I don’t usually write opinion pieces, but a recent article, “Private Equity Chases Ambulances,” published by the American Prospect, deserves a response. The types of allegations made in this article are becoming a familiar mantra of the broader movement opposing “surprise” medical bills—a movement that needs a closer look.
The article contains a good sample of the standard arguments against balance billing, so to discuss this important topic, I will use some of its statements as a starting point. If you haven’t read this or any of the numerous other articles on surprise medical bills, don’t worry; I’ll quote the relevant potions as we go.
Leaps of Logic
The article begins with the story of a woman severely injured as the result of a fall from a subway platform. Rescued from the tracks by bystanders, the woman allegedly “begs” that no one call an ambulance. “‘Do you know how much an ambulance costs?’ she sobbed,” writes the author.
We hear anecdotes such as this from time to time. Is there an expense attached to an ambulance response? Yes, there is. Should that prevent an individual from requesting one? Well, consider that question in the context of a more common medical service.
Is cancer treatment costly? Absolutely. Do people have the option of electing to accept or decline that care? Sure, they do—a patient can choose to avoid cancer treatment and its associated costs, although probably to their own detriment and at the risk of a truncated life. Does that mean cancer treatment should not be available for those who do wish to pursue better outcomes, or should be limited to only cheap options that may or may not be successful? Of course not.
As technology advances, so does life expectancy. However, with those advances come increased costs. To suggest we stay the advance of medicine to the detriment of the population in order to contain costs is simply short-sighted.
The article’s next statement certainly seems to at least address the costs: “Following the 2008 recession, private equity firms began to buy up ambulance companies. Quality has declined, and prices have shot up.”
No, I did not omit a sentence in between those two. That is the unsupported leap in logic just as it was published, with no qualifications or supporting facts. For example, have prices increased in order to compensate for increased costs? And how is the “decline” in quality measured? Read on: “Reports of ambulances in disrepair, slow response times, failing equipment, and low-paid, overwhelmed staff” are rampant, according to the author.
The facts to support these claims? That the New York Times uncovered two lawsuits alleging the poor quality of ambulance service led to patient deaths. Is that sufficient evidence to support the claim of a decline in quality? Well, first, these are allegations, and second, even if accurate, two anecdotal incidents out of millions of transports do not a “decline” make.
Second, the article says “85% of air ambulance crashes were for-profit companies.” That needs more context—what percentage of all air ambulance runs are done by for-profit companies? If the for-profits run 85% of the transports, you’d expect their incident numbers to be proportional. The article is silent on this rather basic analytic, but in fact for-profit organizations operate the vast majority of air ambulances; therefore, the 85% number may not be disproportionate.
Third, finally, and most ironically, this article points out that several of these for-profit ambulance companies have filed bankruptcy proceedings. But hold on—earlier it said, “Under the new paradigm of private equity, poorly maintained ambulance services siphon profits from vulnerable patients.” That’s actually the subtitle of the article. If these “shot-up” prices have resulted in profits, why are there bankruptcy proceedings? What kind of private equity group would sacrifice the golden goose of profit on the altar of bankruptcy? Obviously, no one would close a profitable company, but rising costs and sinking revenue certainly could.
And what of these allegations of “poorly maintained” “ambulances in disrepair”? Each of these vehicles is subject to state rules, regulations, and inspections. If the equipment on the road is up to standards but not up to par, who is really to blame—the company for using state-inspected and -approved equipment, or the state for not having higher standards?
Here I think the answer is twofold: First, the states do have sufficient standards designed to protect their citizens. And second, raising standards would drive up costs and prices, a result that should be untenable to opponents of surprise medical bills. Here the author’s statements about the quality of both the care provided and the ambulances themselves are completely unfounded and incorrect.
Who’s in Control?
In the closing section the author gets closer to her real goal: discussing in-network versus out-of-network charges. Let’s be clear: Ambulance services do not charge different rates for different patients. It is the insurance industry that’s created this distinction in what it pays. More specifically, insurance payers want to contract with healthcare providers for preferential rates, often using creative tactics to encourage those providers to agree. This is an issue created not by healthcare providers but by insurance companies that are also for-profit organizations, and most of which have their names atop more buildings than any EMS service I’m aware of. You want to end “surprises,” begin with regulating the insurance companies that created them.
In an emergency, the article goes on to say, “patients give up control” over what ambulance picks them up and which hospital they’re delivered to, forcing them into these out-of-network fees. I disagree. All providers are “out of network” until an insurance company creates a network for its own best interest and profit considerations. The patient, in choosing that insurance company, has control over the terms of the policy they choose. It should be noted that Medicare, Medicaid, and some other payers do not have networks. Perhaps the patient could choose a better insurance company that doesn’t require them to use the cheapest provider. The patient does indeed have control, and if they exercise that control to choose the cheapest plan, with the most limited in-network pool of participants, caveat emptor.
In conclusion we are told that “What once was a community service, provided at little or no charge to the patient, has become a financialized moneymaker for the wealthy.” I won’t address the incorrect assertion that EMS is making anyone wealthy, but I will address the ridiculous idea that anything is provided at no charge. There is a cost associated with everything—nothing is free. In the case of ambulance services, patients have always in fact paid full value for the service—even in years past, when they did so through property taxes instead of medical invoices.
When you think about it, this is very similar to the risk-pooling of insurance plans: Everyone in a community puts a few dollars into a pot, and a few people use the service and get the benefit of the money. It may not be as readily apparent as an invoice for an ambulance transport, but the dollars are the same whether they come from a tax subsidy, an insurance payer, or an uninsured individual’s pocket. The assertion that there has been “little to no charge” to the patient is simply ignorant of reality.
Healthcare is expensive, and good healthcare is really expensive—that’s the bottom line. If you choose to have access to that care, it will cost you, whether through your checking account, health insurance (i.e., risk-pooling with your neighbors, with excess profits going to the insurance company), or tax bill (risk-pooling funneled through the sieve of government bureaucracy). If you don’t pay, that loss is passed on to the next person via even higher costs. If that person also does not pay, then the healthcare provider closes its doors, and the service is not available for anyone. Consider these realities when you think about “surprise” medical bills.
G. Christopher Kelly is a lawyer with Page, Wolfberg & Wirth LLC who focuses on regulatory healthcare law as it relates to the EMS and ambulance industry. This article is not intended as legal advice. Reach Chris at firstname.lastname@example.org.