Today, about two-thirds of U.S. hospitals outsource emergency care to private physician-staffing companies, many of which are owned by private equity firms. As Congress works to end surprise medical billing, Sen. Elizabeth Warren, D-Mass., Rep. Mark Pocan, D-Wis., and Rep. Lloyd Doggett, D-Tex., are demanding more information about the role private equity firms play in contributing to one of the biggest affordability challenges facing patients.
See excerpts from the lawmakers’ letter to KKR, Blackstone Group, American Securities, Enhanced Equity Funds, and Welsh, Carson, Anderson, & Stowe below:
- “Private equity funds like yours often purchase controlling interests in companies for a short time, then load them up with debt, strip them of their assets, extract exorbitant fees, raise prices and sell them at a profit – implementing drastic cost-cutting measures at the expense of workers, consumers, communities, and taxpayers. For that reason, we have concerns about the rapid spread and effect of private equity investment in many sectors of the economy – including the medical and healthcare industry.”
- “We are particularly concerned about your firm’s investment in physician staffing companies or emergency medical transportation service companies, both of which have contributed to the growing prevalence of out-of-network ‘surprise billing.'”
- “Hospitals around the country are increasingly outsourcing emergency care services to physician staffing firms, further exacerbating the issue of surprise billing since these firms often staff facilities with out-of-network providers. Today, almost two-thirds of hospitals in the United States rely on private physician-staffing companies, many of which are owned by private equity firms. In 2017, private equity firms acquired over 100 physician practices – reportedly paying practice owners as much as $1 million to $2 million per physician.”
- “While the consolidation of these practices provides physician staffing companies substantial bargaining power vis-a-vis hospitals and insurance companies, they also have the strengthened ability to raise prices that patients or their insurance companies [have to] pay for these doctors’ services.”
- “One study found that in the case of EmCare, ‘out-of-network billing rates increase dramatically in the months after [it] takes over a staffing contract” and physician charges increase on average by $556, a 96% increase – “expos[ing] patients to increased cost sharing and financial risk.’ The study found that EmCare’s entrance into a hospital increased out-of-network rates by 81.5%, while HealthTeam’s entrance drove up rates by almost 33%.”
To view the full letter, click here.