Medicaid cuts and private equity-owned care

The One Big Beautiful Bill Act, signed into law on July 4, 2025, is projected to reduce federal Medicaid spending by $911 billion over ten years and increase the number of uninsured people by 10 million. The law reduces Medicaid spending through policy changes that include work-reporting requirements, more frequent eligibility redeterminations, limits on retroactive coverage, and new restrictions affecting state Medicaid financing.

Medicaid also finances large parts of the healthcare delivery system, including long-term nursing facility care, home- and community-based services for people with disabilities, home care and private duty nursing, behavioral health services, autism therapy, pediatric dental care, durable medical equipment, PACE programs, and safety-net providers. Private equity firms have built substantial businesses in many of those same sectors.

Across healthcare sectors, private equity has been associated with leveraged buyouts, add-on acquisitions, market consolidation, opaque ownership, sale-leasebacks, debt-funded dividends, and financial relationships that can be difficult for regulators to see. Medicaid cuts will place pressure on provider sectors where private equity ownership has already changed the financial incentives and operating conditions of care.

In the context of Medicaid spending cuts, regulators and policymakers should examine the impacts of private equity buyouts on sectors of care that rely heavily on Medicaid funding and adopt policies and regulations that limit private equity tactics such as excessive use of debt, asset stripping, sale-leasebacks of real estate, staffing cuts, and roll-ups of providers that reduce competition.

Nursing homes

Medicaid is the primary payer for long-term nursing facility care. Medicaid cuts could put additional pressure on nursing homes where private equity ownership has already raised concerns about debt, real estate extraction, staffing, and resident care.

Private equity owns an estimated 5 to 13 percent of U.S. nursing homes, with the wide range due to opaque ownership. Private equity-owned nursing homes face risks associated with profit-seeking, use of debt, and monetization of real estate, including the possibility that financial obligations can leave fewer resources available for staffing, operations, and resident care.

Intellectual and developmental disability services

Major private equity-owned providers in intellectual and developmental disability services include Sevita, Help at Home, and Broadstep. These companies operate in a Medicaid-financed service system that includes residential care, personal assistance, supported living, employment supports, and day programs for people with intellectual and developmental disabilities.

Private equity ownership brings short investment timelines and return expectations into a labor-intensive care sector, where those pressures can encourage reductions in spending on staffing, training, and services. Those pressures are especially important for Medicaid oversight because complex ownership structures can obscure regional concentration. Private equity-owned IDD providers have faced concerns involving care failures, staffing problems, license revocations, and state enforcement actions.

Home care and private duty nursing

Private equity firms have acquired private duty nursing services for medically complex children and adults, including Medicaid-funded care that allows patients to remain at home rather than in hospitals, nursing homes, or institutions. The sector has drawn private equity interest because demand for in-home care is high and the market remains fragmented enough for consolidation strategies.

PESP has identified Team Select Home Care and Aveanna Healthcare as examples of private equity-owned companies where debt-fueled expansion and cost-cutting practices can create challenges for families seeking reliable nursing coverage. Debt-heavy private equity strategies can divert cash away from patient care. Investor-owned and other for-profit home healthcare agencies can siphon Medicaid dollars away from patient care without stronger guardrails.

Behavioral health

Medicaid is the single largest payer for behavioral health services, including mental health and substance use services.

Private equity-owned companies have operated across youth behavioral health services including group homes, foster care services, residential treatment programs, psychiatric facilities, and autism services. These services often involve children and youth with complex behavioral health needs, histories of trauma, or involvement in foster care and juvenile justice systems. PESP identified concerns in private equity-owned youth behavioral health settings involving cost-cutting that can lead to understaffing, inadequate training, and unsafe conditions.

Autism therapy

Private equity firms acquired more than 500 autism therapy centers over the past decade, with most acquisitions occurring between 2018 and 2022. Much of that growth occurred in applied behavior analysis, a service model increasingly financed through Medicaid as states expanded coverage for autism therapy.

As private equity-backed providers expanded in this Medicaid-funded market, state audits have identified billing, documentation, improper payment, and oversight problems in autism therapy programs.

Program of All-Inclusive Care for the Elderly (PACE)

As of August 2025, 30 of 196 PACE programs had private equity or venture capital backing, serving 11,888 enrollees. PACE, the Program of All-Inclusive Care for the Elderly, is a Medicare- and Medicaid-funded model for older adults who qualify for nursing-home-level care but remain in the community, providing comprehensive medical and social services.

Because PACE is built around public financing and coordinated services for high-need older adults, investor ownership raises questions about how debt, growth targets, or cost-cutting pressures could affect staffing, transportation, care coordination, and access to services.

Dental care

Private equity-backed dental service organizations can separate the business side of a dental practice from clinical ownership while still influencing how practices operate through management contracts, revenue targets, staffing, scheduling, and billing systems.

Payment structures between dental service organizations and dentists can create perverse incentives associated with overtreatment, misleading advertising, Medicaid fraud, and risky practices designed to reach revenue targets. Benevis, formerly known as Kool Smiles, paid nearly $24 million in 2018 to settle Department of Justice allegations involving medically unnecessary dental services performed on children insured by Medicaid.

Durable medical equipment

Private equity firms have bought and consolidated durable medical equipment manufacturers and suppliers through debt-funded growth strategies to achieve market dominance. Major private equity-owned DME companies have included Numotion, National Seating & Mobility, AdaptHealth, and Drive DeVilbiss.

For people who rely on wheelchairs and other durable medical equipment, private equity consolidation can affect access to timely repairs and essential equipment. PESP and the National Disability Rights Network raised concerns about wheelchair repair delays, staffing problems, billing-related litigation, and lobbying against repair legislation. Many disabled and medically complex people rely on Medicaid to cover equipment, supplies, and repairs.

Hospitals and safety-net systems

Medicaid financing is important for hospitals that serve large numbers of low-income and uninsured patients, including through supplemental payments such as disproportionate share hospital and uncompensated care pool payments. A recent analysis identified 446 acute-care and critical access hospitals at heightened risk of closing or reducing services because of Medicaid cuts, including hospitals with approximately 69,000 beds, 6.6 million patients served in 2024, and 275,000 direct patient care workers.

As of April 2025, PESP identified approximately 488 private equity-owned hospitals, representing 8.5 percent of all private hospitals and 22.6 percent of proprietary for-profit hospitals. PESP’s hospital tracker also found that at least 27.7 percent of private equity-owned hospitals serve rural populations and that nearly a quarter of private equity-owned facilities are psychiatric hospitals. Private equity hospital ownership has raised concerns about safety-net hospital extraction, real estate monetization, service-line cuts, and the use of public funding streams designed to stabilize healthcare access.

Medicaid cuts and ownership type

Medicaid cuts will affect patients directly through coverage loss and eligibility barriers. They may also affect patients indirectly by increasing pressure on provider sectors that private equity has already consolidated, indebted, or reorganized around investor returns. That means Medicaid implementation should include an ownership lens. States need to know which Medicaid-reliant providers are controlled by private equity firms, what financial obligations those providers carry, and how patients and workers will be protected if services are reduced, sold, or closed.

Medicaid dollars are public funds for patient care, not simply revenue streams for investors. As states implement the law, they should make sure those dollars are not routed through ownership structures that leave patients and workers carrying the risk.