SPRINGFIELD – In a major reversal, PeaceHealth abandoned its plan last week to outsource staffing of its emergency department to an out-of-state company. This decision came amid mounting pressure from the community, its politicians, and after local physicians filed a lawsuit against their employer.
The parties reached a preliminary settlement on May 6 and are negotiating a three-year contract with EEP for the Springfield RiverBend and Cottage Grove emergency departments, while direct physician employment will continue at its Florence hospital.
In February, PeaceHealth announced it would end its three-decade-long relationship with local Eugene Emergency Physicians (EEP) in favor of Lane Emergency Physicians, which is owned by an Illinois physician and managed by Georgia-based ApolloMD.
PeaceHealth’s initial decision to transition to ApolloMD was based on a desire for a partner with “national resources” and “large-scale operational experience” to better handle a significant surge in patient volume, according to the network, citing a “sharp, sustained rise in patient volume” at RiverBend, according to a March press release.
It is a struggle not unique to the area; due to a significant surge in patient volume and medical complexity, emergency departments across Oregon are facing challenges that are resulting in long wait times and overcrowding. PeaceHealth executives said that visits are expected to rise from around 55,000 in fiscal year 2024 to over 80,000 this year.
The surge in demand for emergency care in Lane County can be attributed to the closure of the University District emergency department, an aging population, and diminished access to primary care, according to PeaceHealth executives, leading more patients to turn to emergency services and increasing ambulance use.
Since its opening in 2008, the RiverBend emergency department has become too small to manage the growing patient volume, necessitating the use of temporary spaces for patient care. The changes were to go into effect in June at Cottage Grove Medical Center and in July at Peace Harbor Medical Center in Florence, and PeaceHealth’s RiverBend in Springfield – the only Level II trauma center providing specialized care for severely injured patients between Corvallis and the California border.
However, the decision to outsource was met with public backlash, including a strike pledge from all 41 EEP physicians who refused to work for ApolloMD and a federal lawsuit that was filed within weeks of the announcement.
Leading up to the settlement, Gov. Tina Kotek and other local leaders pressured PeaceHealth to reverse course to prevent a collapse of emergency care in Lane County amid potential mass resignations by local doctors.
On May 5, Oregon’s U.S. Senators Jeff Merkley and Ron Wyden, along with Congresswoman Val Hoyle, also urged the network “to work in partnership and transparently with physicians, staff, and the community to develop an emergency department staffing plan that ensures continuity of care and maintains the integrity and reliability of emergency services.”
The lawsuit
In “Eugene Emergency Physicians v. PeaceHealth,” the physicians contended that ApolloMD’s business practices violated Oregon’s Senate Bill 951. In essence, the law mandates that a professional corporation practicing medicine must be primarily owned and governed by licensed physicians, prohibiting non-clinicians from owning medical practices.
Judge Mustafa Kasubhai presided over the case and heard various arguments in Eugene. However, before the hearings concluded, he was informed of a settlement, according to KLCC reports.
During the proceedings, the judge found that two witnesses – ApolloMD CEO Dr. Yogin Patel and Lane Emergency Physicians owner Dr. Johne Chapman – were not truthful under oath, as reported by Oregon Public Broadcasting.
Kasubhai pointed out that ApolloMD’s internal company “playbook” indicated that they were controlling the doctors staffing local emergency departments, functioning essentially as a coach.
He raised concerns about the legality of PeaceHealth’s agreement with ApolloMD after discovering that ApolloMD and Lane Emergency Physicians had no written contracts. This lack of formal agreements, the judge noted, allowed ApolloMD to obscure its control over the physician group it had established. He characterized the arrangement as “a handshake and a wink,” which did not meet the legal requirements set out in Oregon’s new corporate medicine law.
In 2025, Oregon enacted legislation designed to limit such arrangements by placing restrictions on a management service organization’s “de facto control” over a medical practice, ensuring that medical decisions remain in the hands of licensed physicians.
The arrangements were deemed misleading, with ApolloMD operating a “friendly physician” model to maintain control while giving the impression of independence.
A “friendly physician” is a licensed medical professional who owns a Professional Corporation that contracts with a non-physician-owned Management Services Organization. They are deemed “friendly” because they collaborate with investors, including private equity firms, to manage the business aspects of a medical practice while complying with state laws that prohibit non-physicians from practicing medicine.
Reporting by MedPage Today indicated that ApolloMD identified a “friendly physician” in another state and appointed this individual as the “paper owner” of Lane Emergency Physicians. Their intention was to maintain control over daily operations while creating an appearance of separate ownership, the lawsuit contends.
Moving forward
On May 6, PeaceHealth issued a statement announcing that it is negotiating a three-year contract renewal with EEP for the RiverBend and Cottage Grove locations and will continue to employ physicians directly at its Florence location.
Representative John Lively of Springfield District 7 called the decision to keep physicians local “a big win” for the community.
In a prepared statement, the Oregon Nurses Association – comprised of over 25,000 nurses and healthcare professionals – said that, “PeaceHealth’s decision to reverse course is not an act of leadership; it is a retreat. Health executives were forced to back down thanks to lawsuits, pressure from elected leaders, and an unprecedented show of solidarity from thousands of nurses, doctors, caregivers, and community members who stood together to hold PeaceHealth accountable and stop out-of-state corporations from controlling our care. While we celebrate this victory, we recognize that damage has been done.”
ONA stated that while trust has been broken between PeaceHealth and its community, “Frontline nurses, doctors, and local leaders are ready to sit down with PeaceHealth executives to build a path forward that restores faith in our community’s healthcare system and puts patients ahead of profits.”
