Surprise: Private Equity and Unforeseen Medical Billing

By SETH SANDRONSKY

The price of US health care is up 18.6% over the past 12 months. A recent paper from the Institute for New Economic Thinking, “Private Equity and Surprise Medical Billing,” by Eileen Appelbaum, co-director of the Center for Economic and Policy Research, and Rosemary Batt, the Alice Hanson Cook Professor of Women and Work at Cornell University, sheds light on part of this inflationary trend.

They write: “As hospitals have outsourced emergency rooms and other specialty care to reduce costs, private investors have bought up specialty physician practices, rolled them into powerful national corporations, and taken over hospital emergency services. The result: large out-of-network surprise bills. The hidden actors: Leading private equity firms looking for ‘outsized’ returns.”

In brief, private equity is investment capital seeking to grow by any means necessary. That growth strategy hikes the prices that patients with health-care insurance pay to PE-owned firms such as KKR-owned Envision Healthcare and Blackstone-owned TeamHealth, whose doctors practice in fields such as anesthesiology and radiology.

Both firms under the cover of a group deceptively titled Doctor Patient Unity, a New York Times report of Sept. 13 showed, are funding direct mail and social media ads against federal legislation to address surprise medical billing from PE-owned firms. In an effort to sow confusion, the ads argue against “government rate setting” of emergency room services. The big bad government is the enemy, not the capitalist system that seeks to grow by treating health care as a means for the one percent to get wealthier.

History matters. Hospitals began to outsource food services and facilities management in the 1980s, according to Appelbaum and Batt. Hospitals did not stop there. “Outside companies now staff 65% of US hospital emergency rooms resulting in over 4-in-10 trips to the emergency room ending with a patient getting a surprise medical bill.” Ouch.

Physicians might have worked for doctor-owned medical firms in the past. That was then. PE firms are the new owners, with investments in air transport services and emergency ambulance companies, too.

I am not the first person to say that an ER visit is the worst time to comparison shop for health care from, especially, PE-owned firm thirsty for profits. “These firms are particularly drawn to medical services and practices that experience consistent demand,” said Claire McAndrew, director of campaigns and partnerships with Families USA, an advocacy group in Washington, DC, to The Progressive Populist in an email, “services for which consumers cannot choose providers, and therefore are not price sensitive, such as emergency doctors and anesthesiologists. Families USA urges Congress to put patients over profits and pass surprise bill legislation this year.”

There are 25 states with laws to protect patients from unforeseen billing. However, the laws “do not fully cover all types of situations,” according to Appelbaum and Batt. Thus, gaps in these state laws leave patients vulnerable to price gouging.

A Medicare for All national healthcare program could go a long way to addressing the health care inflation that PE firms are worsening. Some business groups are supportive of Medicare for All, which Sen. Bernie Sanders (I-V) has popularized in his first and second run for the White House.

Sectors of business are on board with this fundamental change in health care. For instance, the American Sustainable Business Council backs Medicare for All. https://www.asbcouncil.org/asbc-news/why-medicare-all-good-business

Seth Sandronsky lives and works in Sacramento. He is a journalist and member of the Pacific Media Workers Guild. Email sethsandronsky@gmail.com.

From The Progressive Populist, October 15, 2019

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