You Can Thank Private Equity for That Enormous Doctor’s Bill

Private-equity investors have poured billions into healthcare but often game the system, hurting both doctors and patients

Ben Hickey for The Wall Street Journal

David Wainer

May 30, 2024 5:30 am ET

Ben Hickey for The Wall Street Journal

The first in a three-part Heard on the Street series on concentration in American healthcare

Consolidation is as American as apple pie.

When a business gets bigger, it forces mom-and-pop players out of the market, but it can boost profits and bring down costs, too. Think about the pros and cons of Walmart and "Every Day Low Prices." In a complex, multitrillion-dollar system like America’s healthcare market, though, that principle has turned into a harmful arms race that has helped drive prices increasingly higher without improving care.

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.

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.

As one insurance executive put it in the FTC lawsuit, USAP and Welsh Carson used acquisitions to "take the highest rate of all…and then peanut butter spread that across the entire state of Texas." In May, U.S. District Judge Kenneth Hoyt dismissed the FTC’s unusual step of charging the private-equity investor, Welsh Carson, but allowed the case against USAP to proceed.

Dr. Scott Holliday, a board member at USAP, said the company believes that the FTC’s claims are without merit and is confident in their position. "In the meantime, we will continue to focus on caring for the patients we serve in Texas and other communities across the country," he said in written comments to Heard on the Street.

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.

Such so-called rent-seeking behavior is a unique feature of the American healthcare system. Nowhere else in the world do so many healthcare dollars encounter so few mechanisms to limit profiteering. The U.S. commercial market relies on negotiations between insurers and medical providers to deliver the best possible quality and price for patients. Increasingly, though, it is becoming less competitive by design.

In the U.S., many doctors used to work for physician-owned businesses. These days, about three-quarters work for a hospital or a corporate owner. As for your hospital, a private-equity firm or a larger medical system probably owns it.

There are massive incentives to consolidate. At nearly $5 trillion, U.S. healthcare’s gross domestic product would rank it third in the world if it were a country. And there is a reason smaller practices want to sell: Regulations have become increasingly cumbersome, and dealing with insurers as a small entity isn’t a rewarding experience.

One particularly troublesome aspect of the private-equity marriage with healthcare is that it can put businesses that are essential to society at risk. An example is the crisis engulfing Steward Health Care System. The hospital chain was formed by the private-equity firm Cerberus Capital Management when it first bought six struggling Massachusetts hospitals in 2010. A 2016 sale-leaseback agreement with the hospital landlord Medical Properties Trust allowed Cerberus to receive hundreds of millions of dollars in dividends and helped Steward expand through acquisitions.

The strategy allowed Steward to grow but left it with diminished financial resources, arguably paving the path to one of the biggest hospital bankruptcies in decades. Before filing for chapter 11 protection in May, Steward faced a mountain of lawsuits by vendors over unpaid bills, including a pest-control company hired to remove about 3,000 bats last year at one of Steward’s Florida hospitals.

There are plenty of cases in healthcare of private-equity investors steering a business they bought through a transition of rapid performance improvement by streamlining billing and scheduling, later selling it for a profit—the same efficiency they can bring to other businesses.

"But the fact that the other strategies are so rich," noted Mark Miller, executive vice president of healthcare at Arnold Ventures, "makes it hard for private equity to resist them." He said keeping tabs on private-equity investments is a great way for the philanthropic organization founded by the former energy trader John Arnold to look for market failures.

In the Texas case, USAP allegedly exploited a fact that pervades healthcare: Surgery isn’t a discretionary purchase like a pair of shoes or a television, so payers and patients often have no choice but to accept exorbitant charges. What’s more, consumers aren’t cost-sensitive because their employers and health plans cover most of the charges and because they lack pricing information to make a decision. Before a patient goes under, she has no idea how much the anesthesia bill will be. As a USAP executive succinctly put it in perhaps the most memorable line of the FTC lawsuit: "Cha-ching!"

USAP might have hoped to escape regulator scrutiny because the FTC had never pursued a case against roll-ups in healthcare. Under U.S. law, individual transactions valued below a threshold of about $120 million don’t trigger merger filings and might not even be publicly announced. That makes it harder for regulators to challenge such deals, though an FTC official said that is now changing. The Texas anesthesiology case is intended to have a deterrent effect by serving as "a warning to businesses that such deals shouldn’t even leave the boardroom," the official said in an interview.

Political action is also intensifying. Statehouses across the country are enacting laws to curtail private-equity healthcare acquisitions, while Congress and regulatory agencies are probing the effects of private-equity investments. In May, the Justice Department created a task force focused on healthcare monopolies and collusion.

