Patients and providers reveal how private equity is hollowing out our health care system
Over the past decade, private equity firms have poured more than $750 billion into the health care sector, buying out hospitals, nursing homes, private practices, and more. These Wall Street firms use investor money and debt to acquire companies, implement operational improvements, and then sell them at a profit after a few years of ownership. They claim to benefit the sector by increasing efficiency and providing capital to expand medical practices.
But rather than delivering lower prices and better quality to patients, private equity’s buying frenzy has resulted in concentrated market power and contributed to a brewing public health crisis. At Omidyar Network, we’ve been working to call attention to these harms and rewire the rules of our financial system so that shareholder profit does not come at the expense of individuals and communities.
Patients and their providers have been frantically sounding the alarm about this crisis. One indication of their level of concern: the nearly 7,000 public comments submitted to a recent request for information (RFI) from the Federal Trade Commission, Health and Human Services, and the Department of Justice.
An analysis of select responses revealed disturbing trends, including worsening quality of care, physician burnout, and abuse of monopoly power. The comments offer undeniable evidence that the profit-driven private equity business model fundamentally contradicts with health care’s mission to provide patient-centered care.
Responses to the RFI describe how reckless, greedy practices of private equity put patients at risk. A diagnostic radiologist described utter dismay at the “immoral, unethical, and dangerous practice of medicine” encouraged by their private equity owners. “They invoke pressure to crank through more studies per unit of time, which increases the risk of missed findings,” and encourage the radiologists “to focus on quantity over quality, under the premise that a missed finding can be paid out with a settlement, if civil litigation ensues.”
And the evidence is more than anecdotal. According to a recent study from Harvard Medical School, “Medicare patients had a 25% increase in hospital-acquired complications” and were more likely to fall, get new infections, or experience other types of harm after hospitals were acquired by private equity.
Other comments describe feelings of burnout and moral injury among providers so severe that they are driving some to leave the profession altogether. “Private equity firms buying physicians’ practices is slowly burning physicians out. If we continue on this path, health care in America will implode,” one doctor wrote. According to a recent American Medical Association survey, over half of US physicians reported burnout in 2023, amid a national shortage of doctors. They are fed up with a system that strips their autonomy and pressures them to make decisions informed by profit motives rather than medical knowledge.
Unfortunately, private equity does not only affect individual patients and providers. Its anti-competitive practices now threaten the entire health care system. Many comments came from doctors in private-equity-owned practices describing how firms have used anti-competitive practices to exploit them and their patients. They describe how these firms establish regional monopolies, then jack up prices and slash operating expenses to juice profits. One doctor shared that they were fired for speaking out against their private equity ownership’s decisions, noting the non-compete clauses that doctors are forced to sign “create a culture where physicians either comply with private equity’s profit-focused practices against patient care” or risk retaliation, often in the form of firing or litigation.
The numbers bear these doctors’ experiences. A recent study found that in 13% of US metropolitan areas a single private equity firm owns more than half of the physician market for certain specialties. And in 50 metropolitan areas a single private equity firm held greater than 50% market share in at least one specialty.
So what does this all add up to? The CEO of a rural Montana hospital put it best: “Decisions are being made to create financial efficiency, with little regard to the health of the system, patient, or provider.”
Our collective efforts
Omidyar Network has supported a range of partners that are working to call attention to these harms and rewire the rules of our financial system so that shareholder profit does not come at patients’ expense.
Eileen Appelbaum of the Center for Economic and Policy Research and Rosemary Batt of Cornell University have conducted extensive research on private equity industry’s role in American health care, detailing risks and harms to patients in sectors including nursing homes, hospice, behavioral health, and the practice of surprise medical billing at hospitals. The Private Equity Stakeholder Project has done critical work to document private equity’s growing footprint and impact in the health care sector: tracking private equity ownership of hospitals and bankruptcies of private-equity-owned health care companies, as well as partnering with patient and medical advocacy groups.
Americans for Financial Reform has been a leading advocacy voice in Washington calling for policy reforms to increase transparency of private equity’s role in health care, and rein in practices and misaligned incentives that create risks for patients. ER doctor Mitchell Li founded Take Medicine Back in 2021 to organize physicians, reclaim their profession from for-profit interests, and push back on the corporate practice of medicine.
As a result of these efforts, the private equity acquisition spree has begun to catch the attention of policymakers on Capitol Hill, including Sen. Sheldon Whitehouse (D-RI) and Sen. Chuck Grassley (R-Iowa), who recently announced a bipartisan investigation into private equity hospital ownership, and this new push from Health and Human Services, Department of Justice, and the Federal Trade Commission. The three agencies say they will use the RFI responses tocapture emerging trends in the health care space, prioritize enforcement efforts, and inform new regulation “aimed at promoting and protecting competition in health care markets” and ensuring “access to quality, affordable health care items and services.”
It’s clear that as private equity’s stake in America’s health care system continues to grow, so too do concerns among policymakers and the public about whether Wall Street’s single-minded pursuit of profit is compatible with a system intended to prioritize patient health. For the thousands of doctors, nurses, and patients who submitted comments, the answer is already clear: the private equity business model is fundamentally at odds with the core purpose of medicine. Private equity must be reined in.
The potential consequences if it goes unchecked? “Within 30–40 years, there will be nobody to care for our loved ones.”
