnote 281 a wide swath of patient interests are unaddressed. Corporatization of health care is increasing the need for group health plan patient advocacy and the stakeholders who share similar frustration with corporatization. Advocacy for these patients can benefit not only group health plan patients, but any patient who is disadvantaged because of corporate profit-making priorities in health care.
Extrapolating the MLP concept to the group health plan market is one way for the new health lawyer to practice and incorporate systems leadership, fulfill fiduciary duty to patients, and employ social justice concepts of collaboration to achieve greater patient wellbeing. To avoid neutralizing the importance and necessity of MLPs, I propose that WLPs hitch on to current employer efforts to improve employee wellbeing through workplace wellness programs and employee health benefits. WLPs could help ensure that both workplace wellness programs and the group health plan offer more comprehensive, holistic services that go beyond personal responsibility and address social and structural determinants of health.
Although employee wellness programs have not brought the return on investment results employers initially hoped for,Footnote 282 most employers still invest in them.Footnote 283 For example, in 2023, thirty-nine percent of small firms and sixty-one percent of large firms offered programs to help employees lose weight, and forty-six percent of small firms and sixty-eight percent of large firms offered some other lifestyle or behavioral coaching program.Footnote 284 Overall, sixty-two percent of small firms and eighty percent of large firms offered at least one wellness program activity, such as a smoking cessation, losing weight or lifestyle/behavioral coaching.Footnote 285 In 2021, large employers budgeted on average $238 per employee for wellbeing programs.Footnote 286 A 2024 survey of human resource professionals found forty-eight percent of respondents stating that wellness benefits are “very important” or “extremely important” and offering health-related benefits was rated “very important” or “extremely important” by eighty-eight percent of the respondents.Footnote 287 Another employer survey found that employers are concerned about health plan affordability and health inequities.Footnote 288
Implementing WLPs in the workplace could address many employer concerns about employee wellbeing. And for at least some employers, employee wellbeing is a genuine concern.Footnote 289 Like their MLP counterparts, WLPs could adopt a three-fold approach to advocacy: 1) direct plan beneficiary representation; 2) organizational policy change; and 3) systemic policy change. The first prong, direct plan beneficiary representation, could provide more holistic attention to employee wellbeing needs. Like MLPs, WLP lawyers could improve employee social determinants of health. Instead of implementing employee wellness programs that focus exclusively on lifestyle and behavior change, WLPs could help employees address health harmful situations involving housing, domestic violence, access to benefits, and other barriers to better wellbeing. However, workplace wellness programs are not yet paying attention to these social determinants of health.Footnote 290 In fact, some scholars believe that workplace wellness programs are just a legal mechanism to covertly collect data on participants and shift health plan costs onto unhealthy employees who fail to meet wellness program goals.Footnote 291 Usually, it is the most vulnerable employees that pay higher costs for health coverage because they fail to participate in the wellness program or “pass” the wellness program metrics.Footnote 292
WLPs could help change institutional policy, the second prong of the three-fold approach, by offering insight into what internal policies and practices contribute to poor employee wellbeing. They could also hold employers accountable to their fiduciary obligation to operate employee benefit plans in the sole interest of plan beneficiaries and to ensure that the wellness programs actually improve employee wellbeing with the data they collect.Footnote 293 WLPs could help employers use the data to help drive change in the organization, improve working conditions, and design wellness programs that improve patient health outcomes. Finally, drawing on their system leadership and social justice skills, WLP lawyers could collaborate with key health care stakeholders such as employers, physicians, and patient groups to advocate for systemic policy change, the third prong of the WLP model.
