Watchdog warns of risks to patients as private equity’s stake in US healthcare grows

Private equity firms have an increasing footprint in American healthcare. Photograph: SDI Productions/Getty Images View image in fullscreen Private equity firms have an increasing footprint in American healthcare. Photograph: SDI Productions/Getty Images Watchdog warns of risks to patients as private equity’s stake in US healthcare grows New report details slew of ventures between private equity and nonprofits and calls for greater government oversight A watchdog group is calling for greater government oversight of joint ventures between private equity firms and non-profit healthcare providers, arguing that the arrangements could present “risks” to “patients, payers and employees”. ‘Everyone dies of cancer’: the Puerto Rican island poisoned by the US navy Read more In a new report, Private Equity Stakeholder Project (PESP), a vocal critic of the industry, detailed more than 500 joint ventures between private equity and nonprofit healthcare providers – ranging from rural hospitals to major religiously affiliated health systems to hospice care providers. The group argued those risks could include extraction of profit and a decline in quality of care. “This is the challenge with private equity – it’s private, so they don’t have to report what they own,” said Jim Baker, founder and executive director of PESP. “We think this just scratches the surface.” The report, “ Private equity’s joint venture takeover of nonprofit healthcare ”, details the legal mechanisms that allow such partnerships and four case studies that the group argues represent how private equity investments can change nonprofit healthcare. Private equity funds have an increasing footprint in American healthcare, investing more than $1tn in debt-financed healthcare deals in the last decade, according to researchers at New York University. In healthcare, the industry has been the subject of increasing scrutiny from lawmakers and academics who say debt-fueled buying and short investment horizons are at odds with the practice of medicine. The report also significantly expands on PESP’s work tracking hospitals wholly owned by private equity. PESP reports that 488 hospitals, or 8.5% of all private hospitals, are owned by private equity. “I don’t think it’s an irrelevant question to ask whether there’s some tension between a nonprofit hospital and a for-profit investor group joining forces,” said Erin Fuse Brown, a health policy professor at Brown University School of Public Health, and the author of a recent Stanford Law Review article on private equity in healthcare. Nonprofits are “legally obligated to pursue their charitable purpose”, she said. Private equity firms make up a vast industry, employing more than 13 million American workers and, by the industry’s account , contributing $2tn to US GDP across diverse industries, from housing to veterinary care . Such funds are typically made up of “accredited investors,” according to the Securities and Exchange Commission , including high net-w