Do you remember when the health insurance wordsmiths came up with “patient-centered care?” Like, who else was being treated? Martians? Now, we have yet another turn of phrase – “profit-centered care.” The latest is private equity (PE) companies acquiring hospitals, doctors, clinics, rehab centers, nursing homes, emergency rooms, and anything else remotely related to give investors a “healthy” profit. Somehow, the idea of a bunch of “suits” sitting around looking at how much money they made last quarter in health care doesn’t help me sleep at night.
Let’s start with a brief review of private equity’s modus operandi. PE invests in or acquires equity ownership in companies and then flips them ASAP for a higher price. Common tactics are: chopping staff, cutting corners, and loading the company with debt. The idea is to “buy, squeeze, dump, repeat,” according to Laura Katz Olson in her latest book Ethically Challenged: Private Equity Storms US Health Care. And, storm it did. “Investments accelerated in recent years at a mind-blowing pace – $100 billion in capital invested in 2018 alone.”
Who’s Making the Money?
According to Olson, a professor at Lehigh University, there are several “big boys” in the game. Bain Capital is into renal care, home health, substance abuse, emergency medical transport, and hospitals. The Carlyle Group is fond of dentistry, home health, hospice, and eating disorders. KKR, one of the biggest players, targets physician staffing, emergency medical transport, dentistry, home health, substance abuse, autism disorders, health information, and hospitals.
How do you know if your hospital, emergency room staff, and even your doctor’s medical group is owned by a PE? You have to ask but be aware that there may be separate names for various ventures, making them hard to identify. And, are you comfortable asking your medical providers this question?
Here’s the prize-winning comment from Olson in a recently published interview. “PEs don’t care whether the product is Roto-Rooter or hospice. [No offense taken.] That eliminates concerns for you, your community, the reputation of the entity, and the quality of the product. Because PEs often sell their latest company within four or five months, they have no investment in the future.” Olson goes on to say that she believes, as do I, that a ban on the corporate practice of medicine would create what the majority of Americans want – a Medicare for All program that puts patients before profits.
PE’s Kissing Cousin – Direct Contracting Entities – DCEs
My sincere apologies for bumming us all out but I do cover the healthcare beat and it ain’t lookin’ purty.
The Biden administration has expanded the Trump administration’s effort to privatize Medicare through contracting with fifty-three third-party companies to mandate privatized care primarily via Medicare Advantage plans. One well-kept secret – and a consumer problem – is that patients are being assigned to these new plans without their knowledge. They are for-profit businesses – gee, this sounds familiar – and receive a set payment from Medicare no matter how much care they provide. This isn’t rocket science. Limiting the amount of care is the incentive and the payoff. And after The Lever (a subscription-based research organization) investigated, fifteen of the companies were backed by private equity companies. Oh, them again.
Maybe one of the silliest, if not most galling aspects of this whole handing off of Medicare is how Biden, when he expanded the DCEs, gave the Trump program a new name (oh, those names – where do they get them?). Now it’s called the Accountable Care Organization Realizing Equity, Access, and Community Health program or ACO REACH, in case you want to know whether you’ve been quietly enrolled without your consent.
Medicare is ripe for all kinds of bait and switch plots, especially as they relate to one of the most disturbing statistics I’ve read lately. One of every three Medicare beneficiary now has been diagnosed with diabetes. And equally shocking is that the cost of insulin products has gone from $236 million to $923 million in a dozen years. Even though the number of Medicare Part D enrollees (who are mandated to sign up for the drug program or pay a penalty) has doubled over the same years from 1.6 million to 3.2 million, this doesn’t entirely account for the soaring cost of insulin. The average out-of-pocket costs for insulin products range from $309 if you live in Hawaii to $822 if you live in North Dakota. This is just one drug a senior with co-morbidities might have to cover under Medicare Part D.
It doesn’t matter where you live, because congress, the administration, pharmaceutical and health insurance companies are manipulating costs, drug plan formularies, and slowing down approvals that are costing seniors not just their savings but sometimes their lives.
Wherever you are on the healthcare spectrum – gen z, elderly, poor, working, unemployed, retired – we are the vox populi and need to get organized and demand what is a human right for everyone and not simply a privilege for the financially secure.
Photo credits: Gym Class – kelly–sikkema, Board room – jon-tyson, Piles of money – alexander-schimmick, Medical money – Bermix Studio, Do Something Great – Clark Tibbs