Private equity firms have long been active in healthcare settings. Recently, however, acquisitions of physician practices have blasted into the stratosphere. Private equity investors spent more than $200 billion on healthcare acquisitions in 2021 alone and $1 trillion in the past decade.1 A recent study showed that in 13% of metropolitan areas, a single private equity firm owns more than half the market for certain specialties.2
The implications of this consolidation are concerning. Research has shown that mortality rates may slightly decrease, but adverse event rates increase in hospitals after they are acquired by private equity firms.3 The impact on the financial stability of patients and healthcare facilities and providers alike is more staggering. Patient costs increased by more than 30% in some cases, and nearly a quarter of all healthcare companies that declared bankruptcy in 2023 were owned by private equity firms.4,5
Federal regulators have finally begun to take note. Here is what rheumatologists need to know about what the federal government is doing to rein in healthcare consolidation and address its harmful impact on care quality. Note: Rheumatologists subjected to practices they feel are in violation of antitrust law can submit complaints at https://www.justice.gov/atr/HealthyCompetition.
Federal Actions
Earlier this year, the U.S. Department of Justice (DOJ), Federal Trade Commission (FTC) and Department of Health & Human Services (HHS) released a request for information seeking public comment on the intersection of antitrust law and certain types of private equity transactions in the healthcare sector. It also sought comment on the effects of consolidation in the healthcare sector, the types of transactions that most often lead to adverse healthcare outcomes, and what actions federal regulators should consider taking.
In recent months, the FTC and DOJ separately took action to rein in antitrust behavior. In April, the FTC banned noncompete agreements in the for-profit sector, which limit employment opportunities for many workers.6 In May, the DOJ formed the Antitrust Division’s Task Force on Health Care Monopolies and Collusion (HCMC).7 The aim of this task force is to steer the division’s approach to cracking down on actors who are acting against the public’s trust in the healthcare sector. As such, the HCMC will field anti-competition concerns from all stakeholders in the healthcare sector.
To assist the task force in this endeavor, ACR members can submit a complaint at https://www.justice.gov/atr/HealthyCompetition if they have been adversely impacted by healthcare consolidation. The site also provides links to the text of each federal antitrust law that applies to healthcare consolidation and lists relevant examples of behavior that violates these statutes.
References
- Private equity issue brief. AHIP. 2022 Sep 15. https://www.ahip.org/resources/ahip-private-equity-issue-brief.
- Scheffler RM, Alexander L, Fulton BD, et al. Monetizing medicine: Private equity and competition in physician practice markets. American Antitrust Institute. 2023 Jul 10. https://www.antitrustinstitute.org/wp-content/uploads/2023/07/AAI-UCB-EG_Private-Equity-I-Physician-Practice-Report_FINAL.pdf.
- Kannan S, Bruch JD, Song Z. Changes in hospital adverse events and patient outcomes associated with private equity acquisition. JAMA. 2023 Dec 26;330(24):2365–2375. https://pubmed.ncbi.nlm.nih.gov/38147093/.
- Borsa A, Bejarano G, Ellen M, Bruch JD. Evaluating trends in private equity ownership impacts on health outcomes, costs, and quality systematic review. BMJ. 2023 Jul 19:e075244. https://pubmed.ncbi.nlm.nih.gov/37468157/.
- Private equity healthcare bankruptcies are on the rise. Private Equity Stakeholder Project. https://pestakeholder.org/private-equity-healthcare-bankruptcies-are-on-the-rise/.
- FTC announces rule banning noncompetes. Federal Trade Commission. 2024 Apr 23. https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes.
- Assistant Attorney General Jonathan Kanter announces task force on health care monopolies and collusion. U.S. Department of Justice. 2024 May 9. https://www.justice.gov/opa/pr/assistant-attorney-general-jonathan-kanter-announces-task-force-health-care-monopolies-and/.
