More than half of children’s hospital patients rely on Medicaid or CHIP, yet private equity is moving steadily into pediatrics, a sector that has received far less attention than adult care. While headlines focus on nursing homes, physician groups, and adult hospitals, the risks in pediatrics may be greater and the margin for error much smaller.
Children’s hospitals already operate on razor thin margins, with Medicaid reimbursement rarely covering the cost of care. Pediatric systems also carry a wide range of essential but unprofitable services, including community prevention programs, NICU follow up, and pediatric behavioral health. Unlike adult hospitals, which can offset these losses with lucrative procedures, children’s hospitals have no such cushion, which makes them especially vulnerable if private equity strategies are applied bluntly.
Private equity backed firms have already begun investing in urgent care chains that treat children, ABA therapy for autism, pediatric dental groups, and outpatient behavioral health. In adult care, consolidation has often brought higher charges, workforce strain, and reduced flexibility, and there is little reason to assume pediatrics would be immune. What remains missing is systematic tracking of how these changes affect children’s outcomes.
Policymakers are beginning to take notice, as Massachusetts recently passed one of the nation’s toughest laws on private equity in healthcare. The law requires disclosure of ownership and financial reporting, and while it was not written specifically for pediatrics, its framework could have major implications for children’s hospitals. At the federal level, oversight remains piecemeal, and requiring ownership transparency along with monitoring of access for Medicaid heavy populations would be a logical first step.
For pediatric leaders, the best defense may be a proactive strategy. That means shoring up access in areas most vulnerable to private equity investment, such as urgent care, dental, and behavioral health, and ensuring referral streams remain within mission driven networks. It also means investing in patient experience and outpatient services in ways that make private equity backed competitors less attractive to families. At the policy level, children’s systems should help shape guardrails that protect access for Medicaid heavy populations while still allowing innovation.
The bottom line is that pediatrics remains a blind spot in the private equity debate. Children are the most vulnerable patients we have, and if profit driven models expand here without careful guardrails, the consequences could be severe. Pediatrics cannot remain an afterthought in this debate, and leaders must act now before capital accelerates further.
