The latest on the harms of private equity in health care

As private equity firms continue to acquire providers, journalists must report on what we know about how they can undermine quality and access and increase costs.

January was an especially prolific month on that front with three new reports — one academic and two governmental. 

Here are snapshots of each followed by tips to guide your reporting.

Patients give worse reviews to private equity hospitals

Researchers at Beth Israel Deaconess Medical Center in Boston compared scores for the Hospital Consumer Assessment of Healthcare Providers and Systems, a standardized survey of patient experience, for 73 private equity-acquired hospitals to 293 matched control hospitals. 

The results, which were published in JAMA, are eye-opening. 

After a hospital was acquired by private equity, patients were less likely to give it a high rating or say that they would recommend it. That satisfaction deficit increased the longer a hospital was under private equity control, reaching around 5% by the third year after private equity acquisition. To put that in perspective, consider that hospitals nationally experienced a 3.6% decline in patient care experience during the intense operational strains of the COVID-19 pandemic. 

The authors wrote that patient experience scores are important to track because they may capture changes in care that otherwise go undetected. Research published in 2023 linked private equity hospital ownership to increases in adverse events such as falls and central line -associated bloodstream infections. 

Senate probe says private equity puts ‘profits over patients’

A bipartisan Senate Budget Committee report details the business practices of two firms: Apollo Global Management, owner of rural hospital chain Lifepoint Healthcare, and Leonard Green & Partners (owner of Aspen Dental), which owned Prospect Medical Holdings from 2010 until 2021. 

Based on more than a million documents, the report spells out how the firms extracted massive profits from hospitals they controlled while saddling the facilities with debt and allowing patient care and safety to deteriorate. In some cases, facilities were forced to close.

The report says the findings “call into question the compatibility of private equity’s profit-driven model with the essential role hospitals play in public health.”

Companies “are putting their own profits over patients, leading to health and safety violations, chronic understaffing, and hospital closures,” Rhode Island Democrat Sheldon Whitehouse, who led the investigation with Iowa Republican Chuck Grassley, said in a statement.  

Grassley called the 162-page report, “Profits Over Patients: The Harmful Effects of Private Equity on the U.S. Health Care System,” a “step toward ensuring accountability.”

Outgoing HHS secretary slams industry consolidation

Days before leaving office, Biden administration officials raised alarms about unprecedented consolidation of hospitals, health plans and physician practices in a report that said private equity poses “new and unique risks.”

The report, issued by Biden HHS Secretary Xavier Becerra in consultation with the Department of Justice and the Federal Trade Commission, incorporated more than 2,000 comments from patients, physicians, health systems, insurers, industry associations, labor unions, and academic researchers.  It pointed out higher costs, lower quality and less access, and widespread desire for transparency around acquisitions. 

The findings “indicate plainly that the American public is dissatisfied with ongoing trends in the health care sector,” it said. 

Among the recommendations:

• Expand CMS’ nursing home ownership transparency rule to other health care transactions.
• Lower reporting thresholds for mergers and acquisitions to make it easier for regulators to review them.
• Boost collaboration among federal, state and local agencies. 

Tips to guide your reporting

• Don’t bank on Congress to act. The proposed Corporate Crimes Against Health Care Act, introduced by Massachusetts senators Elizabeth Warren and Edward Markey, and Markey’s separate Health Over Wealth Act, stalled. Those bills would have offered greater oversight and transparency of transactions. Former Commonwealth Fund president David Blumenthal wrote in a blog post: “Bills addressing the issue require 60 votes in the Senate, which seem unlikely to materialize.”  
• Follow federal antitrust enforcement. The Biden administration challenged deals such as a roll-up of anesthesiology practices in Texas, although Blumenthal noted that antitrust enforcement is a “limited strategy” since many private equity acquisitions do not raise antitrust concerns. Some experts anticipate that the Trump administration will continue scrutinizing deals that would concentrate markets. 
• Examine state legislative activity. The National Academy for State Health Policy has released model legislation to increase state oversight of health care transactions. A handful of states have provisions to regulate private equity, including Massachusetts, where the collapse of Steward Health Care led to the closure of two hospitals. Five others — California, Indiana, Minnesota, New Mexico, and Oregon — directly or indirectly regulate PE in health care, Blumenthal wrote. 
• Watch for a red and blue divide. Blumenthal noted few conservative states are considering bills to strengthen oversight of private equity, which could exacerbate disparities in health outcomes between red and blue states. In a sign of private equity’s growing strength in red states, Stateline recently reported on safety issues raised by a new Florida law that allows cesarean sections to be performed outside of hospitals; the law was pushed by a private equity-backed physician group, Women’s Care Enterprises. 
• Talk to physicians. Many physicians are angry about losing control of their practices, leading to the formation of an advocacy group, Take Medicine Back, to outlaw the corporate practice of medicine. The Wall Street Journal reported in November that the American Medical Association resolved to support limits on corporate control of medical care. Meanwhile, Michigan Sen. Gary Peters has been investigating private equity’s growing role in emergency department staffing. 

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