Private Equity’s Involvement in Health Care Raises Alarms, Prompts Legislative Response
By Consumers for Quality Care, on April 24, 2024
According to Axios, lawmakers are investigating private equity’s effect on health care, citing concerns about gaps in federal oversight and the decline in patient care standards observed in numerous hospitals following private equity investments.
Earlier this month, U.S. Senator Ed Markey (D-MA) held a hearing with federal and state officials to examine Cerberus Capital Management’s decade-long involvement with Steward Health. The private equity firm took over the health system, turned a massive profit, and then left Steward Health in “financial free fall,” impairing its ability to provide quality care to its patients. Shortly after the hearing, Senator Markey introduced the Health Over Wealth Act to establish safeguards against unchecked private equity deals in health care service companies.
The Cerberus/Steward Health situation is the latest in a string of events that have both lawmakers and the Biden administration scrutinizing private equity’s role in health care. Too often, these firms benefit financially at the expense of hospital systems and consumers. The frequency of these stories has led industry professionals, such as Eileen Appelbaum, co-director of the Center for Economic and Policy Research, to advocate for additional oversight. “Legislation is urgently needed to give the government the tools to hold PE firms and other bad for-profit actors accountable for looting health providers and weakening America’s health care system,” said Appelbaum.
Senator Markey’s proposed legislation requires private equity-owned health care service providers to furnish a list of financial documents and reports, aimed at increasing transparency to help regulators better evaluate how private equity ownership influences health care services and the quality care they provide to consumers.
CQC believes that health care providers – and the companies that own them – should always put patients before profits and encourages lawmakers to scrutinize private equity’s role in the health care system.
