Private equity creates medical debt and profits from collecting it

Today, the Private Equity Stakeholder Project (PESP) released a comprehensive new report that exposes the expansive and growing involvement of private equity firms in the U.S. medical debt crisis. The report, “Private Equity’s Revenue Cycle: Creating and Collecting U.S. Medical Debt,” sheds light on how private equity’s aggressive practices in debt collection and revenue cycle management (RCM) are fueling the financial struggles of millions of Americans.

Key Findings:

• Impact of medical debt: Medical debt has become a significant burden on U.S. patients in recent years, impacting 14 million people and totaling over $220 billion.
• Private equity’s role in the crisis: The report reveals that private equity is not just a bystander but a major factor in the medical debt crisis, by both creating and profiting from medical debt.
• Aggressive collections: Private equity-owned companies in the healthcare RCM sector have shown a pattern of aggressive debt collection practices. This includes the consolidation of debt collectors, medical payment services, and other RCM functions into comprehensive, “end-to-end” service providers. Some PE-owned debt collectors have claimed to use artificial intelligence to target patients who are more likely to pay.
• Exploitation of patients: The report highlights how private equity firms are exploiting patients through the use of medical credit cards, installment plans, and strategic partnerships with financial service providers, driving patients deeper into debt.
• Consumer complaints: Consumer complaints against private equity-owned debt collectors have been documented in the Consumer Financial Protection Bureau (CFPB) database, including complaints about attempts to collect debts that are either not owed or incorrectly calculated.
• Legislative solutions: The report outlines critical policy measures that lawmakers can adopt to mitigate the harms caused by private equity’s involvement in the healthcare sector. These include capping interest rates for patients, mandating transparency in debt collection practices, and accessible data on debt collection companies including ownership information

“The private equity industry has tried to downplay the clear fact that it is an essential part of the medical debt crisis,” says Michael Fenne, report author and healthcare researcher at the Private Equity Stakeholder Project. “For people who are forced to carry medical debt, private equity is a constant presence—from increased healthcare costs, to high-interest medical debt payments, and including aggressive debt collection practices. At every step, private equity firms take resources meant for the provision of care, adding to a debt crisis impacting countless people across the county”

The political context:As the nation gears up for the 2024 presidential election, the issue of medical debt has taken center stage in the country’s political discourse. The Harris-Walz campaign recently committed to erasing billions of dollars in medical debt if the current Vice President is elected in November. The recent Senate Health, Education, Labor, and Pensions Committee hearing in
July also underscored the critical role private equity plays in exacerbating this crisis. PESP’s report arrives at a crucial moment, offering evidence that private equity’s presence in the healthcare system is contributing to unsustainable debt levels and increased financial pressure on patients. In reality, private equity investment in U.S. healthcare has contributed to higher prices and more medical debt.

The PESP report also comes after the organization submitted a joint public comment letter with Center for Economic and Policy Research to the Consumer Financial Protection Bureau (CFPB) regarding the proposed amendment to Regulation V, which implements the Fair Credit Reporting Act (FCRA). The proposed amendment is seen as one of multiple solutions needed to mitigate the real harms resulting from inaccurate medical debt data held by private equity-owned debt collectors and others.

“Private equity’s role in the medical debt crisis demands a response,” Fenne said. “It is crucial that steps are taken to address the aggressive, harmful, and often predatory practices these firms employ.”