DAILY TRIFECTA: Paging Doctor Gekko...
Roll-Up, Up & Away in their beautiful ballooning bank accounts
THE SET-UP: It’s hard to imagine a better set-up to private equity healthcare takeover than the “Shkreli Awards,” which Kaiser Health News describes as “a kind of Oscars for the most outrageous examples of greed, fraud, and general brokenness in American health care.”
Every year, the Lown Institute issues Shkrelis to the “10 worst examples of ‘profiteering and dysfunction’ in health care.” Lown Institute President Vikas Saini spoke to KHN’s “Arm and a Leg” podcast, which you can hear here. Saini says the ten stories paint “a picture of a health care system in desperate need of transformation.”
It’s a sentiment echoed by Lina Khan in a new interview with Financial Times. The newly former head of the Federal Trade Commission said Americans face “catastrophic consequences” if the Trump Administration’s “antitrust officials fail to scrutinise private equity groups that are buying up chunks of the US economy.”
Khan’s particularly concerned about private equity rolling out its destructive “roll-up” model in healthcare:
In private equity, a key focus was roll-ups in the healthcare sector. She argued that these roll-ups — in which companies purchase and merge several businesses in the same sector — and “strip and flip” models — where the acquired groups’ assets are sold off — often leave those businesses indebted and weakened.
“I heard a flood of concern from healthcare workers, from ER doctors . . . about the private equity roll-ups that were resulting in worse quality care, higher prices,” Khan said.
“These are just market realities that are not going away,” she added.
In December, Reuters found “dealmakers” salivating at the prospect of “Mergers and Acquisitions” (M&A) under the far-less-watchful eye of a Trump Administration. And Lina Khan’s warnings are unlikely to impress the Milton Friedmanites tasked with implementing Project 2025 and its Reagan Era “philosophy” of regulatory indifference.
If history’s a guide, we are far more likely to see reboots of Wall Street and Barbarians At The Gate than a return to Marcus Welby, MD. - jp
TITLE: HHS Issues Report on Consolidation and Private Equity in Health Care Markets
https://www.jdsupra.com/legalnews/hhs-issues-report-on-consolidation-and-8045582/
EXCERPTS: In the Report, HHS makes the following assertions: (1) provider consolidation increases prices and reduces access for patients; (2) M&A in health care services, especially in private equity funded transactions, results in process changes and quality reductions; (3) reviews from physicians that work with private equity firms are mixed; (4) there is widespread desire for transparency on private equity led transactions; and (5) there is dissatisfaction with private health insurers, especially vertically integrated insurers.
HHS also sets forth certain policy considerations in the Report, including the following:
scrutinizing potentially harmful transactions and engaging in more vigorous antitrust enforcement to stop or reverse the trend of consolidation;
improving health care entity ownership transparency, including expanding upon CMS's nursing home ownership transparency rule;
enhancing health care M&A disclosure by reducing reporting thresholds, mandating review and approval, and providing relevant authorities with the necessary data and resources to review health care transactions; and
furthering data sharing and collaboration across agencies, Congress, and state and local authorities in a comprehensive government approach to foster competition.
The timing of the Report is notable, as it was issued in the final days of the outgoing Biden Administration. It remains to be seen whether private equity investment in health care will continue to be an area of focus for the agencies under the second Trump Administration. Under the first Trump Administration, the FTC challenged a number of proposed deals involving large health systems and insurers, but transactions involving private equity sponsors were not subject to the same level of scrutiny. However, there are signs of growing bipartisan support to scrutinize private equity’s role in health care. Earlier this month, the Senate Budget Committee chaired by Senators Sheldon Whitehouse (D-RI) and Charles Grassley (R-IA) issued a bipartisan staff report criticizing private equity’s impact on the U.S. health care system.
The full text of HHS’s Report is available here.
TITLE: Private equity ownership improves home health agency efficiency but raises care questions, study finds
https://www.mcknightsseniorliving.com/news/private-equity-ownership-improves-home-health-agency-efficiency-but-raises-care-questions-study-finds/
EXCERPTS: Home health agencies owned by private equity firms are more efficient than others, but the “focus on short-term gains may compromise long-term patient care,” according to the findings of a study published in the journal Science Direct.
Mohammad Ishtiaque Rahman, PhD, an assistant professor of computer information systems at Thomas More University in Crestview Hills, KY, compared care quality, patient outcomes and operational efficiency of home health agencies owned and not owned by private equity firms by examining data from the Centers for Medicare & Medicaid Services’ Home Health Compare dataset covering 2017 to 2023.
His findings jibe with those in a Senate Budget Committee report on private equity investment in hospitals published earlier this month.
“Private equity has infected our healthcare system, putting patients, communities and providers at risk,” Committee Chair Sen. Sheldon Whitehouse (D-RI) said. “As our investigation revealed, these financial entities are putting their own profits over patients, leading to health and safety violations, chronic understaffing and hospital closures.”
