by
John R. Fischer, Senior Reporter | January 24, 2024
She added that there is no concrete proof to validate claims that these providers are less financially stable or more likely to close, and that there is very limited evidence, good or bad, to suggest that loss of competition or tactics undertaken by private equity firms to make a profit affect quality.
“In most cases, private equity investment actually improves hospitals’ financial performance, at least in the short run,” she said.
According to Werner, greater transparency around private equity transactions and what hospital management under these facilities entails is essential to addressing concerns about their presence in healthcare settings.
O'Grady agrees, noting that one way this could be done is if the federal government required all Medicare-enrolled hospitals to disclose publicly on websites and to the federal government all ownership stakes and investors.
Are more regulations necessary?
O'Grady also encourages regulations to tackle anti-competitive practices through consolidation and roll-ups, whereby a company makes a series of small acquisitions to build up consolidation of the market in its favor. These deals, while potentially violating antitrust laws, often fall below the size thresholds for reporting the prospective deal to enforcement agencies, making it easier for companies to build up their share of the local market.
"Because private equity roll-ups and mergers typically fall under the radar of antitrust regulation, the FTC and DOJ should scrutinize healthcare deals involving private equity firm owners even if individual deals do not meet the typical threshold to trigger FTC review," she said.
The White House is also examining private equity ownership in its own cross-government probe, assessing the impacts it had on care quality in hospitals and other healthcare organizations. In a recent review of hospital mergers, the Biden administration, which has ramped up FTC scrutiny of these transactions over the last few years, said that consolidation led to price increases often exceeding 20%, and specifically linked private equity firms to rising costs.
Another recent study published in JAMA by researchers at Harvard Medical School and the University of Chicago found that patients in private equity-controlled hospitals
experienced 27% more falls, developed 25% more hospital-acquired infections, and contracted 38% more bloodstream infections from central lines, despite there being a 16% decrease in central lines following acquisitions.
