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Businesses Medicine

You Can Thank Private Equity for That Enormous Doctor's Bill 157

Private-equity investors have poured billions into healthcare but often game the system, hurting both doctors and patients. From a report: Consolidation is as American as apple pie. When a business gets bigger, it forces mom-and-pop players out of the market, but it can boost profits and bring down costs, too. Think about the pros and cons of Walmart and "Every Day Low Prices." In a complex, multitrillion-dollar system like America's healthcare market, though, that principle has turned into a harmful arms race that has helped drive prices increasingly higher without improving care. Years of dealmaking has led to sprawling hospital systems, vertically integrated health insurance companies, and highly concentrated private equity-owned practices resulting in diminished competition and even the closure of vital health facilities. As this three-part Heard on the Street series will show, the rich rewards and lax oversight ultimately create pain for both patients and the doctors who treat them. Belatedly, state and federal regulators and lawmakers are zeroing in on consolidation, creating uncertainty for the investors who have long profited from the healthcare merger boom.

Consider the impact of massive private-equity investment in medical practices. When a patient with employer-based insurance goes under for surgery, the anesthesiologist's fee is supposed to be determined by market forces. But what happens if one firm quietly buys out several anesthesiologists in the same city and then hikes the price of the procedure? Such a scheme was allegedly implemented by the private-equity firm Welsh, Carson, Anderson & Stowe and the company it created in 2012, U.S. Anesthesia Partners, according to a Federal Trade Commission lawsuit filed last year. It started by buying the largest practice in Houston and then making three further acquisitions, eventually expanding into other cities throughout the state of Texas. In each location, the lawsuit alleges, USAP pursued an aggressive strategy of eliminating competitors by either acquiring them or conspiring with them to weaken competition. As one insurance executive put it in the FTC lawsuit, USAP and Welsh Carson used acquisitions to "take the highest rate of all ... and then peanut butter spread that across the entire state of Texas." In May, U.S. District Judge Kenneth Hoyt dismissed the FTC's unusual step of charging the private-equity investor, Welsh Carson, but allowed the case against USAP to proceed.
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You Can Thank Private Equity for That Enormous Doctor's Bill

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  • by Joe_Dragon ( 2206452 ) on Friday May 31, 2024 @11:13AM (#64513205)

    need to remove profit from healthcare and maybe force estimate to be the max price that you are to pay if if then under estimated the bill.

    • by Burdell ( 228580 )

      My area has a pseudo-municipal-owned not-for-profit hospital and a hospital owned by a for-profit company. It's the not-for-profit hospital that has turned into the monster, buying up all the not-for-profit hospitals in a 70 mile radius (including into the next state), buying the ambulance systems, signing doctors to exclusive network agreements, and continually trying to block the for-profit hospital from adding services or even beds to compete.

      • It is indeed amazing that none of these mergers and other behaviors aren't smashed by antitrust litigation.

        Amazing in that it perpetuates, not amazing in the standpoint that it's likely because of regulatory capture.

        That said, it's a very tough situation to remedy. Even single-payer has its downsides, because of the issues someone else mentioned that basically emergency health care doesn't afford any concept of "competition" because you can't really shop around for emergency care.

        One solution might be to re

    • Non Profit doesn't mean it doesn't pay people handsomely or forgo clinical research, instead could it be fascinated with Health Outcomes, before it claims financial reward? Example: "A blockbuster drug is an extremely popular drug that generates annual sales of at least $1 billion for the company that sells it." - Where does it mention any health benefit? This Billion could be from trickery, or preferring to develop treatments over cures. Has anyone watched Michael Keaton in dopesick to get a whiff of
    • Another day older and deeper in debt I owe my soul to medicare
  • by spiritplumber ( 1944222 ) on Friday May 31, 2024 @12:03PM (#64513321) Homepage
    We can thank private equity for a lot of evil. Why don't we just eat people who practice it?
  • by bugs2squash ( 1132591 ) on Friday May 31, 2024 @12:05PM (#64513323)

    Wait while they saddle your local clinics with huge debt burdens

    if their sole purpose is to extract money from the system then they should be regulated because they are regressing from improving the lives of practitioners and patients. It's not just the patients being shaken down for more for the same or worse service, the doctors are being squeezed too. How does that help recruitment into the healthcare profession ? I get that proper management and accounting is important and a specialist skill, but it doesn't merit being rewarded with ALL the money

  • by JBMcB ( 73720 ) on Friday May 31, 2024 @12:17PM (#64513367)

    This is the lynchpin of the whole scheme. In many regions, to open a new hospital or certain types of health care facilities, you have to obtain a certificate of need from the local health board. To get one, all the existing hospitals and health care facilities have to agree to give one to you. That is, if there is only one hospital that charges high rates, if you want to open a second hospital to compete, the existing hospital has to OK it.

