The surge of corporate control over U.S. healthcare has gained federal attention. The odds of your next doctor being a corporate employee are 3-1, an influx that has prompted regulators and legislators alike to question if such a ratio is detrimental to health outcomes. Three federal agencies announced a cross-government investigation into the expanding role of corporate and private-equity (PE) investment in the industry on March 5.
On a state level, action has also been taken with nearly a dozen state legislatures either placing or considering tighter oversight on corporate acquisitions and mergers in healthcare. Concerns have been raised regarding corporate acquisitions maximizing profit at the potential expense of quality care.
In a recent physician survey published in JAMA Internal Medicine, over half the respondents (60.8%) viewed private equity involvement negatively, while only 10.5% saw it as positive or somewhat positive. The corporate takeover of healthcare has come under fire for the potential contribution to escalated physician and nurse burnout and potential deterioration of patient care.
Data from the field adds weight to these concerns. A JAMA study on PE-owned hospitals found higher rates of hospital-acquired adverse events including infections, falls, and medication errors. Recent studies also uncovered links between private-equity investments and cost increases for payers and patients, and unsavory outcomes linked to PE-owned nursing homes.
Tackling these issues, legislators in Indiana and several other states are proposing laws that require healthcare entities and PE firms to give advance notice prior to any acquisition or merger.
These movements echo the question of whether American healthcare is heading towards a similar path as the banking sector’s consolidation into a handful of powerful entities. With the sixfold increase in PE acquisitions of physician practices in the past decade, this looks increasingly possible, setting the scene for the corporatization of healthcare across America.
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