The harmful effects of private equity in the healthcare delivery system "deserves ongoing scrutiny and greater research," HHS said in a Jan. 15 report.
The report stems from a March 2024 request for information into how healthcare market transactions by health systems, insurers, private equity, and other investors may drive consolidation, harm patient care and affordability, endanger workers and burden taxpayers.
More than 2,000 comments were submitted from patients, physicians, health systems, insurers, industry associations, labor unions, and academic researchers. The report was prepared in consultation with the Federal Trade Commission and Justice Department.
HHS said one of the key findings from its request for information was the volume of comments and criticism targeting private equity deals.
"In theory, private investment in health care services could lead to increases in output, reduced prices, and improved quality, but the comments we received — which are consistent with the growing body of research — suggest that the opposite is true," the report said.
HHS said case studies highlighted how private equity firms "loaded hospitals up with debt, sold the hospitals' underlying assets, and paid investors through dividends and financially engineered sales, resulting in negative consequences such as bankruptcy, closure of facilities and service lines, staffing shortages, and patient safety and quality concerns."
The report noted that in 2023, at least 21% of the healthcare that filed for bankruptcy were private equity-owned.
"PE ownership in health care appears to present new and unique risks related to and apart from consolidation," the report said. "HHS, DOJ, and FTC must continue to monitor and address these issues, welcome partnerships with states and Congress to prevent harm from further consolidation, and collaborate with public and private partners in identifying effective remedies."
Read the full report here.