Origins of the OBED concept
Three of the main companies that set up and staff OBEDs – the OB Hospitalist Group, or OBHG; TeamHealth; and Envision Healthcare – are affiliated with private equity firms. The fourth, Pediatrix Medical Group, formerly known as Mednax, is publicly traded. All are for-profit companies.
Several are clear about the revenue benefits of opening OBEDs. TeamHealth – one of the country’s dominant ER staffing companies – is owned by private equity firm Blackstone and has faced criticism from lawmakers for high ER bills. In a document aimed at hospital administrators, TeamHealth says OBEDs are good for “boosting hospital revenues” with “little to no structural investment for the hospital.” It markets OBED success stories to potential customers, highlighting hospitals in California and South Florida where OBEDs reportedly improved patient care – and “produced additional revenue through OBED services.” OBHG, which staffs close to 200 OBEDs in 33 states, markets a scoring tool designed to help hospitals maximize charges from OBEDs and has marketed its services to about 3,000 hospitals.
Staffing companies and hospitals, contacted by KHN, said that OBEDs help deliver better care and that private equity involvement doesn’t impede that care.
Data from Colorado offers a window into how hospitals may be shifting the way they bill for triaging healthy labor. In an analysis for KHN, the Center for Improving Value in Health Care found that the share of uncomplicated vaginal deliveries that had an ED charge embedded in their bills more than doubled in Colorado from 2016 to 2020. It is still a small segment of births, however, rising from 1.4% to 3.3%.
Major staffing companies are set up to charge for every single little thing, said Wayne Farley, MD. He would know: He used to have a leadership role in one of those major staffing companies, the private equity-backed Envision, after it bought his previous employer. Now he’s a practicing ob.gyn. hospitalist at four OBEDs and a consultant who helps hospitals start OBEDs.
“I’ve actually thought about creating a business where I review billings for these patients and help them fight claims,” said Dr. Farley, who thinks a high-level emergency charge makes sense only if the patient had serious complications or required a high level of care.
Proponents of OBEDs say converting a triage room into an obstetrics ED can help pay for a hospital to hire 24/7 hospitalists. In labor and delivery, that means obstetric specialists are available purely to respond to patients who come to the hospital, rather than juggling those cases with clinic visits. Supporters of OBEDs say there’s evidence that having hospitalists on hand is safer for patients and can reduce unnecessary cesarean sections.
“That’s no excuse,” said Lawrence Casalino, MD, a physician and health policy researcher at Weill Cornell Medicine, New York. “To have people get an emergency room charge when they don’t even know they’re in an emergency room – I mean, that doesn’t meet the laugh test.”
But Christopher Swain, MD, who founded the OB Hospitalist Group and is credited with inventing the OBED concept, said that having round-the-clock hospitalists on staff is essential for giving pregnant patients good care and that starting an OBED can help pay for those hospitalists.
Dr. Swain said he started the nation’s first OBED in 2006 in Kissimmee, Fla. He said that, at early-adopter hospitals, OBEDs helped pay to have a doctor available on the labor-and-delivery floor 24/7 and that hospitals subsequently saw better outcomes and lower malpractice rates.
“We feel like we fixed something,” Dr. Swain said. “I feel like we really helped to move the bar to improve the quality of care and to provide better outcomes.”
Dr. Swain is no longer affiliated with OBHG, which has been in private equity hands since at least 2013. The company has recently gone so far as to present OBEDs as part of the solution to the country’s maternal mortality problem. Hospitals such as an Ascension St. Joseph’s hospital in Milwaukee have echoed that statement in their reasons for opening an OBED.
But Dr. Wachter – who coined the term “hospitalist” and who generally believes the presence of hospitalists leads to better care – thinks that reasoning is questionable, especially because hospitals find ways to pay for hospitalists in other specialties without engineering new facility fees.
“I’m always a little skeptical of the justification,” Dr. Wachter said. “They will always have a rationale for why income maximization is a reasonable and moral strategy.”