Healthcare

Private equity has invested over $1 trillion in the US healthcare sector over the last decade, and touches virtually every corner of the industry – including hospitals, outpatient providers, clinical research, durable medical equipment, home health and hospice, prison healthcare, and more.

This is despite the fact that private equity investment in healthcare companies carries substantial risk to patients, workers, and investors. The typical private equity investment playbook—pursuing outsized returns over short time horizons while using high levels of debt—may lead to behavior that jeopardizes patient care and increases bankruptcy risk.

For example, many private equity-owned healthcare companies have seen the following issues:

• Reduced staffing, or filling beds without adequate staffing ratios
• Over-reliance on unlicensed staff to reduce labor costs
• Failure to provide adequate training
• Pressure on providers to provide unnecessary and potentially costly services
• Violation of regulations required for participants in Medicare and Medicaid such as anti-kickback provisions, creating litigation risk

Sometimes, private equity financial strategies can even result in layoffs, closures of healthcare facilities, and bankruptcies of entire healthcare systems.

Putting profits before patients is not unique to private equity–owned healthcare companies. But because there’s less transparency around private equity deals and the companies they own, and because private equity firms tend to use more debt than other types of investors to fund their business strategies, the private equity business model can amplify the profit-seeking behaviors that put patients and healthcare workers at risk.

PESP has studied the impacts of private equity investment in key healthcare sectors, including:

• Hospitals
  • See our 2021 and 2024 reports on Apollo Global Management’s hospital systems, Lifepoint Health and ScionHealth.
  • See our reports on private equity-owned safety net hospital systems, including Prospect Medical Holdings, Pipeline Health, and Steward Health Care.
• Behavioral health & youth behavioral health
• Dental care
• Durable medical equipment
• Home health & hospice
• Medicare Advantage
• Nursing homes
• Prison healthcare
  • See our reports on YesCare and Wellpath.
• Rural healthcare
• Surprise billing
• Travel nursing
• Urgent care

We have also written about the practice of taking debt-funded dividends from healthcare companies; private equity’s role in medical debt creation & collection; and the relationship of private equity ownership to Medicare & Medicaid fraud.

PESP also tracks healthcare bankruptcies of private equity-backed companies, private equity ownership of US hospitals, and private equity healthcare acquisitions, highlighting notable transactions in a variety of sectors.

PESP has a number of policy recommendations to address private equity’s impacts in healthcare. See our December 2024 report “Recent trends Recent policy and regulatory initiatives to address private equity’s negative impacts in healthcare” to learn more.

See here to access an archive of PESP’s reports and blogs.