Reform group pushes to curb private equity control of health care

An advocacy group is lobbying the Biden administration and Congress to use all available means to curb private equity’s growing influence in health care.

Private equity: ©Funtap - stock.adobe.com

Americans for Financial Reform Education Fund wants government officials to take action to slow what it dubs as “the increasingly harmful effects” or private equity’s control of massive swaths of the health care sector. The group has published a report that provides a detailed analysis of the growth of leveraged buyouts in health care, resulting in degraded patient care, immense pressure on physicians and nurses, and financially distressed companies, due to private equity’s debt-driven model.

“We don’t need to wait for further tragedies caused by private equity ownership,” said Robert Seifert, a senior fellow at AFR-EF and author of the report, in a statement. “There are traditional tools that federal agencies can use and loopholes Congress can close to end the siphoning of public health care resources for private profit, which erodes the quality of care and exacerbates patient suffering nationwide.”

The report recommends federal policy solutions that can limit private equity, including measures that do not require Congressional intervention. These include:

• Reduce incentives to game Medicare payment rules through regulatory fixes that curb excessive overpayments in the Medicare Advantage program. Complementary legislative action could close payment loopholes that favor certain types of services, sites of care, and prescribing practices over others.
• Step up enforcement of existing anti-fraud laws by seeking maximum penalties for violations; identifying whistleblowers, such as physicians with negative experiences of private equity ownership, to bring anti-fraud actions; increasing investigations of likely violations of laws prohibiting self-dealing; and better use and monitoring of individuals and entities barred from participation in Medicare and Medicaid because of past fraud convictions.
• Strengthen antitrust laws and enforcement to address the private equity strategy of small acquisitions that evade current federal merger guidelines. Executive branch agencies can update their merger guidelines to assess the wisdom of mergers from competitive, financial, and public health perspectives; Congress can lower the financial thresholds for reporting health care mergers to antitrust agencies;
• Shine a light on private equity ownership of health care facilities and practices through regulatory actions requiring more extensive disclosure of ownership and financial relationships, and with greater public dissemination of this information.

“The time has come for action to curb the influence of Wall Street private equity in health care or at least mitigate some of its worst effects,” said Ricardo Valadez, private equity campaign manager with AFR-EF, in a statement. “While we need thorough reform of this sector, executive branch agencies can deal with some of the worst manifestations of private equity in health care by using traditional tools already at their disposal to fight fraud, adjust payment incentives, prevent concentration, and improve transparency in ownership.”