Alongside major hospitals and health insurers, private-equity firms have gone on a healthcare buying binge in recent decades, claiming that their acquisitions will ultimately make healthcare more affordable. All the while, Americans’ medical bills have gone nowhere but up.

3 hours ago

For a succinct fictionalized account of this, read "Acquisition Syndrome" by Dr. Tom Bibey. Written in 2012, it's written in kind of folksy language, but it gets one to thinking.

No wonder so many doctors don't want to deal with insurance any more.

Health care should not be vulnerable to this kind of unethical cream skimming.

mrs.

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6 hours ago

Wow! In addition to higher home prices which also causes higher property taxes for us, private equity is causing our doctor bills to go up. Yet nobody talks about this in the press other than the wsj. No one in the us congress or in the state houses is doing anything about this. Biden and Trump never talks about these things. Neither did anyone else talk about this that ran for President this year. You want to fight inflation, fight private equity. They no longer just ruin companies and their workers, they now take money from every American citizen that has a home and uses a doctor. Is anyone in the press or working in government listening? Iris election just going to be about Trump and Hunter Biden’s legal problems.

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14 hours ago

If I were an intelligent young person considering a career in medicine, I would run the other direction as fast as I could. The house of cards otherwise known as the American healthcare industry is going to come crashing down sometime in the very near future, and when it does, there is going to be a lot of collateral damage. Young docs with boatloads of medical debt and a decade-plus of lost earnings while in training who get caught up in the implosion at the beginning of their careers are going to be wrecked financially.

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1 day ago

Why is monopoly power not exerted against the healthcare community? What I've said for years before the Journal: Healthcare professionals are turning into just employees. The care, effort and concerns that doctors used to have for patients have disappeared and an employee has replaced them, easily terminated or able to quit for another "employer".

And then into the profit-making mix you add the pandemic and all the juicy funds and equipment hospital corporations got (remember all those government paid-for respirators? Where'd they go post-pan?). It was a healthcare feeding frenzy. And then there's big pharma. Meanwhile health insurers scratch their heads how to pass on all these "efficiency costs."

Great thing healthcare consolidation. Just one great idea.

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2 days ago

We have the devil's rectangle here between the malpractice bar that forced physicians out of private practice, insurance companies that were put on steroids via Obamacare, government incompetence, and PE firms that sell off the entity's assets on sale leaseback agreements for their quick profit.

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2 days ago

As a physician who practiced from 1975 -2013, I have observed and experienced the results of inept progressive legislation, consolidation and private equity buy-ups firsthand. The combination of corporate greed and a public who feels health care is a right for which someone else must pay is toxic. The result is both monopsony and monopoly driving costs higher and higher. Our healthcare system has more administrators, bureaucrats, and investors than providers, all intent on gaming the system. Healthcare providers are increasingly burning out and bailing out. Rural hospitals are closing. Private equity firms and executives grow wealthy and patients are bankrupted. The U.S. has excellent providers and facilities but an abysmal health care system producing third world health care statistics, and which will ultimately impoverish our nation. Once private equity sucks the system dry, it will leave the wreckage and move on to the next victims.

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1 day ago

In my area of the country, there is a health care system which started out 100+ years ago as a rural community hospital. It had grown over the years and had a good reputation as where to go if you had a serious illness. In the 90's (I think) it started to aggressively acquire and expand. Seemingly hand-in-hand, as they grew their quality of care decreased. Though it is possible the decrease in QOC was simply following a national trend and unrelated to their business practices.

Fast forward to today where they are dominant in the area. Competing hospitals in two neighboring communities have closed in the last 2~3 years, leaving those communities with no local care. A third community hospital, which was bought by this healthcare system was demoted to essentially a large out-patient facility (though it does still have a small ER).

But the real confusing irony to the story is that this large system, which has a near monopoly now, has been loosing tens of millions of dollars per year (or maybe even hundreds of millions) They have now very recently merged with another health system from out of state.

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2 days ago

That's what a society gets when it turns away from free markets and towards government force...

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1 day ago

That's why you need regulation and law and order. The free hand at work is a fallacy in the 21st century.

(Edited)

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1 day ago

You simply need the rule of law and the ability to resolve conflict peacefully.

Neither requires a government. And regulation is a farce - there are volumes written on "regulatory capture", which is the tendency of industries to capture the government offices that regulate them to use them for their own benefit...

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2 days ago

It has been shown over and over again that free markets often fail to deliver products and services at reasonable prices. The recent examples of Epipen and insulin prices soaring to astronomical levels, even for long established generic drugs is an example of the public being soaked by individuals responsible for delivering life-saving drugs thinking only of enriching themselves by exploiting vulnerable persons. Government dollars and insurance company dollars are critical to our personal and national health needs. We might not like regulations, but payers are responsible that our tax dollars and insurance premiums are being spent wisely and that the public is protected from robber barons and frauds. Health care is complex, and it is not easy and impossible to satisfy every want. Progressive good intentions often have undesirable side effects, but it is naive to think free markets alone would meet our needs. Most other developed nations seem to get better outcomes for less money.

