Fierce Healthcare : Private equity owns at least 130 rural hospitals, and other revelations in a sweeping new report on PE in rural healthcare

The healthcare industry is continuously evolving and changing, especially in rural areas where healthcare services are often limited. Private equity has emerged as a major player in the healthcare industry, and its presence in rural areas has become increasingly noticeable in recent years. 

Fierce Healthcare January 26, 2022: Private equity owns at least 130 rural hospitals, and other revelations in a sweeping new report on PE in rural healthcare

In a recent article, Fierce Healthcare covered the release of a new PESP report that highlights the impact of private equity on rural healthcare and provides insight into the role of private equity stakeholders in healthcare company ownership.

Fierce Healthcare highlighted why private equity firms are drawn to rural healthcare: both because of the potential for high returns on investment and the need for improved healthcare services in rural areas.

The PESP report included the many key takeaways about private equity ownership in rural healthcare:

• Private equity firms are driven by profit: The primary motivation for private equity stakeholders is to generate returns on their investments. They invest in rural healthcare projects with the expectation of realizing a high return on investment.
• Private equity ownership can lead to cost-cutting measures: Private equity stakeholders often look to cut costs in order to maximize their returns on investment. This can result in cost-cutting measures such as reducing staff and services, which can negatively impact the quality of care provided to rural communities.
• Private equity ownership can lead to changes in healthcare services: Private equity stakeholders may make changes to the healthcare services provided in rural areas, such as shifting from inpatient to outpatient services or from rural to urban locations. These changes can have a significant impact on rural communities, particularly for those who rely on rural healthcare services for their medical needs.

“Generally speaking, rural healthcare providers are in greater need for capital and so they’re more willing to accept private equity ownership,” PESP’s research director Eileen O’Grady told Fierce Healthcare. O’Grady also said that private equity ownerships of hospitals “is incredibly opaque. It’s like a black box.” 

The Fierce article concluded with a salient suggestion from the PESP report:

“Public investment in rural health should limit ‘extractive practices from for-profit interests’ and has the potential to ‘preserve and even expand access to healthcare,’ the report concluded.”

Find the full report “Private Equity Descends on Rural Healthcare” HERE.