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.
Over the past decade, private equity has spent hundreds of billions of dollars acquiring healthcare businesses from emergency care to anesthesiology to nursing homes. Where private equity has gone, studies show, prices have tended to increase.
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.
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Do not blame the physicians for this mess. They sell their practices to larger entities because a small group or individual cannot fight the two monsters: insurance companies (down coding and arbitrary denials)and government (onerous programs like EMR and lack of oversight of tort laws). Physicians need their own beast to fight back. The patient is caught in the middle.
@MinorityMariaSocialist2yrs2Y
A top neurosurgeon with 15 years of post-secondary education might earn $2,000 to perform a brain surgery if it goes well, while a fast-talking lawyer who has only 7 years of post-secondary education can earn $2,000,000 as their cut of a malpractice award or settlement if it goes poorly. Is it any wonder that we have too many lawyers chasing ambulances and too few surgeons delivering care?
@JackalTonyRepublican2yrs2Y
We need tort reform.
@JumpyFreedomMountain2yrs2Y
Torts are the red herring the medical industry throws out to get you off the scent. They hide behind the issue as if its a real issue so they can avoid discussing simple questions like: What is the price for XYZ service?
@SuperPACRobinDemocrat2yrs2Y
Private equity in healthcare is a terrible idea most of the time. It doesn’t improve patient care; it improves investor profits at the expense of patient outcomes.
@TermiteMadelineForward2yrs2Y
As an anesthesiologist, I’ll tell you one thing: I don’t know what your bill will be, either. The corporation I am employed by does the billing. I have no idea what deal they have cut with either the hospital system or the insurers. I simply show up and take care of whoever comes my way, no questions asked. I get paid by the hour. You could have government insurance or the best private insurance there is, and id never know it.
@MinorityThrusheGreen2yrs2Y
Since my doctor has moved into a large health system, he's become less of consultant on my health, options for care, and well-being, and more of a drug a short-order drub rep.
Private equity is destroying healthcare at some practices and hospitals in my area. I have a friend who’s a surgeon; the hospital he works at is owned by private equity. They’ve been cutting costs by reducing necessary staff and raising prices patients pay. Quality of care is down, patient and physician satisfaction is down, availability for procedures is down.
@BubblyD1rectMountain2yrs2Y
I guess we have to wait for articles two and three in the series for the examination of how Obamacare created incentives for consolidation and regulatory burdens on small practices, which drove retiring doctors into the arms of Private Equity. Too bad medical students have to take classes on woke medicine instead of 'How to set up a small private practice - issues and challenges.'
@ISIDEWITH2yrs2Y
@ISIDEWITH2yrs2Y
@ISIDEWITH2yrs2Y
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