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1 day ago

"The recent examples of Epipen and insulin prices soaring to astronomical levels, even for long established generic drugs is an example of the public being soaked by individuals responsible for delivering life-saving drugs thinking only of enriching themselves by exploiting vulnerable persons. "

Without government grants of IP that could never happen onn a free market.

"Government dollars and insurance company dollars are critical to our personal and national health needs."

Government dollars? You mean other people's money!

"We might not like regulations, but payers are responsible that our tax dollars and insurance premiums are being spent wisely and that the public is protected from robber barons and frauds."

The biggest frauds are the government schemes for SS and Medicare/Medicaid that are run like Ponzi schemes and dump 15% (Medicare) and 50% (Medicaid) of their costs on the private sector by underpaying for services.

"Health care is complex, and it is not easy and impossible to satisfy every want. "

That's why competitive free markets are the only way to increase supply to meet demand at the highest quality and lowest price...

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2 days ago

Good article. It’s very difficult to become a MD. Then takes a number of years to make a good living. Insurance companies need to cover costs and get an adequate return for stockholders. Hospitals in constant negotiation with carriers over contract reimbursements. Labor, equipment, rents, medicines, legal costs, etc, etc, constantly on the rise. Easy to criticize your medical bill but there’s a lot more to it than just the number on a piece of paper. Healthcare is a very tough business.

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2 days ago

If many of these hospitals were in financially good shape, why would they sell to PE firms?

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2 days ago

great strategy.... let consolidation happen, pay politicians to let it happen through campaign contributions, pass a law against consolidation AFTER it has already happened so it looks like the politicians are doing something.... I've seen this movie before....

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2 days ago

Quite illustrative! Private equity firms are essentially engaging in practices that were proscribed for physicians by the panacea of the Stark laws and regulations. Imagine that! Industry gaming the system it help set up with insider lobbying and big political donations.

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1 day ago

BINGO

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2 days ago

Nice, but the usual costs going up but little detail as to where the ince=reases are. Is ALL of the increase going to the shareholders of the private equity firms, or are.... Doctors getting higher pay, nurses getting higher pay, aspirin costing more, GLP1 being prescribed more, .....?

Especially compared to the other countries in the obligatory half way comparison to Europe. How much does an anesthesiologist make in Sweden vs Houston? Nurses in Canada vs US? We KNOW meds cost a lot more in the US than anywhere else. Does that have anything to do with the topic of the article, other than the comparison chart. Would help to drill down to root causes.

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2 days ago

Several years ago Time magazine devoted an entire issue to healthcare in the United States. It was by far the best analysis I had ever read (because I took the time to read the WHOLE thing) and should have been required reading for every Congressman and so-called healthcare leader. We are in trouble and I don't see anyone doing anything substantive about it.

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2 days ago

Health care has an age-old business model, maybe one of the oldest: it's called "your money or your life."

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2 days ago

It’s all about the money and power. These private equity companies exist to enrich their investors.

Start looking at power companies that promise large returns on investment (e.g., Dominion Power in VA). It drives power costs up to meet dividends

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2 days ago

Indeed, "These private equity companies exist to enrich their investors." But if you dig a little deeper, the investors include many of our fellow WSJ subscribers, via our 401k, and such.

As Pogo said, "we have met the enemy and it is us"!

In short, private equity companies rob Peter to pay Peter!

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2 days ago

Government and medicine do not mix….ever since Medicare and Medicaid legislation was passed in the mid 190s!

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2 days ago

Despite the medical cost chaos, including insurance & government conniving, does private equity continue to hide behind the "nonprofit"

status of hospitals? Of course, the "nonprofits" cry poor while continuing to expand through building construction, acquisition & consolidation while having the unconscionable nerve to seek donors, naming rights & fundraisers! If this isn’t controlling the means of production while gouging patients, not sure what it might be….

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2 days ago

Sounds like our University systems, except there they get taxpayer paid-for research.

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2 days ago

Absolutely! And with no accountability ….

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2 days ago

It's also dentist offices, orthodontist offices, buying up properties for rentals. Private equity is out of control and making me question my laissez-faire principles.

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2 days ago

and Veterinarian's offices as well!

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2 days ago

Well said. In the pre-PE days, "laissez-faire principles" sounded so attractive when I was young, and broke. So much so, it fueled my entrepreneurial ambitions. Not sure, in these PE-infused times it would have done the same.

