Private equity stranglehold on medical equipment industry hurts people with disabilities

In recent years, private equity (PE) firms have aggressively sought to acquire and control segments of the healthcare industry. A new report from the Private Equity Stakeholder Project (PESP) and the National Disability Rights Network (NDRN)  highlights specifically the toll the PE business model has on people who rely on costly and necessary instruments, known as Durable Medical Equipment (DME), which includes wheelchairs, respiratory technology, and other tools needed to manage chronic conditions and disabilities. 

New report details how private equity’s stranglehold on medical equipment industry hurts people with disabilities

The new report finds:

• Private equity firms have increasingly bought up DME manufacturers and suppliers, and consolidated them. Through aggressive debt-funded growth strategies, a handful of private equity-owned DME companies have grown from nonexistence to industry giants over the last decade.
• In recent years, private equity-owned DME companies have paid millions of dollars to settle allegations of healthcare billing fraud.
• Private equity-owned DME companies have fought recent legislative efforts that seek to expand consumers’ ability to repair their own wheelchairs, respirators, and other critical pieces of equipment.

“As private equity firms continue to buy medical equipment manufacturers and suppliers, they have sought to cut costs to maximize outsized returns,” said Eileen O’Grady, Healthcare Director at PESP. “We have found these typical PE business practices result in quick profits for the firms, often at the expense of patients. People reliant on DME have seen their local DME shops gobbled up by corporate chains, faced fraudulent billing practices, and struggled to access repairs. Several private equity-owned DME suppliers have challenged right-to-repair legislation, exacerbating delays in accessing repairs for the equipment essential to their daily lives.” 

“The stories told by the individuals in this report are a reminder that the private equity business model has real world, deleterious consequences on people with disabilities,” said Marlene Sallo, executive director of the National Disability Rights Network. “Delays to repairs are more than just an inconvenience to an individual who relies on a mobility device, they are exclusionary and life altering. It means they are unable to go to work, see family, participate in their communities, or even complete tasks like cooking a meal or bathing. It is a health and safety crisis. We must act on the policy reforms called for in this report to ensure that corporate profits do not outweigh the needs of people with disabilities. We have been marginalized for too long to sit idly by and accept this as the norm.”

In order to protect patients, the report puts forth several policy recommendations such as enforcing timely repairs requirements, investigation into allegations of widespread fraud, limiting industry consolidation, and the elimination of prior authorization for necessary repairs of DME.  

Due to the private equity industry’s extreme focus on profit, patients are forced to endure potentially life-threatening delays, costs, and legal hurdles to access the equipment needed to manage their health. Without significant regulation and oversight, private equity’s assault on DME manufacturers and the healthcare industry at large will continue to endanger the health of patients across the country. 

Case studies included in the report follow multiple companies and their involvement in the DME industry. Also featured are personal stories of wheelchair users as well as a comprehensive list of DME companies currently owned by private equity firms. 

You can view the new report here.