HHS report highlights cost, access, quality concerns with private equity in healthcare

Editor's Note

Growing consolidation and private equity investments in health care are driving up costs, reducing access, and raising quality concerns, according to a new report from HHS.

According to HHS’ January 15 announcement, the report stems from a tri-agency effort by HHS, the Federal Trade Commission (FTC), and the Department of Justice (DOJ) to promote competition in health care markets. Informed by over 2,000 public comments, the report synthesizes evidence and policy ideas without aiming to be a comprehensive review.

Comments focused on two trends: the increasing consolidation of health care markets, and the growing influence of private equity and other private investors. According to the announcement, key themes included: 

• Provider consolidation leading to higher prices and diminished access for patients
• Mergers and acquisitions (M&A), especially those involving PE firms, resulting in process changes and quality reductions
• Physicians reporting mixed experiences with working with PE firms
• Widespread demand for transparency in PE-led transactions
• Dissatisfaction with private health insurers, particularly vertically integrated models.

Case studies detailed the negative consequences of PE activity, such as hospitals burdened with debt, asset sales, dividend payouts to investors, and outcomes like bankruptcy, service closures, staffing shortages, and quality concerns. Among other means of addressing these issues, the report recommends increasing M&A disclosure requirements; strengthening enforcement actions to prevent anticompetitive hospital mergers and rollups; and promoting interagency collaboration and data sharing.