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Investors' deep-pocket push to defend surprise medical bills

Rachel Bluth and Emmarie Huetteman, Kaiser Health News on

Published in News & Features

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.


"They have money to burn," said a Democratic congressional aide with knowledge of the lobbying efforts "They're in take-the-bill-down mode."

Private equity firms and the staffing companies they own have a lot to lose, too. While doctors largely once worked for hospitals or had individual contracts, many hospitals now rely on these huge staffing businesses to provide doctors for various departments. Companies like Envision Physician Services and TeamHealth provide doctors to dozens, sometimes hundreds of hospitals. Private equity firms back these ever-growing outsourced staffing companies.

Because patients have no effective way to protect themselves from unexpected medical bills, even knowledgeable, proactive people with comprehensive insurance can find themselves whisked away to an out-of-network hospital in an emergency or treated by an out-of-network anesthesiologist at the in-network hospital they selected.

Several lawmakers have adopted the issue, one seemingly ready-made for campaign season: In fighting surprise bills, they are attacking a practice both reviled by the public and easy to explain.


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