Private Equity in the Dock for Alleged “Surprise Billing Practices”

September 19, 2019 | Private Equity, Regulations
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A bipartisan Congressional investigation is to determine whether private equity giants are behind price gouging in emergency care.

“Surprise billing practices” are unexpectedly large medical bills from an out-of-insurer-network physician for emergency treatment. However, these bills could also emanate from an out-of-network physician or ancillary clinician working in an in-network hospital.

Surprise billing practices: Hapless patients thrown into financial difficulties

Members of the US Congress’ Energy and Commerce Committee will investigate such price gouging. Their investigation will, therefore, focus on emergency treatments received at facilities owned by private equity giants. The committee’s chairman, New Jersey Democrat Frank Pallone, and ranking member Greg Walden, an Oregon Republican will lead the investigation.

Apparently, a study by Yale University titled “Surprise! Out-of-Network Billing for Emergency Care in the United States” triggered the Congressional investigation.

Yale Study: Glare on EmCare and TeamHealth

“Two leading ED physician outsourcing firms – EmCare and TeamHealth – use out-of-network billing to significantly raise the amounts they are paid,” said Yale. “These two examples are instructive in their differences and provide a nice illustration of the economics of bargaining.”

Interestingly, private equity giant KKR recently acquired Envision Healthcare, the parent company of EmCare, for $10 billion. On the other hand, Blackstone acquired TeamHealth, the other party named in the Yale study.

PE giants receive missives from investigators

Therefore, Mr. Pallone and Mr. Walden have written to private equity giants such as Blackstone, KKR, and Welsh, Carson, Anderson, & Stowe, on the subject.

The Committee noted that about a fifth of all emergency medical care results in a surprise billing practice.

Separately, Democratic presidential candidate and Massachusetts Sen. Elizabeth Warren has also criticized private equity players for their fees and outsized profits.

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