One in five patients get a surprise medical bill after visiting the emergency room, a recent study found. A surprise medical bill occurs when patients with insurance receive an out-of-network charge through no fault of their own and, often, despite their best efforts to remain in network.
Even if an individual visits an in-network hospital, the emergency room’s physicians may not be in network. Other common situations that result in a surprise bill include when patients receive treatment at an in-network hospital, but their tissue samples are sent to an out-of-network pathologist or if they are cared for by an out-of-network anesthesiologist while undergoing surgery.
Hospitals are increasingly hiring third-party physician staffing companies to staff their emergency rooms, anesthesiology departments and pathology departments. Many of these third-party companies have private equity investors, who are more interested in squeezing as much money as possible out of our fragmented health care system than caring for patients or protecting patients’ interests.
The private equity firms and physician groups who profit from surprise bills have joined together to either block legislative proposals that would protect patients from surprise bills or shape legislation into a version that is as friendly as possible to private equity investors.
They are engaged in a two-tiered strategy to slow down the momentum for reform.
First, the outside game. They have saturated the airwaves with television commercials painting a dystopian future for our hospitals and our social safety net if certain surprise billing legislation passes.
Second, the inside game. They are deluging key lawmakers with campaign contributions to try to convince the lawmakers to do their bidding.
One solution to surprise medical bills, which is supported by Public Citizen, would require that the provider be paid the median in-network rate, or benchmarked rate, for the out-of-network service that resulted in a surprise bill. Another proposal would require that the provider and insurer go to arbitration to decide on a payment amount. Private equity and the physician groups officially support an arbitration approach, which would impose far fewer restraints on them.
Two of the private equity firms at the center of the debate over surprise billing are Welsh, Carson, Anderson & Stowe (WCAS) and Blackstone. The two firms have made major contributions to Rep. Richard Neal (D-Mass) and Rep. Kevin Brady (R-Texas), the chair and ranking member of the powerful House Ways and Means Committee.
This report focuses on the explosion in contributions to Neal and Brady from the private equity firms’ employees and from employees and PACs of the health care companies in which they are invested.
The contribution strategy appears to have been successful. Of the four congressional committees that have produced legislation to address surprise billing, the House Ways and Means Committee’s proposal is the most friendly to the private equity industry, as it focuses solely on the arbitration approach. Neal and Brady have also taken other steps that hurt, more than helped, any potential surprise billing fix.
Private equity firms WCAS and Blackstone own or invest in companies that are spending millions of dollars trying to shape or kill surprise billing legislation.
WCAS is an investor in three companies that have lobbied on surprise billing: US Anesthesia Partners, US Acute Care Solutions and Emerus. Two of these companies helped fund a front group, Physicians for Fair Coverage, that has spent more than $1 million on anti-surprise billing advertisements.
Blackstone owns TeamHealth, a physician-staffing firm that funds a front group called Doctor-Patient Unity, which spent $28 million on advertisements against surprise billing legislation during the summer in 2019.
The ads from the two front groups imply that legislation implementing a benchmarking approach to address surprise billing would result in a doomsday scenario in which our safety net will be destroyed and hospitals will be empty shells unable to help patients.
Employees at both WCAS and Blackstone also contribute millions of dollars to elected officials, as do the employees and the PACs of the businesses the private equity firms have invested in.
We cataloged all campaign contributions from these entities to the campaign committees and leadership PACs of Rep. Richard Neal (D-Mass.) and Rep. Kevin Brady (R-Texas), the chairman and ranking minority member of the House Ways and Means Committee. They are the two individuals most responsible for the Ways and Means Committee’s private equity friendly legislation.
We found, among other things:
Employees of Blackstone, WCAS and Three of Its Health Care Portfolio Companies, Have Contributed $335,400 to Brady and $55,800 To Neal
Employees of WCAS and Blackstone, along with the employees and PACs of three of WCAS’s health care portfolio companies (US Anesthesia Partners, US Acute Care Solutions and Emerus), have contributed $335,400 to the campaign committees and leadership PACs of Rep. Kevin Brady, according to data from the Federal Election Commission. They have contributed another $55,800 to Rep. Richard Neal.
Neal and Brady have risen to the leadership of the Ways and Means Committee in the past five years, during which time surprise billing has risen as an issue. A wide variety of special interests with issues before the Ways & Means Committee have increased contributions to Neal and Brady as they have assumed leadership positions on the committee. But the two have seen a particularly dramatic spike in contributions from health care interests with a stake in surprise billing.
Neal and Brady are not new to Congress. Neal has been in Congress for more than 30 years, Brady more than 20. But, 95 percent of the money that WCAS and Blackstone interests have contributed to the two politicians was contributed since 2015.
WCAS and Blackstone Entities Have Contributed $335,400 to Brady
Nearly all of the money that WCAS and related donors have given Brady has come since he was named chair of the House Ways and Means committee in 2015.
WCAS Contributions to Brady
- WCAS employees and the PACs and employees of its health care portfolio companies have given $280,300 to Brady over his 23-year career, $262,200 of which came after he was named chairman of the House Ways and Means Committee in 2015.
- Donors from WCAS entities increased their giving to Brady from $11,700 in the 2014 election cycle to $120,450 in 2016 election cycle, when Brady was named House Ways and Means chair. That’s an increase of 929 percent.
- Focusing solely on WCAS (not its health care portfolio companies), its employees have contributed $111,200 in total to Brady during his career.
- After contributing just $1,000 during the 2014 election cycle, WCAS employees contributed $34,700 to Brady in the 2016 election cycle after he became House Ways and Means chair.
- In just the first half of the 2020 cycle, WCAS employees contributed $45,000 to Brady, the most he has received from WCAS employees in any full election cycle of his career. Brady reported that he received all the money on the same day, March 18, 2019.
