Private equity is not new to the health care sector, but recent growth in private equity investment has sparked a plethora of research studies, media attention, and political investigation. For example, my colleague Linda Blumberg and I, as well as a growing number of other researchers, have published and highlighted a slew of research that demonstrates private equity’s connection to higher costs and lower quality health care. Outside of academia, media attention surrounding large private equity-backed health care bankruptcies, such as Steward Health Care and Prospect Medical Holdings, have raised public awareness of these concerns. Over the last year, policymakers have also shown bipartisan interest in investigating and reforming private equity’s role in health care with Senate hearings and proposed legislation. Recent reports from the Senate Budget Committee and the Department of Health and Human Services (HHS) further demonstrate a growing bipartisan commitment to increase oversight of private equity’s profit-driven involvement in health care and recognition of the need for expedient action.
Bipartisan Senate Budget Committee Report Details the Harms to Cost and Quality Caused by Major Private Equity Firms’ Investment in Health Care
On January 7, 2025, the Senate Budget Committee released a bipartisan report with findings from an investigation of two private equity firms with majority stakes in large health systems. The firms include Leonard Green & Partners (LGP) – a majority stakeholder in Prospect Medical Holdings (PMH), which operates urban hospitals in four states (CT, RI, PA, CA) – and Apollo Global Management (Apollo) – a majority stakeholder in Lifepoint Health, which operates rural hospitals nationwide. Through document requests from the firms, the Committee revealed how private equity-owned hospitals make financial and operational decisions, and the implications of these decisions for the quality of patient care. The report “uncovered troubling patterns of prioritizing profits over patients” and detailed harmful changes in quality of care. In both health systems, the report uncovered dangerous practices, including safety violations, significant understaffing, hospital closures, and decreased service availability, all while investors pocketed substantial profits.
In fact, before defaulting on loans and declaring bankruptcy, PMH paid out $645 million in dividends and preferred stock redemption to its investors, $424 million of which went to LGP shareholders. Similarly, the Senate report underscored that while private equity investment can be appealing to rural hospitals in financial straits, the report urged stakeholders to view Lifepoint Health as “a cautionary tale about the ability of rural hospitals to sustain themselves and serve their patients in the face of underinvestment by their private equity owners.”
While the report covers the Committee’s in-depth investigation of two private equity firms, these examples are indicative of greater trends in private equity-backed hospitals and health systems in both rural and urban settings. The report demonstrates bipartisan interest in protecting consumers from increased corporatization and the consequent reductions in quality of care and access.
HHS Report Calls for Policy Reform and Underscores the Negative Impact of Private Equity on Costs, Access, and Quality
On January 14, 2025, HHS released a report that synthesized more than 2,000 public comments in response to a tri-agency (the Federal Trade Commission, the Department of Justice, and HHS) request for information on the “impacts of corporate ownership trend in health care.” A broad range of stakeholders across the health care sector – patients, clinicians, health systems, insurers, industry organizations, labor unions, and researchers – submitted comments on consolidation and corporatization in healthcare.
From these comments, HHS identified several themes related to private equity’s role in growing consolidation of the healthcare industry. First, HHS reported evidence that consolidation increases costs and decreases access to services. The agency also found that private equity transactions lead to cost-cutting operational changes that compromise the quality of patient care. In particular, comments from physicians highlighted how health care professionals working in private equity-owned practices and facilities felt pressured to prioritize financial objectives over patient care. Likewise, patient advocacy groups expressed frustration with a lack of accessibility and reduced high value services after private equity acquisition. Across the board, respondents were also concerned by private health insurers purchasing physician practices. Respondents called this vertical integration, profiteering, and corporatization “dangerous,” and HHS reported that these behaviors have “[shifted] health care markets away from prioritizing patient care toward maximizing profits alone.”
In addition to comment synthesis and background research, HHS’ report included two real-world case studies on the impact of private equity. The first case study explored how the bankruptcy of Steward Health Care, owned by Cerberus Capital Management, led to significant declines in patient quality and access for community hospitals in Massachusetts. The second examined Apollo Global Management’s ownership of 222 hospitals across 36 states, with 71 in rural locations. Similar to the Senate Budget Committee report that also studied Apollo, the HHS case study found harmful effects of these private equity acquisitions across all locations.
In their comment letters, stakeholders broadly called for policy reform to increase oversight of private equity and broader corporate business practices in health care. These policies included greater transparency, increased reporting requirements, “vigorous” enforcement action against industry roll ups, and improved collaboration across agencies, Congress, and state governments to promote competition.
Given the Irrefutable Evidence of Private Equity’s Harms, There Is Bipartisan Support For Policy Action
The recent Congressional investigation and agency report add to a long list of research providing strong evidence of private equity’s dangerous impact on health care costs, quality, and access to care, while generating enormous profits for shareholders. In the wake of major health systems’ bankruptcies, with patients and taxpayers facing the repercussions, there is growing bipartisan support for prompt action. State and federal policymakers interested in protecting patients could leverage the mounting evidence into policy reform that mitigates the harms of private equity and corporatization in the health care sector.