It is through this third prong that WLPs could have the greatest influence on curbing the adverse impact of health care corporatization. WLP lawyers could advocate for state laws such as stronger corporate practice of medicine laws, akin to those passed in Minnesota and Oregon,Footnote 294 that would make corporatization of health care more difficult and facilitate alternatives to corporatized health care.Footnote 295 Although it is beyond the scope of this Article to identify all the legal changes for which WLPs could advocate, Professors Erin Fuse Brown and Mark Hall have already created such a roadmap that WLPs could follow to curb health care corporatization.Footnote 296
As for facilitating alternatives to corporate models of health care delivery, WLPs could advocate for legal environments that make direct contracting between employers and physicians more feasible and accessible. “Direct Primary Care” (DPC) or “Direct Contracting” between employers and physicians is an example of an existing and growing collaborative concept into which WLPs could plug to advance patient wellbeing. Direct contracting involves a contract for health care services between a provider organization (such as a physician clinic) and an employer or group of employers.Footnote 297 DPC is a subset of direct contracting, involving a contract between a primary care provider and an employer or patient.Footnote 298 Importantly, direct contracting removes third party insurance; instead, the provider group charges subscribers a “per member per month” (PMPM) fee, ranging from $25 to $125, in exchange for access to unlimited primary care services at no additional cost.Footnote 299
Interest in direct contracting models between health care purchasers and physicians is growing because of the rising costs of health care driven by corporatization.Footnote 300 By removing the insurance intermediary, employers have more direct knowledge and control of the costs and quality of the health benefits provided and physicians have more autonomy in how they practice medicine.Footnote 301 For example, the Self Fund Health Plan in Wisconsin is a DPC product offering employers lower cost, personalized, and comprehensive primary care benefits to employees.Footnote 302 Currently, employers who choose to adopt the Self Fund Health Plan have more than eighty-six DPC practices in Wisconsin from which to choose.Footnote 303 One of those DPC clinics stated that in addition to offering primary care services to employer groups, DPC is replacing corporate wellness programs.Footnote 304 That is, rather than having a separate budget for corporate wellness, this DPC clinic owner envisions employers adopting DPC as a way to provide employees both primary care and wellness services.Footnote 305
If direct contracting is to expand, employer and physician groups need to advocate for state laws that facilitate these arrangements. One type of state law these groups could address is exempting DPC arrangements from state insurance regulation. Unless state insurance law specifically excludes DPC from insurance regulation, which is administratively burdensome and expensive, DPC models risk being treated as insurance products under state law because of the capitated payment arrangement and the risk the provider assumes in agreeing to treat patients for a set PMPM fee.Footnote 306 As of 2025, thirty-four states have passed laws allowing DPC to be exempt from state insurance regulation.Footnote 307 That means in sixteen other states it is at least unclear whether DPC arrangements can operate legally unless the DPC provider is licensed as an insurer in that state. WLPs could advocate for such legal clarity in those states.Footnote 308
Another area for advocacy is allowing employees to enroll in DPC models while still benefiting from Health Savings Accounts (HSAs). Under current IRS guidelines, individuals with access to DPCs offering services such as physical exams, vaccinations, urgent care, laboratory testing, diagnosis, and treatment are ineligible to contribute to an HSA.Footnote 309 Allowing employees to maintain HSA eligibility while enrolled in a DPC program would improve health care affordability for health care purchasers.
WLPs could also help advocate for laws and policies that reduce the administrative burden on group health plan DPC models. This includes streamlining premium collection, claim payment, fraud investigation, case management, cost containment, continuation coverage, protection of personal information, physician credentialing, quality reporting, and nondiscrimination in benefits.Footnote 310 Lower administrative burdens would help make private equity buyouts of physician practices less desirable to physicians.
In sum, there are multiple laws and policies in which the interests of health care purchaser and physicians align, providing ample opportunities for WLPs to advocate for change at both organizational and systemic levels. For WLPs to work optimally, WLP lawyers must find the right partners.
B. Potential WLP Partner Candidates
There are four possible entities with whom WLP lawyers can partner: 1) Employee Assistance Programs (EAPs); 2) business coalitions; 3) wellness vendors; or 4) DPC arrangements. Depending on the circumstances, some of these entities may be better than others.
1. Employer EAPs
A large majority of workers in the United States have access to an EAP, which provides a wide range of services, including legal services.Footnote 311 Thus, the legal partner to the WLP could offer legal services through an employer’s EAP offering. To the extent an employer already offers legal services through its EAP, this reimagined use of EAP legal services would be in coordination with the employer’s workplace wellness initiative. For example, the legal partner would help employees facing employment or social discrimination, issues with housing, immigration, or family matters. The WLP lawyer would also advocate for organizational and systemic change. This advocacy role would aim to improve employee wellbeing and access to more valuable health services through community stakeholder collaborations, similar to CHCP.
Initially, lawyers forming these WLPs may need to target Certified B Corporations, who are already committed to advancing social and environmental issues.Footnote 312 Certified B Corporations recognize the plurality of business purposes, which is not just to make profits, but also to promote fundamental values such as “individual freedom, autonomy, responsibility, dignity, loyalty and equality.”Footnote 313 This plurality approach should not be isolated to Certified B Corporations, but should apply to all businesses particularly in the wake of the climate crisis.Footnote 314 The business community needs to be reminded of its greater role in society rather than just maximizing profits. Businesses have the power and authority to devote resources to public welfare, humanitarian, educational, and philanthropic purposes.Footnote 315 WLPs that partner with an EAP could help businesses fulfill that duty.
2. Business Coalitions
Another promising partner for WLPs are business coalitions. There are numerous business associations and groups throughout the United States. For example, the National Alliance of Healthcare Purchaser Coalitions has forty-two smaller, usually state-based healthcare purchaser coalitions.Footnote 316 Each of these smaller coalitions consist of employers from the private and public sector who wish to drive health, equity, and value in the marketplace.Footnote 317 Promoting a WLP offering to business coalitions may allow smaller member employers who do not have the resources to improve employee wellbeing to take advantage of WLP services. In other words, members of the business coalition could share in the expense of providing a WLP, and in turn, the WLP lawyers could provide services to all coalition members. The bonus of offering a WLP by a business coalition is that there is already a built-in collaborative group of health care purchasers. The WLP could leverage those coalitions’ impact on systemic change by expanding the collaborations to include physician and consumer groups.