Just received the bill from my dentist (run by a new owner who/which purchased the business from my old dentist). I'd gone in for a "cleaning" (the oral equivalent of an oil-change!); the bill $1,047.

Once the PEs run out of regular targets, they may eventually go after barbershops and such. When that happens, we we'll get two haircuts at each visit, one physical, the other metaphorical.

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2 days ago

You need a new dentist. Where I live the dentists charge $150-$200, not $1,047, low enough to be 100% covered by my dental insurance.

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1 day ago

It's gone from about $100 ten years ago to over $300.... lots of added charges and tacked-on fees.. None performed by a Dentist

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2 days ago

same "formula' worked in waste management industry - move into a market, buy up privately-owned companies (or force them out of business by cutting prices). Big companies loved governmental regulation as it forced compliance costs on smaller private companies that couldn't afford compliance costs.

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2 days ago

Works like that in our condo complex; 3 waste pickup firm changes in 5 years, and with the attendant increases in costs, missed pickups and fewer English speaking workers.

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2 days ago

Hence again, Big Business is not the problem, Big Government selling barriers to market entry is...

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2 days ago

Have to disagree. Both Big Business and Big Government take turns messing up the system. Admittedly it is wishful thinks, but if INTEGRITY had a high enough rank in both groups, we would not have half the mess we have.

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2 days ago

No, you have never lived without government and cannot imagine society without it.

Pretend there is no government. Who forces anyone to do business with any business they would rather not? Who can erect barriers to entry by competitors? Who can grant monopoly privileges of sale?

See the evil government brings?

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2 days ago

But what happens if one firm quietly buys out several anesthesiologists in the same city and then hikes the price of the procedure?

What happens if one labor union organizes several carmakers in the same city and then hikes the price of labor?

Surgery isn’t a discretionary purchase like a pair of shoes or a television, so payers and patients often have no choice but to accept exorbitant charges.

Neither is government. I have no choice but to accept exorbitant taxes.

Why is it OK for public and private labor unions to hike the prices of goods and services, but not OK for private equity to do the same thing in health care? One is supported by this administration, the other is being sued.

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2 days ago

It seems likely that the price of labor in any US market today is not much higher than it was 10 or 20 or 30 years ago. However, the price of what that labor has produced, and its commensurate profit margin, is much higher over the same time span. Income inequality has not favored those lower on the food chain. As for our tax burden, mine is lower, much lower, as a percentage of my income than it was 10 or 20 0r 30 years ago.

There is a reason health care in the USA is more expensive than anywhere else in the developed world. Can you guess why ?

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2 days ago

It's mostly the government regulations and hospitals having to make up for uninsured / government payers. For example, an ACA plan must cover hundreds of different things, many of which I don't need. Nobody can just open a competing hospital. You have to do a needs assessment. The doctors must go to specific schools which raises costs and reduces supply.

A few years ago, a hospital bill for delivering a baby in the 50's went around. It cost the equivalent of $600 in today's dollars. Now it's at least 20x more expensive. It was in the 60's that the government started taking over the health care system.

Like education, anything the government pays for gets much more expensive. Inflation in those areas is far higher than food, for example, which isn't as regulated. I bet you have a different explanation though.

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2 days ago

The difference is obvious. Choice exists.

If your government (city, county, state, or federal) hikes your taxes, you can choose to vote those responsible out of office and replace them with those who will cut your taxes. This happens all the time.

Employees can choose to vote 'no' on allowing a union. If a union exists, companies negotiate with a union. The union cannot just "hike" the price of labor unilaterally.

A patient has no choice as to the anesthesiologists used or the fee charged by that provider or the fee charged by everyone else in the operating room.

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2 days ago

Whatever the solution is, we have to also address the demand problem. Insurance with low copays makes cost low so demand high. Especially boomers & older Americans just go to see a doctor all the time and don't have to bear much incremental cost, even for discretionary care. Maybe if copays were $100 for a specialist, the office wouldn't be so packed. People might just live with minor issues or seek other lower-cost options. And doctors could continue to make a good living.

The inelastic demand contributes to the owner's ability to raise costs. The cost burden needs to be more on the individual, and we need price transparency, to lower demand.

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2 days ago

So true. Even though I am a boomer who loathes going to the doctor, when I do, I have to wait a month or more to see my "regular" doctor. The mechanical voice on the other end always suggests I should consider going to the emergency room if I need attention any sooner!

Not only do the doctors hate dealing with Medicare patients, but there are also fewer doctors, so the choices are more limited. My copay (under Medicare) is only $10. If it was $50 or $100, odds are there could be fewer patients competing for the smaller pool of doctors.

