A recent systematic review published in the esteemed peer-reviewed journal BMJ has provided valuable insights into the consequences of private equity investments in the healthcare sector. This pioneering study analyzed data from 55 empirical research studies across various countries, with a primary focus on the United States. It explored the effects of private equity ownership in diverse medical settings, including nursing homes, fertility centers, plastics, orthopedics, general hospitals, and specialized medical fields.
The Worrisome Results:
The study’s primary goal was to gain a comprehensive understanding of how private equity ownership affects the healthcare industry. By analyzing data from diverse medical settings, the researchers sought to unravel the implications and effects of private equity involvement in healthcare.
The findings revealed a concerning trend: private equity ownership in healthcare leads to increased expenses for patients. Unfortunately, the review did not find conclusive evidence supporting a positive impact on healthcare quality. Instead, it consistently demonstrated a negative effect on payers and patients, resulting in higher medical costs.
The study also investigated the effects of this trend on the quality of medical services. Interestingly, the review found mixed and sometimes, harmful effects on the administration of services in various medical settings. The limited volume of research in this area does, however, underscore the need for caution when generalizing the study’s findings to the global healthcare system, as the evidence primarily pertained to the United States.Â
Thus, we understand that patients and payers experience the burden of higher expenses, with very limited evidence supporting beneficial outcomes in the quality of medical care. While the trend of private equity ownership in the healthcare industry has been escalating at a rapid pace, the study highlighted the lack of positive impacts on patient care and cost benefits.
What the Researchers had to say:
Joseph Dov Bruch, PhD, Assistant Professor of Public Health Sciences at UChicago and co-senior author of the study, highlighted the significant surge in private equity activity within the field of medical care over the last few decades. He emphasized that financial institutions have been increasingly acquiring hospitals, nursing homes, fertility clinics, and similar medical facilities. While such acquisitions have been widely reported in news outlets, a comprehensive understanding of global private equity activity in healthcare was previously lacking. This study was set into motion with the aim of bridging that gap.
The researchers recognized that private equity funding can originate from various financial firms, each implementing distinct investment strategies. Their objective was to shed light on the implications of private equity ownership across a range of medical infrastructures, uncovering its unique impact on the health and medical fields. Notably, Bruch believes that the keen interest that private equity firms’ seem to have in this specific sector stems from the numerous loopholes and cost-cutting opportunities that are present in the industry.
How this impacts the healthcare industry:
As the first systematic review of its kind in the medical field, this study significantly contributes to the understanding of the impact of private equity investments in healthcare. It sheds light on the consequences of private equity ownership, particularly with regard to its effects on patient expenses and the quality of service.
The systematic review highlights the worrisome trend of private equity ownership leading to increased expenses for patients. Despite the growing prevalence of private equity activity in the healthcare sector, there is limited evidence to suggest positive impacts on the quality of the service they are provided with. As the healthcare industry continues to evolve, this study serves as a crucial resource for policymakers, practitioners, and stakeholders seeking to understand the implications of private equity ownership in the industry.
