Government Agencies Investigate Private Equity Health Care Deals

By Consumers for Quality Care, on March 27, 2024

Multiple government agencies are launching a coordinated public inquiry into the control and influence exerted by private equity firms in the health care industry, according to Healthcare Dive. 

The Department of Justice (DOJ), Federal Trade Commission (FTC), and Department of Health and Human Services (HHS) formally submitted a request for information into these private equity transactions, looking into alleged business practices that put profits ahead of consumer care and worker safety. 

“Through this inquiry the FTC will continue scrutinizing private equity roll-ups, strip-and-flip tactics, and other financial plays that can enrich executives but leave the American public worse off,” FTC Chairperson Lina Khan stated in a press release.

Earlier this year, HHS created a new Chief Competition Officer role within the agency, tasking the officer with overseeing health care consolidation. At the end of last year, the DOJ and FTC finalized new merger guidelines designed to delay possible anti-consumer consolidation in the health care industry.

In recent years, private-equity firms have been more involved in health care markets. Between 2012 and 2021, the rate at which private-equity firms acquired independently owned physician practices increased seven-fold. In 2023, an estimated 788 deals between private equity sponsors took place, the third highest on record by deal count. 

Studies have shown that when health care providers merge, prices increase and the quality of care decreases. Citing these studies, officials from the Biden administration have scrutinized mergers in the health care industry more carefully than previous administrations had.

The corporatization of medicine hurts health care consumers, and private equity firms are accelerating that trend. CQC urges lawmakers, regulators, and other stakeholders to fix this deeply broken system. Health care providers – and the companies that own them – should always put patients before profits.