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2 days ago

"Especially boomers & older Americans just go to see a doctor all the time and don't have to bear much incremental cost, even for discretionary care." What about deductibles? That is a significant incremental cost and an may cause some to delay care.

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2 days ago

CMS is out to destroy the independent practice of medicine. PE is extracting profit from discretionary and non-government funded service lines. Unprofitable service lines like pediatrics are discarded to the detriment of public health. Eventually the last PE flip will be made and insolvency will ensue. The government, hospital systems, and Big Insurance will purchase assets for pennies on the dollar and consolidate medical care into a centralized NHS-Style system. Don’t get sick!

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2 days ago

It was once true that non physicians could not legally own medical practices. When was that changed? or was hospitals ownership a loop hole all along?

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1 day ago

It was never changed It was just never enforced

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2 days ago

"Surgery isn’t a discretionary purchase like a pair of shoes or a television, so payers and patients often have no choice but to accept exorbitant charges. "

Sure it is. This Thursday I'm getting a total hip replacement. It's not medically necessary to extend my life and the decision to get it was a voluntary one on my part. In my area there are many orthopedic surgeons operating at competing facilities to choose from. I decided on a high-volume surgeon with a good reputation for quality work.

Most importantly, I had to choose someone who took my insurance, but that dictates I get the surgery done at a hospital and not his practice's care facility (the insurer owns the hospital).

One thing about the discussions of health care is the implication that demand is inelastic (not price sensitive) and that the default situation of all health care is that it is all a matter of life a matter of life and death.

Some is, but most health care is of the long-term, chronic care variety, not acute life and death situations. That means that people DO have a lot of ability to shop for care provided government's policies allow them to do so...

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2 days ago

"... total hip replacement. It's not medically necessary to extend my life and the decision to get it was a voluntary one on my part": Did you get Medicare to pick up the tab? More generally, should such "voluntary" surgeries be paid for Medicare which we are told is going broke?

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2 days ago

Not old enough for Medicare, on my insurance.

If Medicare didn't exist and those 65 and older were allowed to buy their own insurance on a (somewhat) free market they could choose between plans and varying coverage right for them.

If I was a cash pay, the office manager said the cost would be around $16k to use their facility. Since my out of pocket will be around $9k, I opted to use my insurance. If it had been say $10-$11k I'd have opted to pay cash since their facility is more convenient.

Now the bill my insurance will pay is $42k because they route me through their hospital services. I'm sure in the $42k is an allotment of costs born by paying for Medicare and Medicaid patients whose insurance cost shifts to folks like me...

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2 days ago

Interesting but I am not able to understand the fine points you've raised, because it sounds like if you go through one proverbial door, the total charge for your hip replacement would be $16k, but through another door it would be $42k!!

I honestly find it hard to comprehend how/why your insurance company is able to pay $26k to ostensibly cover for Medicare and Medicaid patients. I have long known I don't know a lot about a lot. Your observation makes me realize I am even more ignorant than I thought I was!

PS: You are fortunate you don't have to pick a Medicare plan, yet! When you do, you will discover it is genuinely a mind-numbing exercise; I pray that our politicians on both sides of the aisle don't make it even more complicated for you! When I sought help from my medical/insurance friends, even they couldn't quite decipher the differences between the plans. Ironically, in my case, even after 10 years at the finest universities I had to ultimately choose one by making what felt like a coin-toss.

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2 days ago

"... demand is inelastic ... people DO have a lot of ability to shop". True, but only if you have the patience, aptitude, and time to do deal with all the jargon-rich-generally-unhelpful people manning the phones!

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2 days ago

Not true - most people shop for ongoing/chronic care via friends and family's experiences with providers.

That's how I found my current dentist and GP. The hip surgeon I picked on reputation and practice specialty...

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2 days ago

Why the shift to PE? Medicare has cut reimbursements over the last 20 years. Not "has not increased reimbursements to match inflation", but has cut year after year. Second, the multiple new rules of documentation and benchmarks has greatly increased the burden and cost of each and every visit. I hire a guy to put the information in the computer, pay a company to keep up the software and pay a third to make sure I am compliant with the rules. Thirdly, physicians are largely banned from owning hospitals and other facilities. "Felon" Donald Trump can own a hospital, Marcus Welby MD can not. Fourthly, billing an insurance is often times an exercise in futility. Collecting out of network money can become a multi-month adventure of phone calls and delay delay delay. For little money.

PE has issues, and most physicians that work for PE aren’t happy, but for the doctors that owned their practice, it provides a well earned pay day. You’d be insane to go to medical school today.

Eric Dunn, MD (and still in private practice)

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2 days ago

God bless you. My former physician who was in private practice and who I highly valued retired rather than engage in what he saw coming under Obamacare.

