In Battle Over Health Care Costs, Private Equity Plays Both Sides

U.S. World Business Arts Lifestyle Opinion Audio Games Cooking Wirecutter The Athletic You have a preview view of this article while we are checking your access. When we have confirmed access, the full article content will load. As medical practices owned by private equity firms fuel overbilling, a payment tool also backed by such investors […]

T Kauer T Kauer
Apr 7, 2024 - 16:25
In Battle Over Health Care Costs, Private Equity Plays Both Sides

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As medical practices owned by private equity firms fuel overbilling, a payment tool also backed by such investors helps insurers boost their profits.

Andrew Faehnle and his teenager pose on a couch, their arms around each other’s shoulders.
Andrew Faehnle, right, was on the hook for more than two-thirds of an ambulance bill after his 14-year-old was rushed to an emergency room.Credit…Madeleine Hordinski for The New York Times

Chris Hamby

Insurance companies have long blamed private-equity-owned hospitals and physician groups for exorbitant billing that drives up health care costs. But a tool backed by private equity is helping insurers make billions of dollars and shift costs to patients.

The tool, Data iSight, is the premier offering of a cost-containment firm called MultiPlan that has attracted round after round of private equity investment since positioning itself as a central player in the lucrative medical payments field. Today Hellman & Friedman, the California-based private equity giant, and the Saudi Arabian government’s sovereign wealth fund are among the firm’s largest investors.

The evolution of Data iSight, which recommends how much of each medical bill should be paid, is an untold chapter in the story of private equity’s influence on American health care.

A New York Times investigation of insurers’ relationship with MultiPlan found that countering predatory billing is just one aspect of the collaboration. Low payments have burdened patients with unexpectedly large bills, slashed pay for doctors and other medical professionals and left employers that fund health plans with high, often unanticipated fees — all while making the country’s biggest health insurance companies a lot of money.

Often, when someone gets insurance through an employer and sees a doctor outside the plan’s network, the insurer routes the bill to MultiPlan to recommend an amount to pay. Both MultiPlan and the insurer receive processing fees from the employer, usually based on the size of the final payment: the smaller the payout, the bigger the fees.

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