Action on Predatory Private Equity in Health Care ‘Needed, Stat’ Says Public Citizen

A new Public Citizen report released today examines private equity’s toll on U.S. health care in more than a dozen sectors, from end-of-life care and home health care to dentistry and reproductive health. Increased private equity takeovers have come with shocking lapses in safety, with prices rising faster than at non-private equity acquired entities, while patients have been subjected to price gouging schemes.

In the report, Public Citizen calls for action from Congress and the Biden administration to increase oversight and accountability for private equity firms in health care.

Private equity acquisitions in the health care sector have steadily climbed since the financial crisis in 2009, particularly in the past five years. Unlike acquisitions of hospitals, which typically occur under a public spotlight, the private equity industry’s acquisitions of physician practices and other health care business lines often occur with little or no disclosure or public scrutiny, hindering the ability of regulators and watchdogs to monitor the effects of private equity ownership.

“Thanks to a lack of transparency, we don’t know everything about private equities’ incursion into health care. But what we do know is shocking and immoral,” says Eagan Kemp, health care policy advocate at Public Citizen. “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.”

The report compiles findings from various health care sectors, including:

• End-of-life care: Researchers have found that over 70 percent of the hospice agencies acquired between 2011 and 2019 were previously nonprofit.
• Home health care: Private Equity Stakeholder Project (PESP) reported that nearly half of all home health care deals in 2018 and 2019 involved private equity. Initial data for 2020 indicated even more investment by private equity firms into home health care companies. PESP noted that several companies came under increased scrutiny on issues of patient safety, inadequate staffing, and failures that required investigation by state regulators.
• Traveling nurses: While private equity firms were already investing in traveling nurses prior to the COVID-19 crisis, recent years have seen record numbers of acquisitions.
• Nursing homes: One study, which reviewed data from 2005 to 2017, found that residents of private equity-owned facilities were 10 percent more likely to die when compared with any other type of facility.
• Reproductive health: Private equity companies have bought up three of the four major staffing companies for obstetrics emergency departments, emulating some of the profitable tactics they used in other sectors but in a gray area around the standards for defining live births as emergencies. They have been accused of classifying even normal births as emergencies, allowing them to charge patients additional fees.
• Gastroenterology: One analysis found that from 2020 to 2021, acquisition of gastroenterology practices grew by nearly 30 percent. Another found that as of fall 2021, nearly 10 percent of the 14,000 gastroenterologists worked in practices that were either owned or backed by private equity.

There are also additional steps the federal government can take to better ensure that health reporting requirements improve transparency and accountability. The Biden administration has already begun to implement additional requirements that would improve transparency of ownership, including publishing the ownership information of thousands of hospitals. Similar efforts in other areas of health care would be a positive step in the direction of oversight and accountability for private equity firms in health care.

In addition, Rep. Pramila Jayapal is expecting to reintroduce the Healthcare Ownership Transparency Act, which will require private equity firms and other financial interests to disclose ownership stakes in health care facilities including nursing homes.

“We applaud Rep. Jayapal’s ongoing effort to shine a light on the dangerous toll private equity vultures are taking on our health,” says Robert Weissman, president of Public Citizen. “Adequate regulation of this predatory industry is acutely critical when it comes to the health care sector.”