His replacement is a great doctor but he acts like a puppet on strings driven by a computer program in his actions under the new hospital owned practice he joined.

I get more of a "widget in a factory" vibe when I encounter the health care system now rather than a patient being cared for as little as 10 years ago...

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2 days ago

Agree with everything you say, except the part about Obamacare. IDK.

IMO, it has more to do our collective desire to get more from our 401k's and such regardless of how they generate the returns. So, it is quite ironic that we all get a poorer quality of overpriced-substandard-care in exchange for higher returns on our savings and investments. Sort of a modern-day version of the left-hand-does-not-know-what-the-right-hand-is-doing!

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2 days ago

I see no connection between the two.

On the one hand, I'm invested in what are to varying degrees free market businesses yielding financial returns. The other is a heavy handed government intervention in to the markets for health care and the means to pay for it.

The goal of the Left is socialized medicine provided by the state but paid for by the taxpayers. Obamacare is a stepping stone to that reality by driving industry consolidation down to a handful of big players that can eventually be more easily nationalized...

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2 days ago

Private equity is also involved in the nursing home business. Just what we need; vultures overseeing care for our most vulnerable.

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2 days ago

You think the state does better?

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2 days ago

I still recall the order in New York forcing nursing homes to take Covid patients. The residents of those homes (and it was known at the time) were among the most venerable to having bad results from Covid. Exposing them to Covid, while at the same time shutting things down was wrong. At the same time help from the US president (the use of hospital ships) was not accepted for political reasons.

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2 days ago

This is a very sad situation for patients and healthcare providers.

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2 days ago

The hospital charged me $3,300 for my sons 11 mile ambulance ride. When I complained I was told "You don't realize how many [undocumented persons] were riding in that ambulance."

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2 days ago

Nothing to do with the article.

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2 days ago

Actually, it does. The undocumented don't pay and that does lead to increased costs for those who do. The increase in charges for emergency services is linked to the abuse of those services by people who will not pay (and there are US citizens included in that group). This problem has been going on for decades now (during both Republican and Democratic administrations) and has lead to bankruptcies for hospitals (in some cases, like Kino Hospital in Tucson, Arizona there have been multiple bankruptcies), especially those close to the southern US border.

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2 days ago

Gotcha. I was focused on the private equity aspect. Thanks for taking the time to write your response. I appreciate learning something new.

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2 days ago

I still "thank" the government. Private equity is always going to game the system. Who makes the game and the rules? The fed.

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2 days ago

The Fed?

Your anti-Fed bias is showing.

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2 days ago

Keep voting. It'll fix itself eventually.

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2 days ago

Not so long as 1 party keeps shirking its legislative responsibility for theater & cosplay over cultural issues only.

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2 days ago

In the Urology group, taken over by a private equity group two years ago, I have been seeing for the past twenty years since my treatment and recovery from prostate cancer and bladder issues, the older, more experienced physicians in the group no longer even see patients in the office but are dedicated solely to much more profitable surgery assignments. mostly in sub-acute stand-alone surgical centers the same private equity group owns (by state law, they have to notify us of this ownership). The twenty minutes my urologist used to give me for examination and discussion has now shrunk to ten minutes. The doctor doesn't even look at me; he brings my chart and tests up on his tablet, reads them, pronounces me healthy, and that's the visit. The next step down will be telemedicine, the bottom of the medical treatment barrel.

(Edited)

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2 days ago

Are you even seeing a Physician on your follow-up visits? Many groups are now using Physician Assistants and Nurse Practioners, barely ever see my doctor anymore.

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2 days ago

The modern US model for healthcare, a new innovation, the assembly line.

You are just an income source for the investors in the American free market.

Move on, move on, more customers to be seen behind you...

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2 days ago

As a patient my dermatology experience has plummeted after the sale to PE (no, for the tenth time I do not need to purchase a package for regular facials). As a physician whose group has rejected PE twice, we constantly hear patients complain of the experience at other groups that have "sold out."

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2 days ago

It isn't enough to determine the quality of care but who will be sending a bill and its correctness. "services" like oxygen, wound vac's and anesthesiology can appear out of nowhere. A required patient's blanket assumption of costs agreement opens the door to whatever the primary doc wants. Excess supplies can be deemed non-returnable for sanitary reasons. What to do with two shipments of 5 canisters each that 3M refuses to take back, $500 to the landfill?

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2 days ago

Simple solution, remove Anti-Trust protection from Healthcare and PE cannot claim non-profit status. Right now those are the biggest obstacles in our Healthcare status. It will never happen, both political parties are so dependent on Healthcare for donations.

