Private Equity Firms Impacting U.S. Healthcare: An Analysis
TL/DR –
Private equity firms have significantly increased their acquisition of physician practices, hospitals, laboratories, and nursing homes, spending hundreds of billions of dollars. Such acquisitions often lead to more aggressive billing, stricter requirements for patient tests, reduced access, increased costs, and can even threaten patient safety. To counter this trend, the author suggests a three-pronged approach: robust enforcement of antitrust rules, more oversight over private equity acquisitions, and stronger action on patient safety.
Ashish Jha, previously the Covid-19 response coordinator at the White House, highlights the rising influence of private equity in health care
Ashish Jha, former Covid-19 response coordinator and current dean of the School of Public Health at Brown University, shares his insights into the expanding role of private equity in health care. He recounts how a colleague sold his small cardiology practice to a private equity firm, drawn by an attractive offer and the chance to free himself from administrative burdens.
Private equity firms have been investing heavily in health care, buying up everything from physician practices and hospitals to laboratories and nursing homes. Such activity could increase costs, limit access, and compromise patient safety.
Potential implications of private equity acquisitions in health care
Jha’s colleague experienced subtle shifts initially, from increased billing to more tests for patients. Later, there were significant changes, including the practice no longer accepting a major insurer, effectively barring long-standing patients. Similar occurrences are being reported nationwide, with private equity-owned providers becoming more efficient, but often initiating aggressive billing and test requirements, thus escalating health care costs.
Private equity firms have allegedly disregarded consumer-protection regulations. The Federal Trade Commission accused Welsh Carson of acquiring anesthesia practices in Texas to gain market dominance and levy monopolistic prices.
Evidence of private equity acquisitions impacting patient care
A study revealed a 25% increase in adverse events at hospitals purchased by private equity firms. Jha suggests that such acquisitions can lead to increased staffing cuts and reduced focus on patient safety, potentially endangering patients.
Proposed actions to mitigate the impact of private equity in health care
While banning private equity from health care might seem appealing, Jha believes it won’t address the core issues. He proposes enforcing antitrust rules, more stringent oversight over private equity acquisitions, and a stronger focus on patient safety. He warns of the potential for increased health care costs and declining quality of care without these measures.
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