Private equity firms like Blackstone and KKR have acquired massive health companies like Teamhealth and Emcare, which bill out doctors to the hospitals they work for, taking those doctors out of the hospitals' insurance agreements and massively hiking their fees — that's why when you go to a hospital, even one that's covered by your insurer, you still end up with massive surprise bills for your care.
In classic private equity style, the firms behind this gouging have figured out which doctors are the most profitable: emergency care, neonatal intensive care, and anesthesiologists — these being doctors that you see in times of utmost distress, without the chance to shop around. The NICU targets are especially juicy, because they care for critically ill newborns whose parents are confronting the possibility that their baby will die, and are thus unlikely to haggle over the bill.
The price hikes are prodigious: "after EmCare took over the management of emergency services at hospitals with previously low out-of-network rates, they raised out-of-network rates by over 81 percentage points. In addition, the firm raised its charges by 96 percent relative to the charges billed by the physician groups they succeeded."
The private equity buyouts of doctors' groups were (naturally) debt-financed, leaving these price-gouging companies leveraged to the hilt, with investor shares cratering. Not surprisingly, any legislative relief for patients who face these life-destroying surprise bills is immediately targeted for all-out lobbyist blitz attacks, because the holders of the debt and the PE companies that issued it have everything to lose from even the smallest concession to treating health-care's primary purpose as making sick people well again, rather than making plutocrat looters unimaginably wealthy.
Yves Smith at Naked Capitalism rounds up a selection of quotes from "the normally cool-headed, pro-business Financial Times readers": "..mhighway robbers…smacks of fraud…sheer criminality…ambushing patients…criminals."
A push on Capitol Hill to stop US patients from being caught unaware by medical bills is weighing on the debt of KKR-backed Envision Healthcare, the target of one of the biggest leveraged buyouts last year…
Investors are concerned that a new so-called "surprise billing" law could crimp revenues at companies such as Envision, which employs emergency-room doctors and anaesthetists through its subsidiary EmCare….
"It is like a ransom negotiation: 'I'll hit your enrollees with giant bills unless you pay me enough money not to do that'," said Loren Adler, associate director at USC-Brookings Schaeffer Initiative for Health Policy.
Private Equity: The Perps Behind Destructive Hospital Surprise Billing [Yves Smith/Naked Capitalism]
(Image: Ervins Strauhmanis, CC BY)