This year’s policy efforts to curb private equity’s harmful role in healthcare

PESP reflects on the progress and challenges in regulating private equity’s healthcare business practices

The Private Equity Stakeholder Project (PESP) today released a comprehensive report detailing the legislative and regulatory actions taken across the United States in response to the growing evidence of private equity’s detrimental impact on healthcare systems. From federal agencies to state legislatures, policymakers and regulators are increasingly scrutinizing private equity’s role in rising healthcare costs, patient harms, and financial risks in the sector.

The report, “Recent policy and regulatory initiatives to address private equity’s negative impacts in healthcare,” examines significant policy developments from the past year. Multiple states proposed or enacted new laws aimed at enhancing oversight of healthcare mergers and acquisitions, reflecting a growing concern about the unchecked influence of private equity in the sector. At the federal level, lawmakers introduced two bills specifically targeting private equity in healthcare, and congressional committees conducted investigations and hearings to further scrutinize the industry’s practices. Additionally, state attorneys general, in collaboration with the Department of Justice, pursued enforcement actions against private equity-owned healthcare companies accused of Medicaid and Medicare fraud.

“These actions reflect growing recognition that private equity’s business model is often incompatible with delivering quality, affordable healthcare,” said Mary Bugbee, Healthcare Director at PESP. “While we’ve seen some progress, the fight for greater transparency and accountability faces significant challenges, particularly in the current polarized political climate.”

In an effort to prevent new regulations, the private equity industry has ramped up its lobbying efforts.The report warns of additional obstacles ahead, including the overturning of the Chevron doctrine by the Supreme Court, which will limit the ability of federal agencies to regulate industries like healthcare, and the potential deregulatory agenda of the incoming Trump administration.

Despite spending more on healthcare than any other country, the U.S. has some of the worst health outcomes among high-income nations. Private equity’s aggressive pursuit of profits amplifies the system’s failures, driving up costs, compromising patient safety, and increasing bankruptcy risks for healthcare providers.

Actionable recommendations for lawmakers include strengthening oversight of healthcare acquisitions to ensure that patient care and affordability are not compromised by profit-driven decisions. The report also advocates for greater transparency around private equity ownership, allowing regulators and the public to better understand the extent of private equity’s influence in healthcare. Finally, it calls for expanded enforcement of antitrust and fraud laws to address the industry’s predatory practices that harm patients and burden healthcare providers.

“Private equity’s impact on healthcare is a stark reminder of what happens when profits are prioritized over people,” said Bugbee. “Policymakers must act now to protect patients and our larger healthcare system.”

The full report is available at pestakeholder.org/reports/2024-healthcare-policy-review.