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Private Equity in Healthcare – PESP’s April 2024 Roundup

May 1, 2024

Each month, PESP’s Healthcare Team will be putting together a roundup that shares the latest news stories related to private equity in healthcare and highlights the work that our team has published in the last month.  

In the news

States Aim to Combat Private-Equity Healthcare Takeovers QuotesWall Street Journal

  • Wall Street Journal reported on the growing number of states pushing back against private equity-backed consolidation of medical businesses.
  • “More than a dozen states have passed laws to require corporate buyers such as private equity firms to notify states of planned healthcare acquisitions. In some cases, these laws let state authorities block deals if they consider them against the public interest.”
  • The states include New York, California, Massachusetts, Colorado, Illinois, Indiana, Minnesota, California, Oregon, and Connecticut.

New York Times Investigates Private Equity’s Role in Driving Up Healthcare Costs

  • A New York Timesinvestigation found that private equity-owned Multiplan has helped drive down payments to medical providers, drive up patients’ bills and earn billions for insurers:
    • “But after MultiPlan’s founder sold it to private equity investors in 2006, the company pursued a more aggressive approach. It embraced pricing tools that used algorithms to recommend lower payments, and no longer protected patients from having to pay the difference, documents show.”
  • In a companion article, NYT describes how “In Battle Over Health Care Costs, Private Equity Plays Both Sides:
    • “Insurance companies have long blamed private-equity-owned hospitals and physician groups for exorbitant billing that drives up health care costs. But a tool backed by private equity is helping insurers make billions of dollars and shift costs to patients.

Senate investigating whether ER care has been harmed by growing role of private-equity firms – NBC News

  • The Senate Homeland Security and Governmental Affairs Committee is investigating private equity’s impact on emergency healthcare.
  • The committee sent letters to three private equity firms requesting information on how they run or staff hospital emergency departments. The firms are Apollo Global Management, the Blackstone Group and KKR.

Healthcare team’s latest blogs, reports, and media mentions

REPORT: Private Equity Healthcare Bankruptcies are on the Rise

A new report from the Private Equity Stakeholder Project (PESP) examines bankruptcy trends in private equity-owned healthcare companies:

  • At least 17 (21%) of the 80 healthcare companies that filed for bankruptcy in 2023 were owned by private equity firms.
  • Another wave of PE-driven healthcare bankruptcies is expected in 2024 – almost all of the most distressed US healthcare companies are owned by private equity firms.
  • Private equity’s excessive use of debt and aggressive financial strategies put healthcare companies at risk, and in turn threaten the stability of critical healthcare resources across the country.
  • Case studies examine several 2023 bankruptcies including Envision Healthcare (KKR), Center for Autism and Related Disorders (Blackstone), and others.
  • See coverage of the report in Bloomberg, Healthcare Dive, Becker’s Hospital CFO Report and ASC Review, Fierce Healthcare, Modern Healthcare, Health Exec, DotMed, and Health Leaders Media.

Blog Posts:

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