Private Equity’s Anti-Consumer Business Tactics Responsible for One in Five Health Care Bankruptcies 

By Consumers for Quality Care, on May 8, 2024

A new report by the Private Equity Stakeholder Project (PESP) is shedding light on how private equity hurts health care consumers across the country, according to Healthcare Dive. 

Last year saw the highest number of health care bankruptcy claims in five years, with over 20 percent of the claims coming from health care systems owned by private equity firms. PESP predicts that 2024 may outpace last year’s private equity-backed bankruptcies, in part because 42 of the 45 “most distressed” health care companies are now owned by private equity firms, according to Moody’s Ratings.  

Private equity-backed health care companies are considered extremely high risk due to their engagement in “aggressive debt-funded growth strategies,” according to Eileen O’Grady, Health Care Director at PESP. Too often, these firms benefit financially at the expense of health care systems and consumers. 

Both lawmakers and regulators are investigating the role private equity firms currently play in our health care system and how their business practices often hurt consumers. The U.S. Senate is examining the prevalence of private equity ventures within the health care system, and earlier this year, the Department of Justice (DOJ), Federal Trade Commission (FTC), and Department of Health and Human Services (HHS) formally submitted a request for information about these private equity transactions, looking into alleged business practices that put profits ahead of consumer care and worker safety.  

CQC is deeply troubled by the growing trend of private equity-owned hospitals, especially given that their business tactics don’t align with what patients need. Health care providers must prioritize patients over profits to ensure lower cost, high quality care.