DOJ, FTC, HHS Examining Private Equity Control Over Health Care Industry 

“Private equity firms and other corporate owners are increasingly involved in health care system transactions, and, at times, those transactions may lead to a maximizing of profits at the expense of quality care.”

That is how the federal government explained the motivation behind a public inquiry into private equity and other corporations’ ownership of this vital sector of the U.S. economy.

The Justice Department’s Antitrust Division, Federal Trade Commission (FTC) and Department of Health and Human Services (HHS) have issued a request for information on deals conducted by “health systems, private payers, private equity funds and other alternative asset managers that involve health care providers, facilities or ancillary products or services.” The agencies want information on smaller deals, too, not just those that exceed the threshold set by the Hart-Scott-Rodino Antitrust Improvements Act. That figure just increased this month to $119.5 million from $111.4 million.

The agencies are concerned that consolidation in the health sector is accomplished through deals that reduce staff and costs and, as a result, quality of care. Or, as FTC Chair Lina M. Khan put it, “[P]rivate equity roll-ups, strip-and-flip tactics and other financial plays that can enrich executives but leave the American public worse off.”

“Research has shown that competition in health care provider and payer markets promotes higher quality, lower cost health care, greater access to care, increased innovation, higher wages and better benefits for health care workers,” the joint statement said.

Patient Safety Concerns

The rate of PE acquisitions in the healthcare industry has accelerated in the last decade, and so have concerns about patient care at PE-owned physician practices and hospitals. The Lown Institute reports that PE buyouts of physician practices increased six-fold from 2012-2021 and at least 386 hospitals are now PE-owned, which is 30% of for-profit hospitals in the U.S.

The Institute cited a recent study in JAMA from researchers at Harvard Medical School and the University of Chicago which analyzed patient mortality and the prevalence of adverse events at PE-controlled hospitals compared to non-acquired hospitals. In-hospital mortality decreased slightly at PE-acquired hospitals compared to controls, but not 30-day mortality. The study, based on 4 million hospitalizations from 2009 to 2019, found that the rate of adverse events at PE-acquired hospitals compared to control hospitals increased 25%, including a 27% increase in falls, 38% increase in central line-associated bloodstream infections, and double the rate of surgical site infections.


The health of competition in the healthcare sector is one that concerns the Biden administration in general, beyond the proliferation of private equity ownership. Last month, the Wall Street Journal reported that the DOJ launched an antitrust investigation into UnitedHealth, described in the report as “owner of the biggest U.S. health insurer, a leading manager of drug benefits and a sprawling network of doctor groups.” The paper cited sources who said investigators have been interviewing industry representatives in sectors where UnitedHealth competes. “During their interviews, investigators have asked about issues including certain relationships between the company’s UnitedHealthcare insurance unit and its Optum health-services arm, which owns physician groups, among other assets,” WSJ reporters Anna Wilde Mathews and Dave Michaels wrote. Investigators reportedly also asked about the “possible effects of the company’s doctor-group acquisitions on rivals and consumers.”

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