We need to confront private equity’s role in healthcare

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Of the many reasons healthcare in the US is so expensive, one factor has become increasingly important: the growing impact of private equity (PE) ownership, which is swallowing up much-needed healthcare dollars and undermining local healthcare systems, economies and workforces.

In the inaugural issue of The Journal of Finance and Space, an article I co-wrote with Sage Ponder and Sandy Wong discusses how to curtail PE’s extractive practices and grow investments in the real economy of healthcare for more equitable outcomes.

Among the article’s key points are:

• We need to pay more attention to the impact of PE investments in the healthcare sector as they scale rapidly. PE has funneled nearly $1 trillion into healthcare transactions in the last decade.

• PE is turbocharging financial extraction from key service sectors like healthcare.

• Left unchecked, we expect PE acquisitions in healthcare to exacerbate costs and worsen health outcomes by depriving these essential services of much of the capital needed to serve their main function: to provide healthcare.

• Healthcare investments could be stabilized and relocalized by curbing PE’s role in the sector and expanding investments into public and community-owned healthcare institutions. This will have knock-on benefits to local economies and upstream determinants of health.

• Financial geographers should be more intentionally engaged with this issue of importance to all communities, helping spread understanding of how private market activities affect healthcare. 

While the dangers of private equity acquisitions in healthcare are becoming more well-known, there is little shared understanding about how to beat back these extractive practices or what it would take to create a financially stable, locally rooted healthcare system that serves us all.

We lay out some examples of how to curb private equity’s influence in the sector, and perhaps more importantly, how to grow the public and community-owned healthcare resources that already provide more sustainable and equitable outcomes for health and the economy.

This could include expanding access to and services offered at existing public healthcare institutions like the Veterans Health Administration and Federally Qualified Community Health Centers. As we argue in our piece, such investments have the “potential to increase equitable access to care, improve health outcomes, reduce total healthcare spending, and keep more healthcare dollars circulating in local economies.”

Read the full article, “Confronting private equity in healthcare: challenges and opportunities for relocalising the US health sector,” at doi.org/10.1080/2833115X.2024.2332301. Our website offers more information on TDC's health and democracy work, and for more on private equity's influence on the healthcare sector, refer to resources by our friends at the Private Equity Stakeholders Project and the Center for Economic and Policy Research.