Mariel needed a new gastroenterologist.
Having just moved back to San Antonio, the 30-something searched for a doctor to manage her Crohn’s disease, an inflammatory bowel condition that is successfully managed with medications and lifelong monitoring — including regular colonoscopies.
Mariel booked an appointment and learned she would be on the hook for a $1,100 colonoscopy — about three times what she had paid for the same test in a different state. Almost three-quarters of the bill would be a “facility fee” for the in-office procedure at a colonoscopy clinic. (KHN agreed not to disclose Mariel’s last name because she is concerned speaking out might affect her doctor’s willingness to manage her medical condition.)
Preventive colonoscopies are covered without patient cost sharing under the Affordable Care Act, but colonoscopies for patients with existing conditions, like Mariel, are not. A 2019 study found patients with inflammatory bowel diseases, including Crohn’s disease, incur about $23,000 in healthcare costs a year. Medication treatments alone can cost tens of thousands of dollars annually.
But shopping around proved frustrating. Although San Antonio has plenty of gastroenterology offices, more than two dozen of them are controlled by the same private equity-backed group.
In 2018, one of the nation’s largest independent gastroenterology practices, Texas Digestive Disease Consultants, announced a deal with the Chicago-based private equity firm Waud Capital to expand by offering management services to other physicians. At the time, the Dallas-based practice had 110 locations, mostly in Texas — including San Antonio. Today its management group, the GI Alliance, operates in a dozen states with more than 400 locations — and is growing fast.
With market dominance comes the business opportunity to set and maintain high prices. “It’s pretty much the only game in town,” Mariel said.
Private equity, known for making a profit on quick-turnaround investments in struggling businesses across many industries, has taken an increasingly active interest in healthcare in the past decade. It has invested in gastroenterology practices in recent years to tap into the revenue potential in meeting growing demand.
“We are in the Golden Age of older rectums,” one investment manager wrote in 2017.
Tired of having to manage the increasingly complicated business of running a practice and, often, lured by the sweet deals investors offer, more and more doctors have partnered with or even sold their practices to private equity funds. So investment managers now control the financial decisions for many medical offices caring for patients with digestive ailments. With profit the primary driver, patients may find they pay much more for the same — or less — care.
The Centers for Disease Control and Prevention recently lowered the age at which healthy Americans are urged to begin routine screenings for colon cancer — ensuring that most will undergo regular colonoscopies beginning at age 45. And the population is aging, meaning more people will be needing the procedure.
For those 65 and older, Medicare picks up the tab. But even when a benign polyp is found during a simple screening, patients sometimes end up with an unexpected bill. And less-than-scrupulous providers often find ways to bill for some services, such as out-of-network anesthesia monitoring.