Rising Trend: Private Equity Dominates Massachusetts Health Care

TL/DR –

Private equity’s involvement in healthcare has been under scrutiny from Massachusetts lawmakers, who have held a lengthy public hearing exploring its implications for patient care after a financial crisis at Steward Health Care. Experts testified that private equity ownership has led to increased patient costs, reduced staffing and poorer quality of care across the US healthcare system. They suggested policy reforms to prevent further harm, including greater regulatory power for the Health Policy Commission and increased scrutiny of ongoing operations after health care transactions.

Health Care and Private Equity Under Examination

Private equity’s influence in health care, particularly within Steward Health Care, is under scrutiny in Massachusetts. Lawmakers are exploring a range of policy reforms to mitigate the negative impacts of private equity on the health care system. Recently, a hearing was convened to investigate private equity’s influence in Massachusetts’ health care systems and ways to safeguard patient care.

Sen. Cindy Friedman and Rep. John Lawn, both concerned about declining patient safety due to private equity investments, emphasized the necessity of preventative measures. They were joined by several experts including representatives from the Department of Public Health, the Massachusetts Health Policy Commission, and the Executive Office of Health and Human Services.

Private Equity’s Role in Health Care

Expert testimony highlighted the increasing presence of private equity investments throughout the health care system, from hospitals to ambulatory surgical centers. While some of these investments may seem beneficial, such as keeping rural hospitals open, experts cautioned that they often lead to higher patient costs, reduced staffing, and poorer quality of care. With over 400 hospitals nationwide owned by private equity firms, these concerns are far from theoretical. For instance, studies indicate that patient care deteriorates following hospital acquisitions, with increases in infections and falls.

Policy Reforms Under Consideration

Experts, including representatives from the Health Policy Commission, are urging lawmakers to enhance regulatory oversight in health care. These suggestions include increased scrutiny of changes in provider capacity, investments by private equity, and enforceable penalties for entities that fail to provide adequate information about their operations. The possibility of requiring more transparency about provider ownership was also proposed.

National Implications

The Massachusetts health care market, which has seen a rise in for-profit entities and private equity backers, isn’t alone. Data presented at the hearing showed a dramatic increase in health care transactions involving private equity at a national level. Nationally, there was a six-fold increase in the number of physician practices acquired by private equity firms between 2012 and 2021.

The Massachusetts hearing adds to a growing national discourse on the role and regulation of private equity in health care. To help guide their decision-making process, lawmakers were presented with a briefing about how other states have attempted to establish new limitations around private equity in health care.

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