Federal regulators launched an investigation Tuesday probing private equity firms’ investment in healthcare.
The Federal Trade Commission, Justice Department and Health and Human Services Department are seeking information on the effects of private equity and other corporate investor-backed healthcare transactions, particularly those that fall under regulators’ threshold for review. In the request for information, the agencies expressed concern those deals may generate profits for corporate investors at the expense of patients’ health, workers’ safety and affordable care.
Related: More physicians are employed by private equity, study shows
“When private equity firms buy out healthcare facilities only to slash staffing and cut quality, patients lose out,” FTC Chair Lina Khan said in a news release. “Through this inquiry the FTC will continue scrutinizing private equity roll-ups, strip-and-flip tactics, and other financial plays that can enrich executives but leave the American public worse off.”
The comment window closes May 6.
Studies show private equity firms have acquired physician groups, hospitals and post-acute care facilities at an increasingly fast clip over the past decade. That trend was associated with reductions in staffing, inflated prices and declines in care quality, according to further research.
Those studies have spurred bipartisan congressional inquiries into private equity ownership of hospitals and health systems, as well as a lawsuit from the FTC targeting private equity's consolidation strategy among physician groups.
“Private equity is increasingly consequential in societal spending by insurers, employers and patients,” Dr. Zirui Song, an associate professor of healthcare policy at Harvard Medical School who studies private equity investment in healthcare, said via email.
A recent peer-reviewed study, co-authored by Song, found surgical infections, pressure ulcers and other hospital-acquired infections increased 25% among Medicare patients at private equity-owned hospitals compared with a peer group.
In addition to the investigation, the FTC hosted a public forum Tuesday on the role of private equity investment in healthcare markets.
