Senate Seeks to Expose Private Equity’s Toll on Health Care Service Providers and Consumers 

By Consumers for Quality Care, on April 24, 2024

The U.S. Senate is examining the prevalence of private equity ventures within the health care system, particularly deals that result in these firms turning massive profits while hospitals are left in financial free fall with an inability to provide quality care for patients, according to Healthcare Dive. 

The Senate’s involvement in this issue comes as more than a quarter of all rural hospitals in the country are now owned by private equity firms. 

Earlier this month, Senator Gary Peters (D-MI) launched an inquiry into private equity ownership’s effect on emergency units at hospitals. Senator Peters expressed his concern over how private equity firms’ business models foster scenarios in which the quality of care is compromised in order to pursue massive profits.  

Meanwhile, a subcommittee field hearing was held in Massachusetts to examine the “corporate greed” demonstrated by Cerberus Capital Management, which bought Steward Health Care in 2010 and turned an $800 million profit a decade later as it exited the deal but left Steward Health on the verge of financial collapse. One of the witnesses, Donald Berwick, President Emeritus and Senior Fellow at the Institute for Healthcare Improvement, couldn’t recall a single instance in which a private equity firm improved a health care system after acquisition. During the hearing, Senators Ed Markey (D-MA) and Elizabeth Warren (D-MA) called for increased scrutiny on private equity firms, particularly with deals that come at the detriment of hospital systems and consumers.  

All too often, private equity-owned health care systems have pressured physicians to manipulate certain health care metrics such as wait times, engage in questionable or risky medical practices, or mark up the costs of medical services. Rising medical complications among patients have also been found in hospitals acquired by private equity firms.  

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