Feds seeking public comment on private equity healthcare spending sprees
The ever-growing presence of private equity in healthcare is back in the spotlight, with a cross-government group of agencies seeking public comment on the concerns about private equity investment.
A joint announcement from the DOJ’s Antitrust Division, the FTC and HHS highlighted a public request for information (RFI) aimed at providers, patients or other industry experts to share their experiences with private equity transactions, including those not typically subject to antitrust review by law.
“Preserving competition in health care markets is a priority for the Justice Department because of its important impact on the health and well-being of Americans,” says Assistant Attorney General Jonathan Kanter from the DOJ Antitrust Division. “This RFI will enable the agencies to accurately understand the modern market realities of the healthcare industry and forcefully enforce the law against unlawful deals.”
Comments can be submitted via Regulations.gov and must be received by May 6, 2024.
Concurrent with the broader call for online comment, the same agencies held a virtual public workshop this week, ahead of President Biden’s SOTU address, on the role of private equity investment in healthcare. Keynote speaker Eileen Applebaum, MD, co-director of the Center for Economic and Policy Research and fellow at the Rutgers University Center for Women in Work, drew a sharp contrast between traditional private investment, and the deals done by private equity firms that focus on quick profits.
“The difference is that when private equity buys up companies and rolls them up and builds them up and has a huge footprint, it intends to remain there for only a short period of time. Three to five years is its preferred period, sometimes as long as seven years,” Applebaum said at the workshop. “So it needs to make a lot of profit in a short period of time. Those roll-ups give it revenue, make it look very successful, make it desirable to another buyer.” More:
“But the effect of it as we have seen, since these roll-ups are financed by a lot of debt, is to really encumber the healthcare companies that it buys up. So it buys them up with the idea of selling them in a short period of time, and it uses various strategies to extract as much profit from them, before it sells, as it can. So if it's a hospital chain or a nursing home that has real estate, it will sell off the real estate and pocket the proceeds.”
FTC Chair Lina M. Khan also spoke to potential harms of private equity acquisitions, noting that as of summer 2022, more than 40% of U.S. emergency rooms were overseen by private equity-owned staffing firms. “Under private equity ownership, emergency physicians have reported their experiences of endless cuts to staffing hours that have left doctors with significant patient safety concerns and result in poor patient experiences and outcomes,” Khan said. “One ER doctor wrote to us that they felt as if their ‘medical license was being exploited by private equity to maximize profits to shareholders at the expense of patients.’”
A full transcript of the workshop can be viewed here.
Evan joined TriMed in 2011, writing primarily for Health Imaging. Prior to diving into medical journalism, Evan worked for the Nine Network of Public Media in St. Louis. He also has worked in public relations and education. Evan studied journalism at the University of Missouri, with an emphasis on broadcast media.