3. Wellness Vendors
Another candidate for WLP partnerships is wellness vendors. Wellness vendors are businesses that provide wellness services to employee wellness programs.Footnote 318 Currently, these vendors look at wellness through a very narrow lens of personal responsibility.Footnote 319 They do not consider the social or structural drivers of employee wellbeing.Footnote 320 Convincing these vendors to incorporate WLPs into their services to employers will give wellness providers an opportunity to broaden their scope and view of what it means for employees to be well. Rather than just offering behavioral change activities, wellness vendors could assist employees addressing social determinants of health (SDOH). Expanding wellness to include SDOH acknowledges that not everyone can engage in healthier behaviors and that institutional, structural and social bias plays an important role in employee wellbeing.Footnote 321
However, while wellness vendors may embrace the direct employee assistance, they may not have a vested interest in organizational or systemic change prongs, particularly when compared to working with the employer groups directly. Wellness vendors may be unwilling to expand their scope of delivering wellness services to include advocating for laws and policies that weaken health care corporatization. These vendors may view advocating for such change and holding employer health plans and physicians accountable to their fiduciary duties as too much of a business risk if the employer client paying for the wellness services is not supportive of the idea. Only a very unconventional wellness vendor, or one committed to a plural purpose business model, might fully embrace the three-fold approach of WLPs and integrate organizational and systemic advocacy into their services.
4. Direct Primary Care Arrangements
A fourth candidate for a WLP partner is the medical provider in a Direct Primary Care (DPC) arrangement. This avenue most closely resembles the MLP model, by partnering directly with the medical and wellness provider. Partnering with DPC providers may be the most forward-thinking of the options, particularly if more DPC providers begin replacing conventional wellness service providers. Because DPC providers may have experience with MLPs in delivering comprehensive and holistic medical care, they are more likely to understand and appreciate the need to address employee SDOH in the workplace wellness context. MLPs also give DPC-based WLPs the most closely aligned funding models. Most MLPs are funded in part by the medical provider partner, such as through in-kind support of space and staff time or as a line item in the health care organization’s operating budget.Footnote 322 One could envision funding for WLPs that partner with DPC providers deriving from the PMPM fee paid by employers.Footnote 323 DPC providers could integrate the cost of operating a WLP into the PMPM fee, adding a valuable benefit for employees who use the DPC model.Footnote 324 In this way, DPC could address the SDOH of employees and thereby offer more holistic primary care services to the beneficiaries of the employer’s DPC plan. Because of the alignment of interests between physicians staffing DPC arrangements and their employer clients, of the DPC provider in the wake of health care corporatization, DPC partners are more likely to see the value in the three-fold approach to WLP services.
C. WLP Ethical Considerations and Solutions
With any of these WLP candidates, lawyers will need to navigate the rules of professional conduct. Model Rule 5.4 requires lawyers to maintain their professional independence when delivering legal services.Footnote 325 To preserve their independence under the rule, WLP lawyers should work within a law firm, either their own or as part of a larger firm. WLP lawyers must ensure that any contractual agreement between the lawyer and WLP partner allows the lawyer to maintain their professional judgment and independence, ensure client confidentiality, and mandates client consent for sharing information within the WLP, and how to handle client conflicts of interest.Footnote 326 WLP lawyers must be transparent with all stakeholders so that they understand when and how information will be shared.Footnote 327
WLP lawyers must also prepare in advance through WLP agreements how to address potential client conflicts of interest.
WLPs may encounter conflicts when attempting to address both direct employee representation and organizational change of the three-fold approach. For example, if an employee encounters an organizational barrier to their wellbeing, such as employment discrimination, and the WLP lawyer attempts to address that discrimination through organizational change, the WLP lawyer may find themselves discussing an employee’s allegations of workplace discrimination with the same decisionmakers who approved the WLP in the first place. In those situations, the lawyer may feel conflicted about who the client is and will need to decide if the conflict will impede the lawyer’s ability to stay true to the WLP’s overall objective of improving employee wellbeing. This type of conflict could also arise in an MLP where the health care provider funds the lawyer’s services but is the cause of the patient’s barriers to care. Using Model Rule 1.7(b) as a guide,Footnote 328 WLP lawyers should be able to navigate those conflicts of interest and refer clients to other legal representatives if necessary. At a minimum, employers and employees who assent to WLP services should be informed at the outset of the relationship of potential conflicts and if amenable, consent in writing to allow the WLP to resolve the organizational barrier for the purpose of improving employee wellbeing. After all, the ultimate goal of the WLP lawyer is to promote employee wellbeing, which can make for a personally and professionally satisfying legal career.
Conclusion
Health care corporatization is quickly dominating the health care marketplace, leaving health care purchasers and physicians at a disadvantage. Health care corporatization has aligned the interests of these stakeholders, and this alignment creates an opportunity to leverage such alignment by creating WLPs to help them. As discussed, lawyers bring valuable skills and perspectives in the efforts of improving patient wellbeing. It will be up to these WLP lawyers to adopt concepts of fiduciary duty, systems leadership, and health justice to effectively lead collaborations that will combat health care corporatization and improve patient wellbeing.
