As proposals to ban surprise medical bills move through Congress and state legislatures with rare bipartisan support, physician groups have emerged as the loudest opponents.
Often led by doctors with the veneer of noble concern for patients, physician-staffing firms—third-party companies that employ doctors and assign them out to health care facilities—have opposed efforts to limit the practice known as balance billing. They claim such bans would rob doctors of their leverage in negotiating, drive down their payments and push them out of insurance networks.
Opponents have been waging well-financed campaigns. Slick TV ads and congressional lobbyists seek to stop legislation that had widespread support from voters. Nearly 40% of patients said they were “very worried” about surprise medical bills, which generally arise when an insured individual inadvertently receives care from an out-of-network provider.
But as lobbyists purporting to represent doctors and hospitals fight the proposals, it has become increasingly clear that the force behind the multimillion-dollar crusade is not only medical professionals, but also investors in private equity and venture capital firms.
In the past eight years, in such fields as emergency medicine and anesthesia, investors have bought and now operate many large physician-staffing companies. And key to their highly profitable business strategy is to not participate in insurance networks, allowing them to send surprise bills and charge patients a price they set—with few limitations.
“We’ve started to realize it’s not us versus the hospitals or the doctors, it’s us versus the hedge funds,” said James Gelfand, senior vice president of health policy at ERIC, a group that represents large employers. (...)
To understand the power and size of private equity in the U.S. health care system, one must first understand physician-staffing firms.
Increasingly, hospitals have turned to third-party companies to fill their facilities with doctors. Among driving factors: physician shortages, a bigger insured population because of the Affordable Care Act and an aging population, according to research from the investment firm Harris Williams & Co.
In some areas, doctors have few options but to contract with a staffing service, which hires them out and helps with the billing and other administrative headaches that occupy much of a doctor’s time. Staffing companies often have profit-sharing agreements with hospitals, so some of the money from billing patients is passed back to the hospitals.
The two largest staffing firms, EmCare and TeamHealth, together make up about 30% of the physician-staffing market.
That’s where private equity comes in. A private equity firm buys companies and passes on the profits they squeeze out of them to the firm’s investors. Private equity deals in health care have doubled in the past 10 years. TeamHealth is owned by Blackstone, a private equity firm. Envision and EmCare are owned by KKR, another private equity firm.
With affiliates in every state, these privately owned, profit-driven companies staff emergency rooms, own dialysis facilities and operate physician practices. Research from 2017 shows that when EmCare entered a market, out-of-network billing rates went up between 81 and 90 percentage points. When TeamHealth began working with a hospital, its rates increased by 33 percentage points.
by Rachel Bluth and Emmarie Huetteman, Kaiser Health News via Daily Beast | Read more:
Often led by doctors with the veneer of noble concern for patients, physician-staffing firms—third-party companies that employ doctors and assign them out to health care facilities—have opposed efforts to limit the practice known as balance billing. They claim such bans would rob doctors of their leverage in negotiating, drive down their payments and push them out of insurance networks.
Opponents have been waging well-financed campaigns. Slick TV ads and congressional lobbyists seek to stop legislation that had widespread support from voters. Nearly 40% of patients said they were “very worried” about surprise medical bills, which generally arise when an insured individual inadvertently receives care from an out-of-network provider.But as lobbyists purporting to represent doctors and hospitals fight the proposals, it has become increasingly clear that the force behind the multimillion-dollar crusade is not only medical professionals, but also investors in private equity and venture capital firms.
In the past eight years, in such fields as emergency medicine and anesthesia, investors have bought and now operate many large physician-staffing companies. And key to their highly profitable business strategy is to not participate in insurance networks, allowing them to send surprise bills and charge patients a price they set—with few limitations.
“We’ve started to realize it’s not us versus the hospitals or the doctors, it’s us versus the hedge funds,” said James Gelfand, senior vice president of health policy at ERIC, a group that represents large employers. (...)
To understand the power and size of private equity in the U.S. health care system, one must first understand physician-staffing firms.
Increasingly, hospitals have turned to third-party companies to fill their facilities with doctors. Among driving factors: physician shortages, a bigger insured population because of the Affordable Care Act and an aging population, according to research from the investment firm Harris Williams & Co.
In some areas, doctors have few options but to contract with a staffing service, which hires them out and helps with the billing and other administrative headaches that occupy much of a doctor’s time. Staffing companies often have profit-sharing agreements with hospitals, so some of the money from billing patients is passed back to the hospitals.
The two largest staffing firms, EmCare and TeamHealth, together make up about 30% of the physician-staffing market.
That’s where private equity comes in. A private equity firm buys companies and passes on the profits they squeeze out of them to the firm’s investors. Private equity deals in health care have doubled in the past 10 years. TeamHealth is owned by Blackstone, a private equity firm. Envision and EmCare are owned by KKR, another private equity firm.
With affiliates in every state, these privately owned, profit-driven companies staff emergency rooms, own dialysis facilities and operate physician practices. Research from 2017 shows that when EmCare entered a market, out-of-network billing rates went up between 81 and 90 percentage points. When TeamHealth began working with a hospital, its rates increased by 33 percentage points.
by Rachel Bluth and Emmarie Huetteman, Kaiser Health News via Daily Beast | Read more:
Image: Shutterstock
[ed. Hedge funds. Again. They're an economic virus. See also: Kaiser healthcare workers plan for nation's largest strike since 1997 (Salon)]