The number of healthcare businesses purchased by private equity firms increased from 352 in 2010 to 937 in 2020 in deals totaling $806 billion, according to a report published this month by the US Department of Health and Human Services. The transactions were related to care provision for older adults and disabled individuals, inpatient and outpatient services and pharmaceuticals.
Private equity’s involvement in skilled nursing and assisted living recently has been the target of several state and federal bills. An analysis of California assisted living community and nursing home data, however, challenged the belief that care standards decline after changes of ownership and private equity-funded mergers and acquisitions.
TITLE: Wall Street Is Jacking Up The Cost Of Your Doctor Visits
https://www.levernews.com/wall-street-is-jacking-the-cost-of-your-doctor-visits/
EXCERPTS: A groundbreaking new study published in the medical journal JAMA Health Forum found that, of the nearly 200,000 primary care physicians analyzed, the percentage of doctors affiliated with hospital systems has almost doubled since 2009, with about half of general practitioners affiliated with a hospital in 2022. Another small but growing number of family doctors have been selling their practices to private equity firms encroaching on the health care industry.
As of 2023, nearly four in five physicians were employees of hospital systems, private equity firms, insurance giants, or other corporations.
These affiliations come with heftier price tags: according to the study, prices for office visits are 11 percent higher for hospital-affiliated family doctors and 8 percent higher for private-equity-affiliated doctors as of 2022.
Those costs add up. The study’s authors found that in 2022, commercial health insurers spent up to $1.8 billion more on hospital-affiliated doctors than independent providers and possibly millions more for private-equity-affiliated providers. Consequently, health insurers are raising their premiums year over year, citing rising medical costs among their top reasons.
“The growing acquisition of physician practices by hospitals and health systems and [private equity] firms is one of the most important recent trends in the organization of physician practices in the [United States],” the JAMA study’s authors wrote, who noted this is the first known analysis comparing commercial insurance prices at hospital-affiliated, private-equity-affiliated, and independent primary care practices.
While corporations say their market consolidations can help meet the growing needs of the health care system and reduce inefficiencies, studies have found that both hospital and private equity buy-ups come with poorer patient experiences and dips in physician income.
Family doctors are increasingly susceptible to selling their practices or entering a hospital system thanks to low reimbursement rates from insurance companies, making it increasingly difficult for them to remain financially viable while operating independently. Many providers are also attracted to the fact that practices owned by larger corporations have more power to negotiate higher fees from insurers.
The acquisition of family practices helps hospitals increase their market share and revenue, with hospital prices increasing significantly post-acquisition.
Wall Street is also eager to buy up physician practices: Private equity firms are seeing major returns on their health care investments, exceeding 20 percent in just three to five years. In the past decade, private equity firms have spent nearly $1 trillion on roughly eight thousand health care deals, including primary care practices.
Patients, however, aren’t necessarily benefiting from these investment deals. In fact, the larger, more complex health care systems formed by consolidating hospitals and physician practices do not generally deliver better quality care, according to a 2020 study.
Private equity buy-ups are also impacting patients. In a study published this January, researchers examined seventy-three hospitals that were recently acquired by private equity firms and found that patients’ self-reported care experience worsened following the acquisitions compared to independent hospitals. Another study found that patients were more likely to fall and contract new infections during a stay at a private-equity-owned hospital facility.
A yearlong congressional investigation into two private-equity-owned hospitals uncovered similar findings: private equity firms reap massive payouts through these investments, while patient care deteriorates.
Other research shows that increased insurance costs for hospital and private-equity-affiliated doctors eventually get passed onto patients.
A study found that in 2022, private and employer-sponsored health insurance plans paid on average 254 percent more to hospitals than what Medicare, the federal health care program for senior citizens, would have paid for the same services at the same facilities.
These higher costs ultimately result in higher premiums for beneficiaries. This year will be the third consecutive year in which employee health care costs increase by more than 5 percent.
Premiums for individual insurance plans offered through the Affordable Care Act’s Health Insurance Marketplace are also rising, with rates potentially increasing by an average of 7 percent this year. According to an analysis by the health policy and research institute KFF, alongside inflation and the rising costs of prescription drugs, spikes in health care prices at hospitals and doctors’ offices are a key factor in driving up premium rates.
“The cost of health care has been outpacing wage growth for patients for decades, putting strain on both public and private budgets and limiting access,” noted a new report by the federal Department of Health and Human Services on consolidation and private equity in health care markets. “One of the main factors contributing to unsustainable health care inflation has been growing consolidation in the health care sector and the lack of meaningful competition.”
SEE ALSO:
‘It’s a death sentence’: US health insurance system is failing, say doctors
https://www.theguardian.com/us-news/2025/jan/26/us-health-insurance-system-doctors