How private equity is ruining healthcare

The healthcare sector has seen an influx of funding from private equity groups over the last several years, aiding in the contraction of the industry. But has the influence of cash been beneficial for healthcare?

During the COVID-19 pandemic, while most healthcare offices closed and Americans were told to put off elective procedures, one private equity-backed dermatology chain based in California stayed open, booking appointments, even for cosmetic procedures such as Botox injections, Bloomberg reported.

The actions were questionable from a public health standpoint, but with Wall Street backers, staying open to maintain revenue and profit led the decision. More than $10 billion has been invest in medical practices from private equity firms over the last five years, according to Bloomberg, with particular focus on dermatology.

Some of these investments have led to cost-cutting measures once firms have a stake and then reselling with a 20% to 30% annualized return. However, this method may not be best for healthcare, which deals with life and death situations, and could conflict directly with public health goals.

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