- WCAS employees who also sit on the boards of three WCAS health care portfolio companies have given Brady $38,500.
- Employees and PACs of three WCAS health care portfolio companies have given Brady $169,100 in his career. These donors increased their giving to Brady from $10,700 in the 2014 election cycle to $85,750 in the 2016 election cycle, when Brady was named House Ways and Means chair, an increase of 701 percent. The bulk of these contributions came from US Anesthesia Partners. Anesthesiologists’ services are among the most likely to result in a surprise bill.
- Employees and the PAC of US Anesthesia Partners have contributed $102,900 to Brady during his career. In February 2017, 66 different employees of the company and its PAC contributed to Brady, combining to give $62,500.
- In some cases, the contributions from US Anesthesia Partners employees occurred within days of contributions from WCAS employees. In February 2017, for example, when Brady received contributions from 66 employees of US Anesthesia Partners, he also received $13,800 from six WCAS employees.
Blackstone Contributions to Brady
- Blackstone employees have contributed $55,100 to Brady over his career, all of which was contributed after Brady became chair of the House Ways and Means Committee in November 2015.
- During the 2018 election cycle, Brady received $30,300 in combined contributions from 12 Blackstone employees, including Blackstone CEO and Co-Founder Steve Schwarzman, CFO Michael Chae and Global Head of Tactical Opportunities David Blitzer.
- Steve Schwarzman and his wife are together responsible for 60 percent, or $32,800, of all of contributions from Blackstone employees to Brady.
WCAS and Blackstone Employees Have Contributed $55,800 to Neal
WCAS and Blackstone employees have contributed $55,800 to Neal over his 31-year career. But it wasn’t until recently that he began to receive large sums of money from these private equity firm employees.
Blackstone Contributions to Neal
- Blackstone employees have contributed $42,100 to Neal during his career, almost three quarters of which, $30,800, came in a single month, September 2019.
- In early October 2019, Neal reported receiving $2,800 from a Blackstone’s Neil Simpkins, a senior managing director in Blackstone’s private equity unit. Simpkins led the acquisitions of multiple health care focused companies including the physician staffing company TeamHealth and currently serves as a director at TeamHealth.
- Less than two months after Blackstone employees contributed $30,800 to Neal, House and Senate negotiators closed in on a deal, supported by the White House, that would have used the benchmark rate to address surprise medical bills costing up to $750, a proposal disliked by the private equity firms. Then Neal and Brady announced that they had arrived at their own compromise. They issued a vague outline of a plan that would have included no benchmarking of prices and relied entirely on arbitration, the approach favored by private equity firms. According to those involved in negotiating House-Senate deal, Neal and Brady’s outline ended all hope of the deal’s passage in 2019. 
WCAS Contributions to Neal
WCAS employees have contributed $13,700 to Neal over his career. Almost all the contributions were made on May 10, 2017, when 10 WCAS employees gave Neal a combined $11,700. All 10 of those donors have given to Brady. The donors included three WCAS employees serving as board members of US Anesthesia Partners, US Acute Care Solutions and Emerus.
The truly outrageous nature of the practice of surprise billing has led to rare bi-partisan support for a solution in Congress, with committees in both chambers having passed legislation that would protect patients. The White House is apparently on board as well. Yet, attempts to address the issue have dragged on and momentum has been stopped, often with dubious explanations. A key reason Congress has yet to end the surprise billing crisis is greed.
Private equity firms are not alone in their greed. But they are some of the worst culprits. Their unethical practice of pulling providers out of networks and relying on surprise bills for profit would be heavily curtailed under the proposed compromise.
If nothing is done, private equity’s grip is only going to get stronger as the industry’s firms acquire more and more companies like TeamHealth and US Acute Care Solutions. A recent study found that private equity firms are accelerating the pace in which they are purchasing physician practices.
The more physician practices they purchase, the more money they have at stake. And the more money they have at stake, the more aggressive they will be in their lobbying efforts and campaign contributions.
The author of the study that found private equity firms accelerating their purchasing of physician practices cuts to the heart of the issue: “Private equity firms expect greater than 20% annual returns, and these financial incentives may conflict with the need for longer-term investments in practice stability, physician recruitment, quality, and safety,” according to Axios.
In other words, private equity firms do not take the Hippocratic Oath. Their commitment is to growth and money.
Congress should show its commitment to the American people and pass surprise billing legislation that protects patients.
 Karen Pollitz, Matthew Rae, Gary Claxton, Cynthia Cox and Larry Levitt, An Examination of Surprise Medical Bills and Proposals to Protect Consumers From Them, Peterson-KFF (Feb. 10, 2020), http://bit.ly/2v0NlGN.
 Margot Sanger-Katz, Julie Creswell and Reed Abelson, Mystery Solved: Private-Equity-Backed Firms Are Behind Ad Blitz on ‘Surprise Billing’, The New York Times (Sept. 13, 2019), https://nyti.ms/39ZH7Wj, Doctors Argue Plans To Remedy Surprise Medical Bills Will ‘Shred’ The Safety Net, Politifact (Aug. 7, 2019), http://bit.ly/32kwFpS and Rachel Bluth and Emmarie Huetteman, Investors’ Deep-Pocket Push To Defend Surprise Medical Bills, Kaiser Health News (Sept. 21, 2019), http://bit.ly/32kBlfq.
 Margot Sanger-Katz, Julie Creswell and Reed Abelson, Mystery Solved: Private-Equity-Backed Firms Are Behind Ad Blitz on ‘Surprise Billing’, The New York Times (Sept. 13, 2019), https://nyti.ms/39ZH7Wj.
 These totals include a small number of contributions from employee spouses as well.