Private equity is reshaping healthcare in ways that can harm patients. These investment firms buy hospitals and clinics, using borrowed money to boost profits. While they aim for high returns, the strategies they use often prioritize financial gains over patient care.
A tragic case highlighting this issue is that of Sungida Rashid. After childbirth, she died from internal bleeding because her hospital’s critical equipment was taken back due to unpaid bills. The hospital’s focus on paying debts rather than caring for patients led to her death. Before filing for bankruptcy in 2024, Steward Health Care, the company that owned the hospital, had taken out over $800 million through intricate financial maneuvers.
Private equity ownership has grown significantly. As of 2023, around 11% of U.S. hospitals and 30% of for-profit hospitals are owned by these firms. They also control many emergency and specialty care facilities. This trend raises alarms since many patients depend on community hospitals that prioritize care, not profits.
The current healthcare regulations aren’t equipped to handle the complexities brought by private equity. Most rules focus on hospital quality but ignore how these firms operate. Recent state efforts, like Massachusetts’ new laws requiring transparency in private equity transactions, mark a shift. These laws ask for disclosures about debt levels and operational changes, aiming to protect patient care.
Experts have noted a troubling link between private equity ownership and lower care quality. A study from the University of Chicago found a 25.4% increase in hospital-acquired conditions after private equity took over. Staffing cuts appear to play a significant role in this decline.
Furthermore, a recent article in BMJ reported a 10.3% increase in 90-day mortality rates at private equity-owned hospitals. Costs for privately insured patients also rose by an average of 32%. Vulnerable populations, including Medicaid patients, faced longer wait times, highlighting the disparities in care that can arise from profit-driven motives.
Despite these concerns, some argue that private equity can help struggling hospitals by bringing in necessary capital and improving operations. The debate continues as stakeholders seek a balance between financial sustainability and patient well-being.
In May 2024, the Federal Trade Commission (FTC) began investigating private equity firms for using acquisition strategies that suppress competition. This inquiry looks at how small acquisitions can create dominant market positions while avoiding stricter merger reviews.
Overall, the growing influence of private equity in healthcare calls for careful oversight. As this sector evolves, ensuring patient care remains paramount should be the focus of future reforms.
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