Another way that the insane medical system in the US squeezes money from sick people

Here is another post about the insanity of the US health system, a post that will be utterly incomprehensible to people who live in civilized countries where you are not blindsided by huge bills just because you get sick. It involves the practice of people getting ‘surprise bills’ after treatment. For those of you not familiar with this insane system, in the US your insurance company contracts with a network of doctors and hospitals for your treatment. If you go to those when you are sick, your bill will be lower than if you go to an out-of-network doctor or medical facility (or if you do not have insurance at all) so you always have to check before going to see a doctor.

Having to take all these precautions before you even see a doctor is bad enough. The problem is that even after you practice due diligence, you might unknowingly still be treated by a doctor who is out-of-network and then suddenly you will be confronted with a much larger bill than you anticipated. It turns out that doctors are taking advantage of this to get more remuneration.

Doctors have so far been spared some of the criticisms that the health insurance, pharmaceutical, and hospital industries have got for their squeezing money out of patients. But this issue shows that doctors are also involved in the gouging of patients, thanks to the role of private equity companies entering the medical field. And doctors are lobbying hard to stop legislation that would block this kind of surprise billing.

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.

Yes, that’s right. In the US, these private equity companies, entities that one thinks of primarily in the world of high finance are also big players in the medical field and you know that cannot be good because these companies are rapacious in their desire for big profits.

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.

A study by the Kaiser Family Foundation found that 1 in 6 Americans with insurance were surprised by a medical bill after treatment at a hospital in 2017.

That is no coincidence: In many states, balance billing—when a provider charges a patient the difference between their fee and what their insurance company paid—is legal, so physician-staffing services have little incentive to contract with insurance companies and provide in-network doctors.

The health system in the US is a nightmare that one has to live through to fully appreciate its Kafkaesque nature and the many ways that it squeezes money out of people. And yet, when proposals are made to replace it with a sane single-payer system that would be free to everyone at the point of service, the cry goes up “But it will raise my taxes!”

Well, duh! Nothing is free. The question is whether you want all the money you set aside for health care that is deducted from the paycheck you get from your employer to go to actual health care (which is what happens to your taxes in a single payer system) or whether you want a large chunk of it to go to enrich insurance companies, hospital and drug company executives, already wealthy doctors, or industry shareholders, all of whom do not give a damn if you can afford to pay or may even go bankrupt.


  1. johnson catman says

    Unfortunately, there are WAY too many idiots in the US who think single-payer is socialism (which it is), and is therefore BAD. These same people would probably scream bloody murder if you try to take away their SOCIAL SECURITY, where the socialism is right there in the name.

  2. says

    We are getting slapped by the market.
    I’m having to deal with something similar. My doctor and spinal injections for pain are covered, but the nearest facility for the injection isn’t. I’d have to drive an hour and a half to get to one that is covered. And I’d have to have a friend drive me there and back. So I’ll pay the price and have it done locally.

  3. bmiller says

    It seems like the entire American economy is based on inventing ways to extract fees and profit from customers and workers, while providing little real value to anyone but the investor class. Its rentier extraction all the way down.

  4. Ridana says

    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.

    Which meaning of “rate” are they talking about here? The amounts being paid or the number of referrals to out-of-network? Or both?

    1) @ johnson catman: These are the same people who say, “I don’t want the government involved in my Medicare,” or “We need to get rid of Obamacare, but don’t mess with the ACA.”

  5. mnb0 says

    Unfortunately, while -- or because -- being Dutch, this is not incomprehensible to me. In 2006 the great minds who rule this country thought it wise to introduce some parts of the American system. The situation is not as bad as described in this blog post. Yet.

  6. garnetstar says

    And, one reads of a huge majority of doctors being unhappy and dissatisfied with the practice of medicine, as currently constituted in the US. The undergrads here don’t want to go to med school anymore: vet school and dental school have both surpassed medical school in applications.

    The system here is so dysfunctional for everyone, for patients, doctors, even for hospitals and I might think for insurance companies (because it is so extremely chaotic and requires such an immense bureacracy), that I think it will eventually collapse. Only then will we get a sane system: when care is so expensive and so bad that people feel that nothing, even “socialized” medicine, could be worse. And, since that will cost less and be better care, they are right.

    But, to pry those who are profiting from this system loose from their profits, the system will have to sink into depths of dysfunction that we haven’t seen yet, and may not be able to imagine.

  7. abusedbypenguins says

    I’m a Vietnam veteran and I paid $2300.00 for cataract surgery on one eye two days ago because the VA threw me under the bus. In 12 days I get to pay another $2300.00 for the other eye. The VA is totally mismanaged and they don’t care.

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