Sleuths discover the source of $28m in dark money lobbying in favor of emergency room "surprise bills": private equity firms that own doctors' practices

Even if you're insured and even if you assiduously verify that the emergency rooms you visit when undergoing a medical crisis are "in network" for your insurer, you can still end up with thousands of dollars in "surprise bills" from ER docs and anesthetists who don't work for the hospital — instead, they work for private "physician staffing firms" who can and do charge whatever they want for your care.

This started as a simple outsourcing exercise in which "physician groups" were contracted to provide services to hospitals, but then, giant hedge funds and private equity groups started buying up these groups and jacking up prices by 86%-91% in just a few years (prices are still rising). The private equity looters focused on emergency care because, apart from prisons, it is the ultimate captive market: once the ambulance drops you off mid-cardiac-arrest at an in-network hospital, are you really going to ask to be taken somewhere else once you learn that the doc who triages you works for Blackstone or KKR and plans on billing you thousands of dollars over and above the tens of thousands of dollars your insurer will have to pay?

These shenanigans might just be the last gasp of price-gouging, murderous American privatized health-care, with optics so bad that they make the case for Medicare for All without any pushing from the Sanders wing of the Democratic Party.

What's a poor billionaire to do in the face of such public unwillingness to enter medical bankruptcy in order to enhance the fortunes of the global looter class?

The answer is obvious: found a dark money "advocacy" organization and spend millions on ads calling the anti-surprise-billing movement "socialist" and the proposed rules banning the practice "government rate setting" and showing ambulance crews trying to deliver their patients to dark emergency rooms whose staff have all gone home because they can't ruin your finances while saving your life.

$28 million later, we finally know who is behind Doctor Patient Unity, the dark money org who pushed these risible dank memes: Teamhealth (part of Blackstone, the largest private equity fund in the world) and Envision Healthcare (part of private equity giant KKR).

It took a lot of sleuthing: Doctor Patient Unity's true owners are hidden behind numbered companies, generic officers and a code of silence, but once the NYT had the incontrovertible evidence, Blackstone and KKR admitted that they were the funders.

I'm sure that they'll be the first to tell you that they only kept their funding a secret because they knew you'd be delighted by the fact and they didn't want to spoil the surprise.

We have long been concerned about how health care has been increasingly commercialized, as hospitals and other "provider" organizations get bought out by for-profit corporations, and as physicians are increasingly employed by such corporations to provide care to individual patients, becoming corporate physicians.

Even more concerning is the intervention of private equity. We first discussed the perils of private equity takeovers of hospitals here in 2010, and of physicians providing direct patient care as employees of corporations owned by private equity here in 2011. The private equity business model seems particularly unsuitable for organizations which provide patient care, as we discussed in some detail in 2012.

For a quick modern summary of why it is bad to have private equity involved in direct patient care, see Merrill Goozner writing in Modern Healthcare, September 5, 2019,

The private equity business model in healthcare parallels other industries: Use highly leveraged private capital to roll up a number of small firms into one entity, with the private equity firm providing collective management. In addition to hefty fees for arranging the transaction (generally 1% to 2% of the purchase price), the private equity firm typically demands a 20% return on its investment after paying interest on the debt.

After three to seven years, assuming all goes well in achieving the promised efficiencies, the private equity firm and its junior partners (who are the specialty physicians in this latest wave of takeovers) earn a windfall by taking the company public or flipping it to another set of private equity investors. If things don't work out as planned, the firm cuts its losses and declares bankruptcy (most of its capital will have been recouped through the 20% annual returns).

The management company has two paths to achieve its financial targets. It can either reduce costs sharply or look for ways to increase revenue.

Who Advocates For Surprise Medical Billing? – Private Equity Hides Behind Physicians' White Coats [Roy Poses/Health Care Renewal]

(via Naked Capitalism)