Good old American capitalism is getting a hard look under the healthcare regulatory microscope. And not a moment too soon, in the eyes of some.
For your next doctor’s appointment, odds are nearly 3-1 that the physician who sees you is a corporate employee. And regulators and legislators far and wide are saying that this ratio may be harmful to your health.
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Corporate control of U.S. healthcare has reached such proportions that three federal agencies announced on March 5 a cross-government investigation into the mushrooming role of corporate and private-equity (PE) investment in the industry.
States are also getting in on the oversight action. To date, nearly a dozen state legislatures have passed laws or are in the process of enacting regulation heightening oversight of corporate acquisitions and mergers in healthcare.
“Private equity firms and other corporate owners are increasingly involved in healthcare system transactions, and, at times, those transactions may lead to a maximizing of profits at the expense of quality care,” said a Federal Trade Commission press release announcing the inquiry.
For more than a few healthcare providers, that is an understatement. In a physician survey published in JAMA Internal Medicine on March 11, three out of five respondents (60.8%) said they view private equity involvement negatively, while only 10.5% saw it as positive or somewhat positive.
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Doctors around the country are stridently blaming corporate takeover of healthcare for escalating physician and nurse burnout since the Covid-19 pandemic and for deteriorating patient care due to increased pressure on clinicians to see more patients in the same or less time.
For example, Jonathan Jones, MD, president of the American Academy of Emergency Medicine, said he left his job in a community hospital when a private equity-controlled group took over his department and doubled the patient-to-physician ratio.
A JAMA study published December 26, 2023, found that patients receiving care at PE-owned hospitals experienced a higher rate of hospital-acquired adverse events – such as bloodstream infections, falls, and medication errors – than patients at non-PE-owned hospitals. The difference was as much as 25% for Medicare patients.
Another study published in the BMJ uncovered a link between private-equity investment and cost increases for payers and patients as high as 32%. Yet another study found PE-owned nursing homes were associated with 20,000 additional deaths over a 12-year period.
The disparities are driving Indiana legislators to join those in nine other states in requiring healthcare entities and PE firms to give advance notice to state officials prior to any acquisition or merger.
If the legislation passes, the Hoosier State will become the first red state to join its all-blue predecessors in enacting similar mandates: New York, Oregon, California, Massachusetts, Minnesota, Nevada, Connecticut, Illinois, and Washington.
Of course, the question arises as to whether the toothpaste can be returned to the tube. For a variety of economic reasons, independent medical practices may be headed toward total extinction. Principally, commercial insurers’ muscle in negotiating provider reimbursements put the declining number of independents at a sizable disadvantage.
But will American healthcare go the way of the banking sector’s consolidation into a handful of all-powerful titans? Possibly so. One study found that PE acquisitions of physician practices increased sixfold in a decade. Another reported that in one of eight metropolitan areas nationwide, a single PE firm owns more than half of market share for certain specialties.
Alas, the corporately employed doctor will see you now. But only for a few minutes.
Editor’s Note: This article first appeared in the Healthcare Docket newsletter. Click here to subscribe and read the full newsletter.
