Private Equity’s Role in Healthcare Issues
A few years back, Congress took a significant step to tackle America’s healthcare challenges with the No Surprises Act. This legislation aimed to eliminate the frustrating issue of “surprise” medical billing. Before this law, patients often faced staggering bills when they received care from out-of-network doctors without their knowledge. While the No Surprises Act addressed this problem, it inadvertently created a new challenge that has worsened healthcare costs.
Now, instead of direct surprise bills, insurers and out-of-network providers settle differences through the Independent Dispute Resolution (IDR) process. A third-party arbitrator decides which party’s payment proposal to accept. Initially meant to be an infrequently used mechanism, the IDR process is now being manipulated by adept financial entities for profit. This system has ballooned into a multibillion-dollar industry, focusing on volume and creating more problems for employers and families—along with taxpayers, who ultimately bear the costs.
New findings from the Wall Street Journal reveal that close to $15 billion was disbursed via the IDR system in 2025. Meanwhile, the New York Times noted that providers filed an astounding 1.2 million arbitration cases during just the first half of 2025, contrary to regulatory estimates of about 17,000 annually. Providers won nearly 88% of these cases, and arbitrators earned nearly $885 million in fees between 2022 and 2024, with a striking $1.3 billion in 2025 alone.
Perhaps what’s even more concerning are specific instances, such as a plastic surgeon who promoted breast reductions for $15,000 to $25,000 but secured arbitration awards reaching $440,000 for a single procedure. The investigation showed this doctor filed over 6,000 arbitration claims, winning the vast majority. Another study revealed that surgical assistants were making significantly more than surgeons, sometimes earning 25 times the physicians’ pay. In 2025, payments to providers exceeded typical in-network rates by more than sixfold.
This outcome is not what Congress envisioned, nor is it what the American public should tolerate.
The IDR system exemplifies regulatory capture, benefiting those with the finest legal teams and financial resources, while average Americans face rising premiums. Throughout my career, I’ve witnessed how savvy financial actors leverage complex systems to maximize profits, contributing little back to society. In this context, the private equity industry particularly merits closer examination.
Research indicates that private equity-backed physician staffing firms significantly contributed to the initial surprise billing dilemma and subsequently lobbied for the arbitration framework that became part of the No Surprises Act. Many of these firms are now the predominant filers of arbitration cases, with private equity investors also holding stakes in companies involved in managing parts of the arbitration process itself. This scenario might be dubbed a “conflict of interest,” or perhaps it’s just corruption—or fraud. However, it is all technically legal.
The business model has become increasingly sophisticated. Rather than concentrating on patient care, a network of intermediaries has emerged to exploit arbitration revenues.
A recent investigation by STAT highlighted that HaloMD, a firm focused on filing arbitration claims for providers, became the leading filer of disputes in the first half of 2025. The report painted a picture of a lavish lifestyle—complete with mansions and private jets—accessible through manipulation of this system.
One study estimates that the IDR process has already led to about $5 billion in extra costs due to administrative fees, arbitration expenses, compliance costs, and inflated provider payments. These costs ultimately result in higher insurance premiums for employers, employees, and families alike.
President Trump has evidently become frustrated with this flawed system and has instructed his administration to take action. The Centers for Medicare & Medicaid Services (CMS), led by Dr. Mehmet Oz, recently expressed concerns over the system being exploited for higher prices and indicated ongoing efforts to rectify the situation.
Regrettably, some lawmakers in Congress appear insufficiently aware of the issue’s scale and seem poised to take misguided actions. The proposed No Surprises Act Enforcement Act primarily aims to heighten penalties for delays in payments post-arbitration, but this approach largely overlooks the larger systemic issues: an arbitration process already bogged down by excessive filings, dubious eligibility checks, and soaring awards. Even the Congressional Budget Office has echoed concerns, warning that arbitration outcomes could lead to rising prices over time.
Congress should avoid merely treating symptoms while neglecting the underlying problem. Meaningful reform needs to restore the IDR process to its original aim: fairly settling legitimate disputes on rare occasions rather than serving as another revenue stream for private equity. The Administration might want to consider utilizing agencies like the Federal Trade Commission to investigate if this dysfunctional system is causing market distortions harmful to consumers and leading to increased prices for all.
The goal of the No Surprises Act was commendable: patients should be shielded from surprise charges. However, they also need safeguarding from a significant loophole fostered by the government that’s quietly pushing healthcare costs higher. Washington promised to eliminate surprises but instead created a new industry founded on rule exploitation. Congress should advocate for reforms that prioritize consumer protection, encourage fair competition, and prevent special interests from converting taxpayer-provided safeguards into profit centers for the affluent.
