Before going dark, HHS released report on PE in healthcare markets

On January 15, 2025, the Department of Health and Human Services (HHS) released a report in response to the Consolidation in Health Care Markets Request for Information (RFI) as one of its last actions under the Biden administration. The report highlights the impacts of increasing consolidation in our nation’s healthcare markets and the recent influx of private equity and other private investors active in the sector.^[1]

This effort by HHS began in March 2024 when, in collaboration with the Federal Trade Commission (FTC) and Department of Justice (DoJ), the agency published a related RFI. The tri-agency RFI from last year sought to ascertain how certain healthcare market transactions made by health systems, private insurers, private equity funds and other private investors may “increase consolidation and compromise patients’ health, quality of care, and affordability, while also threatening workers’ safety, satisfaction, and wages, and creating taxpayer burden.”^[2]

In June 2024, PESP joined a coalition of over 90 organizations and individuals, representing patients, workers, communities, public interest advocates, and healthcare researchers, calling on federal authorities, as part of their review of competition in health care, to take action to curb the abuses of private equity and safeguard the ability of doctors to deliver quality care to all patients and achieve equitable health outcomes.^[3]

HHS highlighted the following key points from its report:^[4]

• Responses to the RFI primarily addressed two major trends in the health care sector:
  • 1) Increasing consolidation of health care markets
  • 2) A recent influx of private equity and other private investors into health care services
• Key themes from the comments include:
  • Theme 1: Provider consolidation leads to higher prices and less access for patients
  • Theme 2: M&A in health care services, especially in PE-backed transactions, results in process changes and quality reductions
  • Theme 3: Physicians that worked with PE firms offer mixed reviews
  • Theme 4: There is widespread desire for transparency on PE-led transactions
  • Theme 5: People are dissatisfied with private health insurers, especially vertically integrated insurers
• Case studies highlight how PE firms loaded hospitals up with debt, sold the hospitals’ underlying assets, and paid investors through dividends, resulting in negative consequences such as bankruptcy, closure of facilities and service lines, staffing shortages, and patient safety and quality concerns.
• Policy considerations include:
  • Enhancing ownership transparency, building on CMS’ nursing home ownership transparencyrule
  • Increasing disclosures of mergers & acquisitions in health care by lowering reporting thresholds, requiring review and approval, and empowering relevant authorities with data and resources needed to conduct review of health care transactions
  • Pursuing further enforcement actions to halt hospital mergers and industry rollups
  • Continuing to improve data sharing and other collaboration across agencies, Congress, and state and local authorities in an all-government approach to promoting competition

The HHS report in turn cites a 2024 report from PESP, Apollo’s Stranglehold on Hospitals Harms Patients and Healthcare Workers, which details harm caused to the healthcare industry by the private equity firm Apollo Global Management.

The fortunate timing and importance of this report is highlighted by the Trump administration’s recent actions in ordering a communications blackout for federal health agencies (including HHS) and the United States’ withdrawal from the World Health Organization. As it looks like the public’s access to critical healthcare information collected by the federal government may be curtailed during this administration, it is even more important for policymakers and advocates to review and reflect on reports such as these when considering solutions to the risks that private equity can present to health systems.

If you have any questions about HHS’ report in response to the Consolidation in Health Care Markets RFI, please contact PESP’s Policy Director, Chris Noble, at [email protected].

^[1]https://www.hhs.gov/about/news/2025/01/15/hhs-releases-report-consolidation-private-equity-health-care-markets.html.

^[2]https://www.ftc.gov/news-events/news/press-releases/2024/03/federal-trade-commission-department-justice-department-health-human-services-launch-cross-government.

^[3]https://pestakeholder.org/news/coalition-calls-on-federal-agencies-to-fight-private-equity-abuses-in-healthcare/.

^[4]https://www.hhs.gov/about/news/2025/01/15/hhs-releases-report-consolidation-private-equity-health-care-markets.html.