In recent years, private equity takeovers have risen sharply in over a dozen health sectors, ranging from end-of-life care and nursing homes to hospitals and medical specialties, according to a new report from Public Citizen.
Photo by Ridofranz, courtesy iStockphoto
Private equity ownership in health care has led to price gouging, reduced quality of care and quickened facility closures, according to a watchdog report released in March. And while most of private ownership involves medical facilities, public health remains impacted by the practices.
“The damage that private equity has wrought on Americans’ health care — from cradle to grave, simply for profit — has become a life or death situation. Transparency and oversight are needed, stat.”
— Eagan Kemp
In the past 15 years, private equity takeovers have risen sharply in more than a dozen health sectors, ranging from end-of-life care and nursing homes to hospitals and medical specialties, said the Public Citizen report. Acquisitions are often under the radar.
“Thanks to a lack of transparency, we don’t know everything about private equity’s incursion into health care, but what we do know is shocking and immoral,” Eagan Kemp, MS, health care policy advocate at Public Citizen and author of the report, said in a news release. “The damage that private equity has wrought on Americans’ health care — from cradle to grave, simply for profit — has become a life or death situation. Transparency and oversight are needed, stat.”
For the report, Public Citizen dug into public records, news releases, academic studies, trade journals and other sources to track private equity growth and impact. Among its findings was that between 2000 and 2018, private equity investments in health care increased by a factor of 20.
In recent years, for-profit firms have back-pedaled from financially troubled sectors such as nursing homes to those with higher rewards for investors, such as hospitals, diagnostic imaging, home health care, reproductive health, obstetrics and gastroenterology.
Acquisition of gastroenterology practices grew by nearly 30% in 2020-2021, and three of the four largest staffing companies for obstetrics at emergency departments are owned by private equity firms.
Private equity is driven by profits and satisfying shareholders, not developing health facilities into first-rate providers, the report said.
That means patient care tends to suffer after acquisition.
The report cites cases in which health care declined after private equity took over. Reviewing death records at nursing homes from 2005 to 2017, a National Bureau of Economic Research study found that morbidity increased 10% at facilities recently bought by private entities.
When the COVID-19 pandemic created an increase in demand for mental health services, private equity capitalized and bought up behavioral and mental health clinics. The move increased risk of “higher prices for patients and a focus on profit instead of patient well-being,” the report said.
Industry observers have called for greater oversight, transparency and accountability in acquisitions of health care facilities by private equity firms, which are not required to have the same transparency as nonprofits.
“The regulation needs to be on the money, the spending and the ownership,” said Charlene Harrington, PhD, RN, a professor emerita at the University of California-San Francisco, who was not involved in the report.
“There needs to be criteria for who can be an owner,” Harrington, who studies acquisitions of health care facilities, told The Nation’s Health.
For more information on the report, “Private Equity’s Path of Destruction in Health Care Continues to Spread,” visit www.citizen.org.
- Copyright The Nation’s Health, American Public Health Association