Dive Brief:
- The federal government announced initiatives aimed at scrutinizing corporate investment in healthcare this week, with a pair of bipartisan senators launching an investigation into the effects of private equity ownership on hospital quality and the Biden administration announcing initiatives to halt anticompetitive practices in the industry.
- On Wednesday, Sens. Chuck Grassley, R-Iowa and Sheldon Whitehouse, D-R.I., sent letters to CEOs of private equity firms and a for-profit hospital demanding “documents and detailed answers” about the organizations’ operational involvement in hospitals.
- Also this week, the White House said it would increase oversight into non-traditional mergers and acquisitions, claiming that consolidation leads to higher costs and worse patient outcomes.
Dive Insight:
Private equity investment in healthcare has accelerated over the past decade, with the firms investing approximately $750 billion in deals between 2010 and 2020.
Private equity ownership is often linked to worse outcomes, including higher costs for patients and worsened quality of care, according to data published in the BMJ. Provider surveys have also linked private equity and corporate hospital ownership to lower quality and higher costs for patients.
Now, federal lawmakers are seeking insight into firms’ healthcare investments.
The White House on Thursday announced it would address anti-competitive “roll ups” — when private equity firms engage in a series of small acquisitions to consolidate their market share — by sharing data between the HHS, the Department of Justice and the Federal Trade Commission.
The Biden administration also said it would increase transparency into facility ownership. Last month, the CMS finalized a new rule aimed at shedding light on nursing home ownership, following concerns over quality of private equity-owned facilities.
Federal lawmakers have recently scrutinized private equity investment in healthcare. Last month, Sens. Elizabeth Warren, D-Mass., and Richard Blumenthal, D-Conn. sent a letter to private equity-backed U.S. Anesthesiology Partners inquiring about their acquisition and pricing strategy.
Grassley and Whitehouse’s probe into private equity is partially motivated by regional events.
In Grassley’s home state of Iowa, a certified nurse practitioner at a private equity-owned hospital, Ottumwa Regional Health Center, allegedly assaulted nine female sedated patients without detection between 2021 and 2022. The probe, along with letters sent earlier this year, asks how the nurse evaded detection and whether financial interests superseded patient interests at the facility.
“As private equity has moved into health care, we have become increasingly concerned about the associated negative outcomes for patients,” Whitehouse said in a press release. “From facility closures to compromised care, it’s now a familiar story: private equity buys out a hospital, saddles it with debt, and then reduces operating costs by cutting services and staff — all while investors pocket millions."
The Senate probe asks for information from chief executives of Apollo Global Management, Leonard Green & Partners, Lifepoint Health, Medical Properties Trust and Prospect Medical Holdings.
The Senators asked the firms to provide documents detailing and justifying a series of “opaque and questionable acquisitions, mergers” that may have put profits over care.
