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Baby, that bill is high: Private equity ‘gambit’ squeezes excessive ER charges from routine births


Elizabeth Huffner thinks it is obvious: A full-term, healthy pregnancy results in a birth.

“When your due date has come and gone, you’re expecting a baby any minute,” Ms. Huffner said. So she was surprised to discover she was an “unknown accident” – at least from a billing standpoint – when she went to the hospital during labor. Her bill included a charge for something she said she didn’t know she’d ever entered: an obstetrics ED.

That’s where a doctor briefly checked her cervix, timed her contractions, and monitored the fetal heartbeat before telling her to go home and come back later. The area is separated from the rest of the labor-and-delivery department by a curtain. The hospital got about $1,300 for that visit – $530 of it from Ms. Huffner’s pocket.

In recent years, hospitals of every stripe have opened obstetrics EDs, or OBEDs. They come with a requirement that patients with pregnancy or postpartum medical concerns be seen quickly by a qualified provider, which can be important in a real emergency. But it also means healthy patients like Ms. Huffner get bills for emergency care they didn’t know they got.

“It should be a cautionary tale to every woman,” said Ms. Huffner, of Rockford, Ill.

Three of the four major companies that set up and staff OBEDs are affiliated with private equity firms, which are known for making a profit on quick-turnaround investments. Private equity has been around for a long time in other medical specialties, and researchers are now tracking its move into women’s health care, including obstetrics. These private equity–associated practices come with a promise of increased patient satisfaction and better care, which can help the hospital avoid malpractice costs from bad outcomes.

But private equity also is trying to boost revenue. Robert Wachter, MD, chair of the department of medicine at the University of California, San Francisco, calls the private equity encroachment into medicine “worrisome.”

“Hospitals will do what they can do to maximize income as long as they’re not breaking the rules,” Dr. Wachter said. “And it sounds like that’s sort of what they’re doing with this ER gambit.”

Surprising bills

KHN reviewed the bills of a dozen patients in five states who said they were hit with surprise emergency charges for being triaged in an OBED while in labor. That included a woman in Grand Junction, Colo., who said she felt “gaslit” when she had to pay $300 in emergency charges for the care she received in the small room where they confirmed she was in full-term labor. And in Kansas, a family said they were paying $400 for the same services, also rendered in a “very tiny” room – even though HCA Healthcare, the national for-profit chain that runs the hospital, told KHN that emergency charges are supposed to be waived if the patient is admitted for delivery.

Few of the patients KHN interviewed could recall being told that they were accessing emergency services, nor did they recall entering a space that looked like an ED or was marked as one. Insurance denied the charges in some cases. But in others families were left to pay hundreds of dollars for their share of the tab – adding to already large hospital bills. Several patients reported noticing big jumps in cost for their most recent births, compared with those of previous children, even though they did not notice any changes to the facilities where they delivered.

Three physicians in Colorado told KHN that the hospitals where they work made minimal changes when the institutions opened OBEDs: The facilities were the same triage rooms as before, just with a different sign outside – and different billing practices.

“When I see somebody for a really minor thing, like, someone who comes in at 38 weeks, thinks she’s in labor, but she’s not in labor, gets discharged home – I feel really bad,” said Vanessa Gilliland, MD, who until recently worked as a hospitalist in OBEDs at two hospitals near Denver. “I hope she doesn’t get some $500 bill for just coming in for that.”

The bills generated by encounters with OBEDs can be baffling to patients.

Clara Love and Jonathan Guerra-Rodríguez, MD, an ICU nurse and an internist, respectively, found a charge for the highest level of emergency care in the bill for their son’s birth. It took months of back and forth – and the looming threat of collections – before the hospital explained that the charge was for treatment in an obstetrics ED, the triage area where a nurse examined Ms. Love before she was admitted in full-term labor. “I don’t like using hyperbole, but as a provider I have never seen anything like this,” Dr. Guerra-Rodríguez said.

Patients with medical backgrounds may be more likely than other people to notice these unusual charges, which can be hidden in long or opaque billing documents. A physician assistant in North Carolina and an ICU nurse in Texas also were shocked by the OBED charges they faced.

Figuring out where OBEDs even are can be difficult.

Health departments in California, Colorado, Massachusetts, and New York said they do not track hospitals that open OBEDs because they are considered an extension of a hospital’s main ED. Neither do professional groups like the American Hospital Association, the American College of Obstetricians and Gynecologists, and the Joint Commission, which accredits health care programs across the country.

Some hospitals state clearly on their websites that they have an OBED. A few hospitals state that visiting their OBED will incur emergency room charges. Other hospitals with OBEDs don’t mention their existence at all.


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