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2 days ago

Really. Maybe you should look at what happened when the ACA was discussed and then passed unilaterally in Congress. "Both parties" were not involved except at opposite ends and 1 party has, instead of fixing healthcare further instead tries to repeal the act with nothing to replace it, opening up the healthcare economy to investors and investing.

You surely don't think that having PE involved with create a cheaper and more efficient healthcare?

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2 days ago

Private equity now owns almost 75% of hospices throughout the country. Claims go up and staff gets cut. To me and hopefully to most of us, making money out of people dying goes beyond obscene

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2 days ago

Good ‘til the last drop says the vampire squid

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2 days ago

Is this the same private equity firm that has bought many dermatologist practices under the USDP moniker?

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2 days ago

Has PE really improved anything, other than their own pockets?

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2 days ago

Yes, the campaign coffers of the politicians who permit these abuses by not passing consumer protection laws reigning them in.

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2 days ago

You mean...SOCIALISM!? Because addressing healthcare issues like cost and availability is always criticized as socialism.

Victims are victims through their own faults, no?

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2 days ago

Capitalist healthcare, housing, education and infrastructure...

'Milton don't do dat.'

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2 days ago

The American health care system is an obscenity. If our collective government actually cared for its citizens, they would stop this madness...

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2 days ago

Good point. But we elected the politicians (on both sides of the aisle) who helped create this mess. So, at least to a small extent, each of us bears some responsibility for it.

Interesting, these same politicians do not have to use the same systems. If they did, they too may have experienced some of the pain and anguish the rest of us do and, in turn, done something to improve matters.

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2 days ago

Government dictates under the excuse of needed patient protection is a cause. Shifting of patient records from paper to digital has provided government the ability to supervise and even direct physician services. Congressional approved diagnosis?

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2 days ago

"And there is a reason smaller practices want to sell: Regulations have become increasingly cumbersome, and dealing with insurers as a small entity isn’t a rewarding experience."

Sadly, it is getting harder and harder for small practices to be viable. Too many cumbersome regulations to comply with, negotiating payment rates with insurance companies, hiring and training nurses and support staff, etc. all take time away from the practice of medicine.

On a related note, why is carried interest never on the table for elimination?

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2 days ago

Yes from a healthcare independent to government controlled lacky in a generation.

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2 days ago

The terrain was prepared and that fertile ground has proven quite profitable to all who are responsible for this.

Greed (whether it be for power or money) has indeed been a profitable crop.

Imagine how expensive 'free' healthcare will be when this ends up at its ultimate conclusion.

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2 days ago

Too many stakeholders in the pie. The stakeholders who pay for healthcare in the commercial system are

end users (aka employees)

employers

Insurance companies keep medical loss ratio, aka percentage of premium collected. They want it to be high

Brokers (many) keep percentage of premium collected. They also like it high

Hospitals/doctors naturally want to charge as much as they can

Employees:

Top 20% drive 81% of costs. They do not care as they hit the out of pocket max

Bottom 50% drive 3% of costs. They do not care

Employer: The HR makes decision, and often they demend on $2 (brokers)

Too many conflicts of interest

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2 days ago

Read up on what PE did to Crozer Keystone Hospital in Chester/Upland Pennsylvania, it will almost make you ill.

Or Hahnemann in Philadelphia.

(Edited)

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2 days ago

Looking forward to the next installment. In a normal market, one would expect a healthy supply of anesthesiologists to drive down the prices. Not sure what's stopping that.

It'd be great if Costco could get into the healthcare business

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2 days ago

amazon has the elements in it portfolio but has not reduced it;;;yet;;;for a roll out.

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2 days ago

Several factors:

-Limited number of providers

-High cost of entry

-Exclusive contracts with hospitals, surgery centers, etc.

-Excessive government regulatory burden

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2 days ago

Every single goober runs on ending scambolic "carried interest" but do they? Of course not - that's the donor class - as Trump pointed out in his debate with the ol' Hill.

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2 days ago

PE firms are nothing but leeches feeding on the blood of ordinary folks while they continue to add to their extraordinary wealth!

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2 days ago

Im so done with the united states of scamerica

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2 days ago

Thank you. I never expected to see this article in the WSJ. Private equity has strip-mined many once-flourishing businesses, to the vast detriment of company employees, customers, and our society at large. But doing that to health care seems particularly egregious.

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2 days ago

The bigger villains are the terrible managers who mismanage their organizations so badly they make themselves targets for PE.

Cheers, Steve

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2 days ago

It wasn't the shrimp that ate Red Lobster!

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2 days ago

Hospitals already did this

Following Obamacare. Forming large practice monopolies that resist price cuts while negotiating with insurers. Oh- and they tack on BS "facility fees" on top of the provider charge. Criminal.

