UnitedHealthcare to Pony Up $100 Million in Unpaid Medical Bills

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We gotta admit, it’s nice seeing a health insurer get hit with a huge bill for a change.

UnitedHealthcare — one of the largest medical insurers in the world — must pay $91 million to Envision Healthcare, a company that staffs doctors in emergency rooms and anaesthesiology departments across the country and is owned by the private equity group KKR. It’s the latest battle in the intensifying war between the private equity and health insurance sectors.

This isn’t Healthy

In one corner, you have health insurers who say medical providers employed by private equity groups are performing unnecessary procedures on patients and overcharging for routine encounters. On the other side are private equity groups claiming health insurers are refusing to pay for potentially life-saving treatments. Caught in the middle is you, the patient.

In the case of United and Envision, three arbitrators found that United breached the contract between the two parties by unilaterally reducing reimbursement rates for physicians’ services, the Financial Times reported, marking a setback not only for United but the health insurance industry as a whole.

Private equity has been quite bullish on medical care in the past few years. In 2021, groups like Nordic Capital, Silver Lake, and Harvest Partners dumped more than $150 billion into healthcare acquisitions, a 130% one-year increase, according to consulting group Bain & Company. Despite those large investments – or perhaps because of them – private equity does not have the cleanest track record in the medical field and is often called out for maximizing profits instead of providing quality service:

  • In 2017, two-year-old Zion Gastelum visited Kool Smiles, a dental clinic in Arizona owned by the private equity group FFL Partners. There, he was given anesthesia and received root canals and crowns. After the procedure, he became unresponsive and died a few days later due to a lack of oxygen. The Gastelum family sued the clinic, claiming Kool Smiles “overtreats, underperforms and overbills.” The case was settled out of court.
  • A study published last year in the JAMA Health Forum found that practices owned by private equity groups charged 20% more per insurance claim compared to independent practices. In private equity’s version of the Hippocratic Oath, do no harm to the bottom line.

“Higher spending, ultimately, will be borne by the patients, potentially in the form of higher insurance premiums and higher out-of-pocket costs and copays,” study author and Oregon Health & Science University Professor Jane Zhu said in an interview with Oregon Public Broadcasting. “When there’s no need for higher spending, it’s a concern for the health system at large.”

The House Solutions: To rein in private equity’s grip on healthcare, Rep. Pramila Jayapal recently introduced the Health Ownership Transparency Act. If passed, private equity firms would have to list investors, debts, fees collected, and performance details. It would also create a task force to monitor and make recommendations on medical operations owned by private equity groups. We can’t say the prognosis is good, however: Jayapal introduced the bill last year too, and it never moved out of committee.

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