Concerns Continue Over Private Equity’s Reach Into Healthcare
— Rising costs have left many hospitals vulnerable to “the sway of private equity,” one expert says
by Shannon Firth, Washington Correspondent, MedPage Today, January 2, 2025
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“at its simplest, the private equity model is wealth extraction.” Private equity firms acquire a health system, sell the real estate, force the hospital to pay rent it wasn’t paying before, and then take out loans, giving itself dividends that hospitals have to repay, McNamara told MedPage Today. They also pressure physicians to see more patients in less time, cut staff, and replace physicians with less costly non-physicians, he noted, in addition to raising costs for patients.
The acquired hospitals generally aren’t lucrative or well-run, he added. “When you put [that burden] on top of them, collapse is pretty much inevitable, unless the state bails them out, or some other buyers come in,” McNamara said. “Doctors swore an oath to put the patient first. Private equity doesn’t do that.”… [end quote]
Don’t hold your breath for getting this problem under control. Investigate ownership of your hospital and don’t go to one owned by private equity.
Small local hospitals seem to be stressed financially by our current system. Many are closing. Some get sold in hopes the buyer will have better access to resources. But they can easily move toward closing the hospital.
What is the solution to this problem? Subsidies for smaller hospitals is one way. The better solution is universal health insurance. The bottom line is usually not enough insured patients. Too many uninsured need to be served.
Traditional Medicare pays higher reimbursements to rural hospitals to adjust for their higher cost of operation. Medicare Advantage does not.
Rural folks have a propensity to sign up for Medicare Advantage believing that the for-profit, United Healthcare model is cheaper and more efficient. That results in lower revenue for rural hospitals.
Lack of antitrust enforcement has been going on since 1980 and feeds the bipartisan culture of corruption in Washington. Until people wake up to the evil that Brian Thompson and Andrew Witty were/are up to at United Healthcare, things will only get worse.