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,” 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 emergency department.

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 Huffner’s pocket.

In recent years, hospitals of every stripe have opened obstetrics emergency departments, 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 Huffner get bills for emergency care they didn’t know they got.

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

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. Dr. Robert Wachter, 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,” 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, Colorado, 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.

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