    Sounds fair, right?

  • true story (Score:5, Interesting)

    by LazarusQLong ( 5486838 ) on Friday May 31, 2024 @12:27PM (#64513389)
    One day, at work, I went to the toilet. Whilst urinating, I noticed my urine was a deep dark red, like fine Merlot and I had been having this stabbing pain in my abdomen... I went outside and called my doctor, whilst on hold I had an uncotrollable urge to vomit, my doctor (at that time) told me to relax, it will be fine. Well, I kept on have uncontrollable urges to vomit about every 20-30 minutes, so I left work and drove to the nearest emergency room, stopping along the way to vomit as needed.

    I got to the emergency room at Mary Washington Hospital ( I was living in Virginia then) . I waited until just after 11 pm to be seen (much more seriously injured people were being seen before me, and all I had was pain, deep, dark red urine and vomitting. When seen, the took urine and blood and did an x-ray. the doc told me I had a kidney stone and discharged me at about 12:30 am with some anti nausea pills (chewable) and some pain pills (hydrocodone) and he had injected me with some morphine derivative. I drove home, and took the pills as directed, facetimed my brother and mom to tell them about this development, and the morphine kicked in. How did I know, because my first generation iPhone started growing hair. So I went to bed, only awoke to take meds as prescribed...

    6 months later I got a bill from the hospital, a little over $8000, the insurance had paid 80% of that. the documentation said I had been being seen for two days and assigned a private room to me, when the reality was I had been seen for 1.5 hours, had one X-Ray and one blood test and one Urinalysis, been prescribed anti-nausea meds and pain killers.

    I called my insurance and told them this and the lady on the other end of the phone basically didn't care and told me they had already paid it.

    I called the hospital billing and tried to explain to them, but they just presumed I was lying and told me so.

    So, if I am ever in that part of Virginia again and need medical care, please do not take me to Mary Washington Hospital, there are a couple of newer hospitals that have been put up in the area.

    • There are hospitals that charge new mothers extra to hold their newborns. That should tell you everything you need to know about for-profit healthcare.
      • holy crap! I did not know that!

        .

        Studies have shown that holding the newborn after birth (specifically placing the newborn on the mother's naked belly if she didn't have a c-section so there is skin to skin contact if I remember correctly) speeds up the recovery of the mother, so it is a best practice, or used to be before these assholes got in charge!

        • $30 in 2016 [bbc.com], which is of course nothing compared to the average bill for a normal delivery, $30,000. In comparison the equivalent cost to the NHS is around $2,500.
          • I am sorry, was it $30 for the mother to be allowed to hold her baby after the birth? Is the 'normal' cost for a birth $30K? whilst the cost the NHS pays is $2500? I thought medical care under the NHS made all procedures free?

            Or am I misunderstanding and the extra cost in the UK for the mother to be allowed to hold her baby after the birth the equivalent in British Pounds Sterling $30, the cost for a normal birth in the US, $30K, and that the NHS pays the doctors, nurses and all the others involved in the

            • $30 surcharge to hold the baby in a US hospital, with the average bill for a delivery being $30k. $2500 is roughly what it costs the NHS, but the mother doesn't pay anything besides regular taxes. Obviously in either country the costs are higher if there are complications or the birth is via caesarean section, but in the UK it makes no financial difference to the mother.
  • Think about the pros and cons of Walmart and "Every Day Low Prices."

    Sure, but I'm not sure Walmart is the model here as 70-80% of their merchandise comes from China.
    Pretty sure we can't get our local healthcare there.

    From Walmart’s Open Call Continues To Support Products Made in the USA [retailwire.com]

    In America, estimates say that Chinese suppliers make up 70-80 percent of Walmart’s merchandise, leaving less than 20 percent for American-made products,” according to the Alliance for American Manufacturing.

    Also not sure how that's going to play out in the future if ... Donald Trump’s 60% Tariff on Chinese Imports [crfb.org]:

    Former President and current Republican presidential candidate Donald Trump recently proposed implementing a tariff of 60 percent or higher on imports from China.

    Noting that tariffs are paid by the importers *not* the exporters (ie: China) and those costs are often (usually?) passed along to the consumer.

  • by Tony Isaac ( 1301187 ) on Friday May 31, 2024 @12:46PM (#64513461) Homepage

    Why should a doctor be allowed to gouge patients, but a grocery store can't gouge shoppers? Why should a drug maker get to dictate the price they charge Medicare, without any ability for the government to negotiate those prices (except for 10 drugs)?

    When there are no boundaries, there is no one to say "no" when abusers come along, and they always will.

    I'm all for free enterprise, to a point. It's way past time for healthcare to experience heavier government regulation.

