The rising price of healthcare, up 18.6% over the past 12 months, is hammering businesses and the customers that they serve across the U.S. A recent paper from the Institute for New Economic Thinking, “Private Equity and Surprise Medical Billing,” by Eileen Appelbaum, co-director of the Center for Economic and Policy Research, and Rosemary Batt, the Alice Hanson Cook Professor of Women and Work at Cornell University, sheds light on part of this inflationary trend.

They write: “As hospitals have outsourced emergency rooms and other specialty care to reduce costs, private investors have bought up specialty physician practices, rolled them into powerful national corporations, and taken over hospital emergency services. The result: large out-of-network surprise bills. The hidden actors: Leading private equity firms looking for ‘outsized’ returns.”

In brief, private equity is investment capital seeking to grow. That growth strategy hikes the prices that patients with healthcare insurance pay to PE-owned firms such as KKR-owned Envision Healthcare and Blackstone-owned TeamHealth, whose doctors practice in fields such as anesthesiology and radiology.

Such physicians might have worked for doctor-owned medicine firms in the past. That was then.

PE firms are the new owners, with investments in air transport services and emergency ambulance companies, too. The big fish are gobbling up the smaller fish.

Hospitals began to outsource food services and facilities management in the 1980s, according to Appelbaum and Batt. They continue, “Outside companies now staff 65% of U.S. hospital emergency rooms resulting in over 4-in-10 trips to the emergency room ending with a patient getting a surprise medical bill.”

How do small business owners deal with the problem of unforeseen medical billing resulting from PE firms’ drive for profits and market share? Katie Vlietstra Wonnenberg is a principal with Public Private Strategies, a bipartisan consulting group based in Washington, D.C.

“Small business owners need to educate themselves about healthcare insurance and then share that knowledge with new hires and continuing employees,” she told MultiBriefs.com by phone. What is and is not covered matters.

Surprise medical billing is affecting the employer-employee relationship in small businesses, according to her. What to do? Part of the answer is, surprise, extra effort aimed first at owner education.

That can help clarify but not eliminate surprise medical billing. After all, what person can shop for ER services when experiencing medical symptoms that propel such a visit in the first place?

In the meantime, there are only so many hours in the day. “Frazzled small business owners are desperate for help and guidance in the ins and outs of healthcare insurance,” Vlietstra Wonnenberg said.

There are 25 states with laws to protect patients from unforeseen billing.

However, the laws “do not fully cover all types of situations,” according to Appelbaum and Batt. Gaps in these laws leave patients vulnerable to price gouging.

“In the surprise billing legislative fight, private equity-backed provider staffing companies are spending millions on advertising to deter members of Congress from doing the right thing for constituents by banning egregious surprise bill practices. Families USA urges Congress to put patients over profits and pass surprise bill legislation this year,” Claire McAndrew, director of campaigns and partnerships with Families USA, told MultiBriefs.

A Medicare for All national healthcare program could go a long way to addressing the healthcare inflation that PE firms are worsening. The American Sustainable Business Council backs Medicare for All.