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31 May, 2024

Maybe Private Equity should not qualify for tax advantages like low capital gains, carried interest, etc., in some business types such as health care, at the obvious expense of patients, and that exclusion could be implemented via legislation.

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31 May, 2024

I'm a physician. I personally consider that the corporate practice of medicine is unethical and immoral. Corporations, private equity groups, etc. have a fiduciary duty to the shareholders or owners, NOT to the patient. Money spent on patient care is a "loss" to these entities. "Over the past decade, private equity investment in physician services has emerged as a driving trend toward the financialization of health care, with investors mining health services organizations to extract wealth. The primary goal of financialized health care is profit, while the quality of the patient care is a secondary concern." https://corpgov.law.harvard.edu/2023/04/19/private-equity-and-the-corporatization-of-health-care/
Private Equity and the Corporatization of Health Care

corpgov.law.harvard.edu

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31 May, 2024

Texas and Florida, I am shocked...

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2 days ago

Well done Beck. Reduce a complex nation wide problem to your particular implied political bias. I’nm sure everyone appreciates your contribution to insightful analysis of the problem.

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2 days ago

Uh huh, California too. But nice try! Maybe they will hire you!

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31 May, 2024

Acquisitions limiting competition can and have been done by doctors and hospitals, so private equity may not be the real culprit. Government, Medicare initially, may see this phenomenon as a first step toward taking over the health care system. It's much messier to take over a large number of individual medical practices who would have to individually agree to Uncle Sam's coercive offers .

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2 days ago

Private equity is the real culprit

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31 May, 2024

Unfortunately an equation that everyone should know! It's a three legged stool and you get to choose two; Quality, Cost or Access. The three variables are universal and they determine your care.They are applied across many systems.

(Edited)

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31 May, 2024

why not try to save the remaining doctors in private practice?

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31 May, 2024

{{ "But the fact that the other strategies are so rich," noted Mark Miller, executive vice president of healthcare at Arnold Ventures, "makes it hard for private equity to resist them." He said keeping tabs on private-equity investments is a great way for the philanthropic organization founded by the former energy trader John Arnold to look for market failures. }}

Arnold Ventures (founded by former star Enron energy trader John Arnold) is about the only good thing that came out of Enron.

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31 May, 2024

Ridiculous. Obamacare did it. Obamacare created the basis for humongous health and wealth redistribution.

Still waiting on my $2K check ...

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31 May, 2024

can you read and/or comprehend?

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31 May, 2024

LOL. Yes, all Obamacare of course, yet the trend for medical consolation goes back to at least the 1990s.

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31 May, 2024

America has constantly rejected the so called "single payer" system as socialized medicine, so we have to put up with the inconsistencies of private enterprise.

However, looking at the UK's nationalized health system, we probably should be satisfied with what we've got.

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2 days ago

No you should not. That is their message. They are lying.

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31 May, 2024

More like thankful than satisfied.

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31 May, 2024

Insurance consolidation over many years, In my opinion, and denials for reimbursement that insurance companies orchestrated are the root of the issue. Physicians are at heart independent and care for their patient on all levels. Insurance profits and patient cost of care are very complex. Most physicians should have bought United Health Care stock instead of other options . ???????

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31 May, 2024

Read the article, most physicians work for companies as salaried employees. A trend begun in the 90s. Medical care now the domain of large companies.

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31 May, 2024

You Can Thank the Government for That Enormous Doctor’s Bill.

- Fixed that for you.

There is no free market in health care. The government imposes all sorts of complicated price controls and severely restricts supply of every form of medical material and the supply of qualified medical employees. Every subsequent government intervention has made the system less customer focused and more expensive. While the tiny areas of medical care in a more free market have improved service and reduced price, the majority of services stuck under onerous regulations have gone the opposite direction. Of course every time the government blames someone else for the problems and says the only solution is to give them more money and power. The end goal is rationed care by the 'single payer' with all private care forbidden (for social equity).

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31 May, 2024

The article argues otherwise and presents some data. Your data?

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31 May, 2024

Private equity: the festering boil on the body of society.

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2 days ago

A great carbuncle ! Let's lance that boil!

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31 May, 2024

So I don't know what the other parts are going to cover. But I hope to see the factors of civil liability lawsuits and horrendous awards, and of course how the government programs affect doctors and hospitals. I think those two issues compel doctors and hospitals to take a different structure than they did before. Your first part kind of attributes it to greed but I wonder if the real motivating factor is survival.

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31 May, 2024

Lawsuits account for 2.4% of medical costs. Perhaps too large, but not a major cost driver.

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31 May, 2024

example of first-rate reporting ---you can spin the political implications as you will---but good for us to have a foundation of fact

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