    • Or the opposite. Arguably, much of what is wrong with medicine today is due to government policy:

      * Monopolies on medical services, pharmaceuticals, and devices.
      * Tax incentives for employer-provided insurance, pushing other models out of the market, limiting choice, and requiring portability regulations to try to fix it.
      * Medicare and Medicaid distorting the market and imposing burdensome administration.
      * etc.

      The only thing worse that I can think of would be direct government health care, which would end up

      • I'll vote with my dollars. I've told my wife to shop around and pick the hospital with the best value if I ever have a stroke or heart attack. There will be no overpaying for us.

        • Good luck with that research! It's NOT easy to figure out in advance what you will pay for healthcare. And a hospital that charges less in one area, might well charge more in another, so you can't just pick a hospital and stick with it.

      • by Tony Isaac ( 1301187 ) on Friday May 31, 2024 @04:26PM (#64514111) Homepage

        * Monopolies are allows because of *lax* government policy.
        * Employer-provided insurance helps bring *down* the cost due to bargaining power.
        * Medicare and Medicaid also bring *down* healthcare costs, because many insurers limit their payouts to some percentage, like 150%, of what Medicare pays. Those without insurance, pay even more, but often those costs are also tied to a percentage above what Medicare pays.

        • * Monopolies are allows because of *lax* government policy.

          The government artificially creates monopolies for pharmaceutical companies (patent law), for doctors (illegal to practice medicine without the doctor monopoly granting you permission), in some places it's illegal to build a hospital without the local hospitals granting you permission. The vast, vast majority of monopolies are artificially created by the government, and most of the rest are allowed by the government despite being illegal. Maybe for good reasons, but that's how it is.

          • The things you are describing, are not monopolies.

            A monopoly is "a market structure with a single seller or producer that assumes a dominant position in an industry or a sector." https://www.investopedia.com/t... [investopedia.com].

            Having a patent gives one company the exclusive right to sell a specific drug, but does not enable the company to control the entire pharmaceuticals market.
            Physician licensing does not give a physician or group of physicians, the ability to control the entire industry or sector.
            Some places require

            • You're basically claiming that monopolies are impossible. Maybe you can read your own link, where it goes on to say that a monopoly can be in a single product.

              • I did go back to the article, and it does not say that a monopoly can exist around a single product, except when there is "no similar substitutes for the product being sold." There are very few drugs that fall into this category. Just because a drug has a patent locking out competitors, doesn't mean there are no good substitutes. Even for those few cases that are truly unique (hmmm...not sure I can think of a single example), patent law has a built-in expiration date, after which competitors can jump into t

  • by Fly Swatter ( 30498 ) on Friday May 31, 2024 @02:43PM (#64513777) Homepage
    If you have procedure the result should not be separate bills from six different parties, all arriving at different times, sometimes three months later.

    First step is to have one itemized bill. ONE. Any other bills for that procedure are not legally binding. This isn't hard, just greed. The current design is to overwhelm the patient such that it's just a wall of money requests. If you have insurance they too should get ONE FUCKING BILL PER PROCEDURE or DAY.
  • "In May, U.S. District Judge Kenneth Hoyt dismissed the FTC's unusual step of charging the private-equity investor, Welsh Carson, but allowed the case against USAP to proceed."

    One of the benefits of the US corporate system is the whitewashing of legal liability. A private equity firm (or any investor) can gain control of a corporation, force that corporation to act illegally to benefit the investor, and only the corporation can be punished. It's a great system ... for some people.

  • by ndykman ( 659315 ) on Friday May 31, 2024 @06:00PM (#64514349)

    And it will affect the counties that consistently vote for people that would never even consider the idea that health care is fundamental right that every single person should have access to without fear of cost.

    Basically, they will ring as much as they can out of rural and community hospitals, but that is short lived. The doctors can't even come in and stop it, because regulations allow a vulture equity firm to buy up hospitals, but they can't be employee or doctor owned.

    The doctors will burn out and move to urban areas where there is still demand and actual non-profit systems that are trying like hell to stave off for-profit acquisition.

    It's either single payer or a health system that is completely collapsed under mismanagement for profit.

    But, no, we need to spend trillions on weapons programs that don't work, prop up defense contractors that just leech off our taxes to maintain stock pricing.

    You could cut 4 trillion of defense spending over 10 years and you get nothing but a more efficient and nimble defense force. Sure, we can't spend trillions trying to install democracies in random countries.

    But, I'll take that over nobody ever going into bankruptcy over medical bills by a system where insurance and equity take up 33% of very cent spent to just deny care.

  • When debt is cheap, people use more of it. And they use it to do the things people do with debt - buy assets. And do leveraged buyouts (private equity companies used to be known as leveraged buyout investment firms and their business model is use relatively small portion of equity and a relatively large portion of outside debt financing [aeaweb.org]).

    The perniciousness of cheap debt, and debt where risk is transferred away from the lender (e.g. "privatize profits, socialize losses") has led to these dysfunctions.

    Privat

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