Private Equity's Growing Role in Healthcare Raises Patient Care Concerns
Private equity firms and corporate owners are increasingly investing in healthcare systems, raising concerns about prioritizing profits over patient care. A study in JAMA found that adverse events at hospitals acquired by private equity (PE) firms increased by 25%.
The Lown Institute reports a six-fold increase in PE buyouts of physician practices from 2012 to 2021, with 386 hospitals now under PE ownership, accounting for 30% of for-profit hospitals in the U.S. Agencies worry that consolidation and cost-cutting measures could lead to reduced care quality.
In response, the German Federal Cartel Office (Bundeskartellamt) has issued information requirements to monitor transactions involving private capital companies in the healthcare sector. The goal is to ensure transparency, prevent market concentration, and protect competition. Similarly, the U.S. Department of Justice (DOJ), Federal Trade Commission, and Department of Health and Human Services have requested information on health care transactions involving private equity funds. Additionally, the DOJ has launched an antitrust investigation into UnitedHealth, which owns the largest U.S. health insurer, a leading drug benefits manager, and a vast network of doctor groups.
The growing involvement of private equity firms and corporate owners in healthcare transactions has raised concerns about the potential impact on care quality. Regulatory bodies in Germany and the U.S. are taking steps to monitor these transactions and ensure that competition and patient care are protected.
