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“Pirate Equity” Profiteers Behind Shady Ads to Block Reform of Surprise Medical Billing

By Craig Sandler, Program Associate, Congress Watch

During the July Democratic primary debates for the 2020 presidential nomination, viewers were shown a mysterious advertisement that struck some in the health care field as bizarre. The initial ad as well as subsequent similarly fear-mongering ads aired in targeted markets purporting to seek to protect patients from greedy insurers. But the “patients first” language these ads used is a sham. In reality, the advertisements were calling for viewers to demand that their senators oppose bipartisan legislation that would rein in surprise medical billing. The advertisers are banking on viewers’ unfamiliarity with the nuances at play in order to help preserve a deeply anti-patient practice.

Surprise medical billing is a devastating and horrifically common phenomenon in our broken for-profit health care system. Patients that receive an in-patient treatment, visit an emergency room, or are transported via ambulance frequently receive a sky-high surprise medical bill. This typically occurs because one of the providers used for the service was out of the patient’s insurance network. Unfortunately, this can happen easily, even if patients are normally quite careful about ensuring they are only treated by in-network providers. Patients are often not given a choice of transport services or they are not able to weigh-in because, for example, they may have been unconscious. In practice, this means that everyday Americans routinely face surprise medical bills that run as high as six-figures and leave families devastated and at severe risk of bankruptcy. This unethical practice of surprise billing happens to one in six people every year in the United States.

Among those who work in health care reform, the injustice of surprise medical billing is a widely-known phenomenon. The practice is so clearly wrong that despite the current political polarization in the nation’s capital, bipartisan legislation to eliminate surprise billing has progressed through committees in both chambers of Congress. Even President Trump has called on Congress to address the issue. While the competing bills differ in how favorable they are to one industry versus another, until recently it had seemed like Washington was in unanimous agreement that the practice would end and consumers would finally be protected against receiving surprise medical bills.

So that’s why it caught many off-guard when, beginning in late July, a secretive “dark money” group began a TV advertising blitz in targeted states urging senators facing tough reelection battles to reject any and all of the proposed pieces of legislation. The ads were paid for by a group called Doctor Patient Unity, which was formed only a few days before its ads started airing. Because of the Federal Election Commission’s rules for electioneering communications, the group’s ads are considered strictly “issue ads” and do not fall near enough to any election to count as electioneering. Therefore, Doctor Patient Unity was not required to disclose its donors, and for months there was speculation inside the capital beltway as to who exactly was paying for these ads.

As the New York Times uncovered last month, the two largest financial backers of Doctor Patient Unity are TeamHealth and Envision Healthcare, two enormous private equity firms on Wall Street that have already played a substantial role in consolidating the provision of health care under corporate banners. Typically, within the health care space, some of private equity’s prime targets for acquisition have been healthcare staffing firms as well as small practices for specialty care providers, like dentists and ophthalmologists. This transition from a system in which many former separate small practices are now part of a massive corporate network have reduced patients’ choices in receiving care and forced them into accepting the emergency care they need even in the face of sky-high costs.

“Private equity” (a term the industry prefers to what it was once known as, “leveraged buyout”) firms’ stated aim is to “flip” failing companies by snatching up companies and investing large amounts into making them more profitable before selling them off and making a mint. These Wall Street firms typically like to describe themselves as “helping” struggling businesses but, in practice, these firms often operate in a more predatory way—circling like vultures to find vulnerable companies from which they can strip the assets and leave the workers out of a job, a pension, and severance pay. This is why financial reform advocates have nicknamed the practice “pirate equity.”

In the healthcare space, the “pirate equity” industry has been buying up physician practices and provider management companies as well as ground and air ambulances that hospitals have outsourced. These conditions—concentrated corporate power in health care provision—have helped set the stage for surprise billing to become so prevalent and lucrative for those willing to profit off the suffering of working families.

As two writers at The American Prospect write of a recent study:

A team of Yale University health economists examined what happened when private equity–owned companies EmCare (part of Envision) and TeamHealth—the two largest emergency room outsourcing companies—took over the emergency departments at hospitals. An EmCare takeover translated into an 82 percent increase in charges for caring for patients. EmCare’s egregious surprise medical billing practices have resulted in a congressional investigation headed by former Missouri Senator Claire McCaskill, lawsuits from shareholders, and court actions involving Envision and UnitedHealth Group, the largest U.S. insurer.

The predatory business model of private equity firms is well-known, and the industry’s expansion into health care system is a malignant growth that was a virtually inevitable symptom of our for-profit model of medical care. Just as private equity is driving corporate consolidation in struggling industries like retail and even journalism, so too is it feeding on vulnerable hospitals and physicians’ groups.

It remains to be seen whether Doctor Patient Unity will continue to oppose all bipartisan legislation to end the devastating practice of surprise billing. We’ll be keeping an eye on this week’s Democratic debate to see if the group does circulate more of its misleading doublespeak on the airwaves.

In the meantime, constituents should continue to pressure Congress to pass legislation that will put an end to surprise medical billing. Public Citizen and its fellow members of the “No Surprises: People Against Unfair Medical Bills” coalition have laid out three principles that any surprise medical billing legislation must adhere to in order to guarantee that the change will not hurt consumers. Those are: to ban surprise balance billing and fully protect consumers, to contain total costs for consumers, and to ensure comprehensive protection nationwide.

It bears mentioning, however, that while we need immediate legislation to address this particularly egregious practice, such a bill is only one step we must take. This legislation would protect consumers with insurance against the worst abuse but would not solve the larger problem of ordinary families’ risks of medical debt and bankruptcy. And for people with no insurance in the first place, changes to out-of-network coverage will not resolve their lack of access to adequate and affordable health care. Ultimately, Medicare for All is the path we must take to put an end to the gross injustices and inequities of our for-profit health care system, and the devastation it wreaks on regular American families every day.