Earlier this year I discussed (The denominator matters: we only have a quality health care system if everyone can access it!, February 16, 2020) an article from the New York Times by Elisabeth Rosenthal, the editor of the Kaiser Health News and an emergency physician, called “Where the frauds are all legal.” One of those “frauds” I focused on was “surprise” medical bills. “Even though you went to a hospital that was in your insurance network and saw a surgeon who was in your network,” I wrote, “it turns out that the ER group or the anesthesiology group contracted by the hospital, or the assistant surgeon your surgeon picked, is not in network. Boom! $10,000, $100,000 bills! No one is “satisfied” by this.”
In fact, this is not entirely correct. Yes, your insurance company is not happy about this if they have to pay the bill. Yes, you, the patient, are certainly not happy about it if the insurance company doesn’t pay the bill, or only pays a part of it, and you are stuck with the rest. Very likely, the hospital itself doesn’t like this if they themselves are indeed in your network, because it makes them look bad, and they know that you, and your insurance company, are going to hold them in large part responsible. So who likes it? Well, as you might guess, those doctors who are getting the big payments. In fact, probably even if the hospital tried to hire its own, say, anesthesiologists or emergency physicians, they’d have a hard time paying as much as those independent groups do.
But the other stakeholders who are happy with this arrangement are the owners of these physician practices, who are not always the physicians themselves but increasingly private equity funds, which have been buying out physician groups for a few years (‘Specialty physician groups attracting private equity investment’, Modern Healthcare, August 31, 2019). Expanding upon a “research letter” published in JAMA, JM Zhu from the Leonard Davis Institute of Health Economics at the University of Pennsylvania writes:
Of approximately 18,000 group medical practices, we found 355 physician practice acquisitions across a number of specialties, most commonly anesthesiology (19.4%), multi-specialty (19.4%), emergency medicine (12.1%), family practice (11.1%), and dermatology (9.9%). From 2015 to 2016, there was also an increase in the number of acquired cardiology, ophthalmology, radiology, and obstetrics/gynecology practices. Acquired practices had an average of 16.3 physicians, 4 sites, and 6.2 physicians affiliated with each site. About 44% of acquired practices were in the South. (‘Private Equity Investment in Physician Practices’, February 18, 2020).
Of course, it doesn’t take great acumen to realize that the reason that private equity investors are attracted to buy these practices is exactly the opportunity to profit handsomely from this “loophole”, by what Rosenthal calls “legal fraud”. In essentially all areas, the whole strategy of private equity funds is exactly this sort of “gaming the system”, finding the margin where the income far exceeds the cost because of some loophole in the law.
This demonstrates several flaws in our current healthcare “system”. The most obvious is the specific problem created by “surprise” bills, one that has been even recognized (although not addressed) by Congress. For example, HR 3502, “Protecting people from surprise medical bills”, introduced in this congress by Rep. Raul Ruiz (D-CA). It could pass the House, and if both the Senate and White House flip, it could even become law. Of course, it would have considerable opposition from the very equity firms that are making money from the current situation. This is the second flaw – legislation to regulate the system often fails because those who make big money from the very problems such regulation is intended to correct have – big money. They can give contributions to legislators.
Every inequity in health care, every exploitation of the system, results in (and usually from) someone making money, and those “someones” are very interested in preventing the issue from being corrected. This holds true, as I have previously discussed, for hospitals (“health systems”), long term care companies, pharmaceutical and device companies, and insurance companies, as well as equity-owned physician groups. Kansas Congressman and GOP Senate candidate Roger Marshall, according to a recent article in the Kansas City Star by Shorman and Lowry, pushed for aid to physician-owned hospitals (ones not yet bought up by for-profit equity companies) while his wife, as a partner in real estate ventures that owned the land that they were on, profited greatly! In this case it didn’t even require contributions to politicians; the politician was in it for himself. You can be sure that if there is a buck to be made, someone will be making it. You can just be certain that it isn’t you, the patient, particularly if you are uninsured, poorly insured, or poor. Of course, if you are, you’ve probably figured out by now that the system overall is not designed for you!
The design of the capitalist US, particularly so in this age of corporate “gangster” capitalism is to make money for the wealthiest and everyone else be damned. The only question that might still be open to discussion is whether people’s health, and health care, should be subjected to the same rules of that system as consumer goods. After all, it is your health, your life! Your family’s health and life! The same could, and should, be said for other basic necessities such as food, shelter, and education, but health has special resonance such that every survey of the American people finds overwhelming support for the idea that everyone should be able to get adequate healthcare, and agreement that profiteers such as insurance companies and pharmaceutical companies are bad guys (there is less awareness of the role of hospital systems, still less of the private-equity-owned physician groups discussed here).
The third key aspect (I keep wanting to say “flaw” until I realize there are strong advocates for these policies) that this illustrates is the fatuousness of trying to solve the problems of our health care system and its exploitation by profiteers one issue at a time. Each scam that has been exposed and addressed by regulations or legislation (more rarely) has generated another; each loophole that is supposedly “closed” contains exceptions. The problem isn’t “bad apples” (although there are many), it is the whole system and the powerful forces that wish to continue it.
While Republicans policies are often targeted at eliminating any regulation, and indeed encouraging overt corruption and exploitation, “mainstream” Democratic policies are about putting in occasional patches, and then saying “there!” until another scam pops up. The Democratic Party, like the GOP, is beholden to rich donors, and a high percentage of theirs are financiers. Their mantra, clearly articulated by Joe Biden, is that we need to keep the private (read: profit-making) sector, and not change everything. Unfortunately, if the goal is actual to make the health system more equitable and increase the nation’s health, it cannot work. It certainly cannot contain costs; the very profit that these companies make IS the cost!
The only solution is a comprehensive change to our entire health system, one that eliminates the incentive for profit-making altogether. This will work, is a good idea, and is what we should do, starting with Medicare for All.