- Private equity ownership of healthcare facilities generally results in higher costs and negative impacts on quality of care, according to a new analysis of research from the past two decades published in the BMJ.
- Nine out of 12 studies that analyzed cost found higher costs to patients or payers at care sites owned by PE firms — the “most consistent pattern” in the review, researchers said.
- Of the 27 studies looking at healthcare quality, 12 found harmful impacts as a result of PE ownership. Just three found beneficial impacts. PE ownership’s impact on health outcomes and costs to operators was mixed, and the review couldn’t draw definitive conclusions as a result, researchers said.
In a bid to consolidate the existing field of research on PE ownership, researchers systematically reviewed studies from 2000 to 2023 for the paper published last week in the medical journal.
Across the 55 studies included in the BMJ’s review, researchers found no consistently beneficial impacts of PE ownership.
“The results of this study confirm the need for increased rigorous research on private equity ownership in healthcare,” researchers said. “This said, the current body of evidence is robust enough to confirm that private equity ownership is a consequential and increasingly prominent element in healthcare, warranting surveillance, reporting, and possibly increased regulation.”
Private equity investments in healthcare facilities have increased over the past decade, with acquisitions surging during the COVID-19 pandemic. Global healthcare investments and acquisitions from PE firms exceeded $200 billion in 2021, and firms closed the second-highest amount of deals in 2022.
As investments have accelerated, so too have worries from the medical community and regulators, sparking investigations into firms that lead healthcare deals.
President Joe Biden has specifically criticized rising PE ownership of nursing homes, as national exposes showed decreasing care quality and rising patient deaths at senior facilities.
The BMJ review found nursing homes generally suffered after a PE buy, with the majority of studies suggesting care degradation following an acquisition. However, overall impacts were mixed.
In addition to quality and cost effects, the study found a “noticeable influx” of ownership over the past 10 to15 years, with PE deal counts often increasing annually. Nursing homes were the most common acquisition by private equity firms, followed by dermatology, opthamology and hospital settings, and general physician groups.
Regulators are attempting to crack down on private equity acquisitions, including roll-ups — when firms buy and merge multiple smaller companies into one business.
Antitrust regulators proposed new merger guidelines last week that would allow them to consider each transaction in a chain of acquisitions. The guidelines, if finalized, could have a chilling effect on PE roll-ups and healthcare M&A more broadly, experts say.